Optimal product co-creation strategies in a service-oriented smart manufacturing supply chain

Abstract

Service-oriented smart manufacturing, which allows customers to engage in the product lifecycle process, has become more and more popular. In this paper, we investigate the win-win strategies for the manufacturer and the customer when they co-create a product. We consider three scenarios in the model: the manufacturer and the customer have same initiatives for product co-creation, the manufacturer has higher initiative for product co-creation than the customer, and the manufacturer has lower initiative for product co-creation than the customer. We find that both the manufacturer and customer gain the lowest benefits when they have same initiatives for product co-creation. The results also indicate that when the quality increment effectiveness for consumer is sufficiently low, there exit win-win situations if the manufacturer and the customer choose different initiatives for product co-creation. This paper provides important managerial implications on the organization and interaction process of product co-creation.