Sharing of Heavy Equipment

59 Pages Posted: 25 Sep 2018 Last revised: 8 Sep 2020

See all articles by Philippe Blaettchen

Philippe Blaettchen

INSEAD

Niyazi Taneri

NUS Business School, National University of Singapore

Sameer Hasija

INSEAD - Technology and Operations Management

Date Written: September 08, 2020

Abstract

Technological advances enable new business models for heavy equipment manufacturers, replacing or augmenting ownership-based models with access-based consumption. An ever-increasing list of peer-to-peer sharing platforms (e.g., Trringo by Mahindra, Yard Club by Caterpillar, or COOP by Ryder) shows that it is paramount for decision-makers to understand the economic implications of such business models. However, in this changing landscape, the efficacy of relying on access-based consumption is unclear, and a lack of empirical performance data motivates the need for analytical insights. This study seeks to understand the performance of different emerging business models, particularly peer-to-peer product sharing models, by considering salient economic and operational factors in the context of heavy equipment. Although such sharing business models are widely publicized, the optimal model for a heavy equipment manufacturer will depend on operational factors linked to after-sales services, a point which has been previously overlooked and which deserves closer attention from decision-makers. We determine the threshold at which a heavy equipment manufacturer may prefer setting up a sharing platform for its products, which provides support for the emergence of such manufacturer-owned platforms in practice. We also describe the optimal design of a sharing platform, highlighting the need to subsidize one part of the business (sharing) in order to benefit another (after-sales services). Moreover, we provide insight into how manufacturers can leverage after-sales services when threatened by the entrance of a third-party sharing platform.

Keywords: Sharing Economy, After-sales Services, Heavy Equipment, Business Model Innovation

Suggested Citation

Blaettchen, Philippe and Taneri, Niyazi and Hasija, Sameer, Sharing of Heavy Equipment (September 08, 2020). INSEAD Working Paper No. 2020/43/TOM, Available at SSRN: https://ssrn.com/abstract=3254790 or http://dx.doi.org/10.2139/ssrn.3254790

Philippe Blaettchen

INSEAD ( email )

Boulevard de Constance
Fontainebleau, 77305
France

Niyazi Taneri

NUS Business School, National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 119245
Singapore

Sameer Hasija (Contact Author)

INSEAD - Technology and Operations Management ( email )

Boulevard de Constance
77 305 Fontainebleau Cedex
France

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