Product-service System Business Model Research Articles

Literature analysis on product-service systems business model: a promising research field

Goal: Product-service system (PSS) is a business model implemented by organizations aiming at generating profitability and competitiveness, and contributing to sustainability. However, companies need to build up new skills to develop and implement PSS focused on business models that should be able to generate value. This context calls for a theoretical analysis with the objective of identifing characteristics of this type of business model by means of a literature review.
 Design/Methodology/Approach: A descriptive review was conducted, and 313 publications related to PSS business model were selected. A final set of 48 articles related to PSS and business models were identified as well as the number of publications per year and main journal. Mechanisms for generating value from the PSS business model and its components were described after content analysis.
 Results: Most of PSS business model publications were published in recent years with the main focus on sustainability. Fourteen business model components were identified from the literature to be considered when structuring a PSS, associated with value proposition, creation, delivery, and value capture mechanisms. The most common components were ‘value proposition’ and ‘key partners’, although their concepts need a clarification. The business model should be designed with a value-centric vision in an iterative process. Moreover, it must cover the interests of the entire PSS value network, considering environmental, economic, and social dimensions of sustainability.
 Limitation of the investigation: The analysis has not considered the related research field on servitization, and nor the publications related to the ‘value’ concept from interdisciplinary areas (e.g., marketing).
 Practical implications: Developing a PSS business model requires forming a value network, considering the interests and responsibilities of those involved for the generation of mutual value as well as the inter-organizational relationships.
 Originality/Value: As PSS as a business model is a promising field of study, this paper devotes more attention on developing this kind of business model.

Strategic Development of Product-Service Systems (PSS) through Archetype Assessment

Product-service systems (PSS) enable product-oriented manufacturing companies to differentiate their offerings and become more competitive, while creating more value for customers along with improved economic performance and, in some cases, reduced environmental impact. However, PSS development remains difficult for manufacturing companies due to limited prior knowledge about PSS and the strategic characteristics it entails. To guide the PSS development process, this paper presents a prescriptive approach composed of a tool and a method based on the use of PSS archetypes in the initial development stages of new PSS business models (BM). The proposed tool builds upon three PSS archetypes, combined with 10 factors for assessment of the best suiting archetype. The proposed method and supporting tool guide companies in five steps, from the beginning of a servitisation process to the initial PSS development. Based on an evaluation with a Danish manufacturing company, an improved version of the method and tool was developed and applied with 60 students specialised in PSS development. Results from the evaluation indicate that the method and tool support scoping new PSS BM through the selection and modification of a PSS archetype, encouraging servitisation and PSS development in companies with different levels of PSS experience.

Product-Service Systems and Sustainability: Analysing the Environmental Impacts of Rental Clothing

Business models like product-service systems (PSSs) often recognise different sustainability goals and are seen as solutions for the impacts of consumption and fast fashion, but there is a lack of evidence supporting the environmental claims of such business models for clothing. The research aimed to understand if rental clothing business models such as PSSs have the environmental benefits often purported by quantifying the environmental impacts of rental formal dresses in a life-cycle assessment (LCA) in a case study in Stockholm, Sweden. The effects of varying consumer behaviour on the potential impact of a PSS vs. linear business model are explored through three functional units and 14 consumption scenarios. How users decide to engage with clothing PSSs dictates the environmental savings potential that a PSS can have, as shown in how many times consumers wear garments, how they use rental to substitute their purchasing or use needs, as well as how consumers travel to rental store locations.

Product-service systems evolution in the era of Industry 4.0

Recent economic transformations have forced companies to redefine their value propositions, increasing traditional product offerings with supplementary services—the so-called Product-Service System (PSS). Among them, the adoption of Industry 4.0 technologies is very common. However, the directions that companies are undertaking to offer new value to their customers in the Industry 4.0 have not yet been investigated in detail. Based on a focus group, this paper contributes to this understanding by identifying the main trajectories that would shape a future scenario in which PSS and Industry 4.0 would merge. In addition, future research directions addressing (a) the transformation of the PSS value chain into a PSS ecosystem, (b) the transformation inside a single company towards becoming a PSS provider, and (c) the digital transformation of the traditional PSS business model are identified.

