Smart Factory Enables Investment Challenges for Manufacturers
Published on : Sunday 23-08-2020
Manufacturers are facing investment challenges due to shifting in businesses of industry 4.0 technologies. With new strides and technological advancements propelling the manufacturing industry to greater innovations, it’s crucial to understand how improving machinery operations are dependent upon making factory smarter.
In manufacturing, smart finance for digital transformation tends to come from integrated specialist financiers, where the funder realizes the technology, the applications, markets, and operating pressures. Such factors include –
• Digitalization upgrade – It’s designed to allow the acquisition of a system or piece of technology or machinery. The financiers with a profound knowledge of manufacturing will flex the finance period and terms to align with the possible benefits the manufacturer will gain from the technology. This type of financing will often cover associated costs of ownership such as maintenance into a “bundled” monthly payment. A financier will often have a “master” agreement with a manufacturer to enable the rapid acquisition and implementation decisions, streamlining the process of agreeing on future financing.
• Asset Value Extension (Retrofit) – The upgrade periods and technology innovation are shortening. During a financing period, finance can provide the flexibility to upgrade, offering protection against technology obsolescence. The upgrades frequently involve retrofitting hardware and or software onto the main technology platform, extending the life of the platform and the value and capabilities it delivers to the manufacturer. The associated risks are understood by the specialist funders who then incorporate the software element into a total financing package.
• Transition Management – Identifying the challenges of transition from an existing technology or manufacturing platform, financing arrangements are available that adjourn payment for a new set up until it’s reliably up and running, removing the financial challenge of having to pay for the new system while the old one is still running.
• Energy efficiency – The payments can be predicated on the expected business benefits that the technology makes possible. Savings or gains from access to the technology are used to fund monthly payments, making the technology cost-neutral to the manufacturer. The arrangements effectively capture future savings to finance the present investment, without the need to tie up capital.
• Performance and Productivity – The specialist financing comes in a range of packages where payments can be aligned to defined productivity targets.
• Sustainable Growth – An increased production capacity and productivity, while improving price competitiveness, can need greater quantities of raw materials or parts. Invoice finance solutions are available to help manage cash flow challenges that success through digitalization brings.
Such factors are expected to be the focused factors for manufacturers in the global market. Also, manufacturers will primarily aim to invest a high amount in the smart factory concept, despite the investment challenges in the global market.