Why pay per use models make you more efficient
Nobody needs it for office supplies or fuel, but capital assets follow a different logic than consumables. A new production line can cost millions and take years to show a return on investment. If a company cannot or will not make such a capital commitment, then entire product programs may be jeopardized. Companies that finance capital investment on the basis of unit costs are ready to act sooner.
Exactly. Or more precisely, this is the only way that it will ever be launched. In many companies, innovative development programs compete for limited investment budgets. Shareholders and stakeholders want to keep expenditure down, and as a result good ideas often come to nothing. But in today’s economy, the ability to bring innovations to market quickly is a major factor in a company’s success. Financing on the basis of pay per use models allows companies to do more and to take more risks.
Only if mistakes were made with the financing arrangements. A profitability calculation requires considerable experience, robust benchmarks, a systematic procurement process, and a financing partner that is willing to share the risks. But companies also gain maximum flexibility, allowing them to expand facilities or relocate a manufacturing site, for example. This creates room to maneuver that will certainly pay off sooner or later.