While asset-light models in the manufacturing industry can be a beneficial way to reduce costs and increase efficiency, it is important to be aware of the potential significant drawbacks. Companies should carefully evaluate their asset-light model strategy to ensure that it is cost effective and beneficial to the business. This process of evaluation should never be done from the sole perspective of opportunity cost! Just in the last 2-3 years or so, we have seen startling examples of asset-light model projects. Effect: Clients lose the possibility to create really strategic scenarios, because only tactically determined actions exist. Creativity in free fall.

A global company specializing in property facades and energy efficient windows and doors executed the most emblematic projects in Brazil, but the company had not returned a profit from its Brazil office since 2001 and had recognized that a strong brand and quality product were not enough to succeed in the current market. The company’s headquarters in Europe was considering closing the Brazil office. However, it also recognized that Brazil is an emerging market with a large social middle class and an average age of 29 years, making this a potentially lucrative location if a successful turnaround could be executed. The business model is not matching to the local requirements. To survive, the model would have to be adapted, which would seem to be contrary to the European standard. Is that feasible?