Blog post

Intro to Digital Production as a Service

October 4th, 2021

FlexFactory is a joint venture of MHP, Porsche, and Munich Re. It supports customers in reorganizing their production systems to think beyond the boundaries of production alone. Flexible production starts with a seamlessly digital value chain and opens up new business models extending right through to Digital Production-as-a-Service. This transformation is implemented using the following building blocks:

1. Digital Value Chain

The “Semantic Engine” software, which can be tailored to individual needs, closes the digital gap between product development and production planning. It enables the seamless and automated transfer of product data into process data. Less manual planning effort when retooling a production line to switch from product A to product B increases efficiency and reduces the likelihood of errors. This allows more frequent product changes and reduces dependency on a single main user of the production line – assumingthat the line is flexible.

2. Flexible Production

The modular “Multi Product Line” uses an optimized cell layout as well as automated guided vehicles, enabling highly flexible and scalable production for individual small series or frequent product changes. This opens the door not only to further efficiency gains, but also to completely new approaches. Innovative business models are made possible by offering production capacity to third parties – in other words by making the leap to X-as-a-Service.

3. Financial Transformation

a. Performance Guarantee

FlexFactory guarantees the technical availability of the production line and compensates extra costs of production results that are not as agreed. This guarantee reduces the risk of temporary downtime and makes investments more manageable within strategic decisions about innovative production technologies. Since production-related risks are guaranteed beyond the machinery and equipment manufacturer’s warranties, the higher level of risk transparency means that the production line can be opened up to external investors.

b. External Financing Options

Companies no longer need to own production lines; they can access the assets according to their needs and purchase the manufactured products from a special purpose vehicle. This legally separate entity assumes ownership and – in conjunction with increased flexibility and a performance guarantee – opens the door to external financing under optimized terms and conditions. This approach reduces both investments and fixed costs, while at the same time providing control over the production line and the quality manufactured – Digital Production-as-a-Service taken to its logical conclusion.

Background gradient FlexFactory X logo left

We tailor our solutions according to your business needs and production requirements.

Phillipp Hypko, Managing Director

This solution is suitable for manufacturers in different industries that are open to new production technologies and need to increase the flexibility of their production processes due to smaller or fluctuating lot sizes. On the financing side, the associated investment risk presents achallenge that conventional approaches can rarely solve. Now it is possible to fundamentally rethink production up to the entry into a new business model.

Get in touch for more information

Marcel KegelmannMarketing & Operations Manager