The customer journey in a product-service system business model

The customer journey map is a user-centered design tool, which combines visual resources, and it takes the customer’s point of view into account. A promising business model with relevant presence of customers’ perspective, the product-service system has been widely studied since its first introduction in literature in 1999. However, only a few studies have approached the two research areas, and none of them has associated the characteristics of the visual tool of customer journey and the PSS business model. For this reason, this study proposes to explore how the customer journey map can support PSS Improvement, comparing a customer journey map from what the company imagines it occurs and what the customers have described. To achieve that, we have developed a case study with interviews of the PSS company and three different customers to avoid bias. After the collected data, we drew two customer journey maps, one representing the company’s view and the other, the compilation of the customers’ reports. For the analyses, we evaluated the relevant differences between the journey maps, discussed the customers feeling and emotions, and highlighted the impacts of the pandemic from Covid-19 in the customer journey. Finally, there was some recommendations suggested for the company, such as actions to improve influential touchpoints, to maintain critical services, and to prevent changes that negatively affect the user experience.

SERVICE-ORIENTED BUSINESS MODELS IN MANUFACTURING IN THE DIGITAL ERA: TOWARD A NEW TAXONOMY

A stream of servitisation research has focused on the construction of taxonomies and typologies of product–service system business models (BMs). However, their relevance in the context of increased utilisation of digital technologies may be questioned. Thus, the purpose of this paper is to empirically revisit the existing product–service system BM taxonomies to explore the following research question: How can the BMs of servitised manufacturing firms be categorised in the digital era? The question is addressed through an embedded case study of five servitised firms. We found that the firms’ BMs varied with regard to the degree of the suppliers’ ownership of delivered products, degree of smartness of the services provided and degree of performance orientation of contracts. Based on these findings, we derived a new product–service system BM taxonomy with eight categories, presented in a 2 × 2 × 2 matrix, that significantly extends earlier taxonomies.

Business models towards SDGs: the barriers for operationalizing Product-Service System (PSS) in Brazil

ABSTRACT Sustainable development requires the creation and development of new business models. Sharing economy will maximize the use of a product by several people, while it enables the reduction of natural resource consumption. In this sense, Product-Service Systems (PSS) can greatly contribute to achieving the Sustainable Development Goals, published by the United Nations. In this context, the present study aims to analyse the barriers associated with the operationalization of PSS business models in Brazil. Nineteen barriers listed in the literature supported a questionnaire used in a survey of Brazilian researchers. Data analysis was performed through Hierarchical Cluster Analysis, descriptive statistics and TOPSIS (Technique for Order of Preference by Similarity to Ideal Solution). TOPSIS is used for comparative ordering of barriers in terms of intensity. The results showed that there are many barriers observed in the Brazilian scenario for the operationalization of PSS; those related to the resistance to change to the mentioned business models and the lack of necessary skills to manage them stood out. These findings can be used to enhance the debates about PSS in the Brazilian context.

Systematic Literature Review—Effects of PSS on Sustainability Based on Use Case Assessments

Product-service systems (PSS) are often presented as an inherently sustainable business model. The argumentation is often based on theoretical considerations, which cite circular economy (CE) characteristics in PSS business models as an explanation. In this paper we examined to what extent positive and negative sustainability effects of PSS could actually be observed, based on use cases. For this purpose, we conducted a systematic literature review and analyzed the statements on sustainability effects based on the triple bottom line approach. We find that positive sustainability effects, especially on the environmental sustainability of PSS, are described disproportionately often, which may be indicating a possible publication bias. In addition, the methods used to derive statements on sustainability effects are very heterogeneous and often unsystematic, making it difficult to compare the described effects. Furthermore, we were able to identify drivers that are particularly often considered in literature to be responsible for sustainability effects. As a result, we were able to derive direct implications for future research in the field of sustainability assessment of PSS.

Systematic Literature Review—Effects of PSS on Sustainability Based on Use Case Assessments

Product-service systems (PSS) are often presented as an inherently sustainable business model. The argumentation is often based on theoretical considerations, which cite circular economy (CE) characteristics in PSS business models as an explanation. In this paper we examined to what extent positive and negative sustainability effects of PSS could actually be observed, based on use cases. For this purpose, we conducted a systematic literature review and analyzed the statements on sustainability effects based on the triple bottom line approach. We find that positive sustainability effects, especially on the environmental sustainability of PSS, are described disproportionately often, which may be indicating a possible publication bias. In addition, the methods used to derive statements on sustainability effects are very heterogeneous and often unsystematic, making it difficult to compare the described effects. Furthermore, we were able to identify drivers that are particularly often considered in literature to be responsible for sustainability effects. As a result, we were able to derive direct implications for future research in the field of sustainability assessment of PSS.

Product-Service System business model for printing houses

In the light of intensifying competition, growing customer needs and requirements, and bigger awareness of environmental impact, entrepreneurs are looking for new ways to improve and develop their operations. Currently available business models based on sales and the transfer of ownership rights to products from a manufacturer to the user, which do not include any additional services, do not create a possibility for the customer to fully exploit the products. After some time, machinery sold under such an arrangement ceases to be used and those who bought it have problems with selling the machinery and recovering capital frozen in it.Therefore, seeking new business models seems extremely important as they may improve customer satisfaction and experience with the way products are offered to them and, at the same time, bring a number of benefits to entrepreneurs. One of possible solutions to the above-mentioned issues is the PSS model, which allows selling the accessibility and functions offered by products and their re-use.This publication is an attempt to develop such a model for the printing industry. To this end, questionnaire-based studies were conducted in 80 printing houses from which we learned how printing machines are used and about the needs and problems faced by entrepreneurs.Results of analyses suggest there are deep differences between small, medium-sized, and large printing companies as to the services in which these categories of businesses are interested. Profound analyses conducted for industries to whom PSS design methods are addressed, industrial PSS cases, questionnaire-based studies, statistical analyses, and consultations with experts from different fields helped in developing a new PSS model whose detailed structure, in particular for the printing industry, have never been broadly commented, studied or evidenced so far. This paper is intended to bridge this gap. The approach to the subject is also innovative as it is based on questionnaire-based studies which correctly reflect market reality. Moreover, all services tied to machines have been selected following in-depth statistical analyses and the proposed approach is unusually comprehensive as it covers micro, small, medium-sized, and large enterprises.

THE IMPORTANCE OF CONSIDERING FLEET SIZE IN THE LIFECYCLE COST ANALYSIS OF PRODUCT SERVICE SYSTEMS

AbstractThe use of product-service systems business models is increasing in today's economy. Because the products that provide the service to the customers incur cost during their lifetime, the method of lifecycle costing finds wide-spread use. However, this paper shows the current methods have some inaccuracies when determining lifecycle costs. The methods do not consider the required number of products necessary to provide the offered service to the customers. This paper describes a new framework for lifecycle costing that includes these cost components.

PSS Strategic Alignment: Linking Service Transition Strategy with PSS Business Model

One of the most promising business models towards economic circularity is product-service system (PSS). Despite its great potential benefits, shifting the traditional business model of a manufacturer into PSS business model commonly refers to service transition and triggers inconsistencies between strategic direction and organization arrangement at an operational level. The absence of alignment between the service transition strategy and the PSS business model is greatly emphasized as a crucial enabler, risk factor and key success factor of the service transition. However, limited academic works have concretely contributed to the strategic alignment. Through a systematic literature review, this paper proposes a PSS business alignment that enables the manufacturer to identify the strategic objective of its service transition strategy and align it with PSS business model. The theoretical version of the proposed framework is redefined and redeveloped through two cycles of action research involving 11 Japanese companies.

Midlife upgrade of capital equipment: A servitization-enabled, value-adding alternative to traditional equipment replacement strategies

Fast-paced technology lifecycles continuously increase the uncertainty of decision-making processes when it comes to acquisition of new technological innovations. This is especially true in case of technology acquisitions by means of equipment replacement that is often capital intensive and time consuming. The midlife upgrade strategy, building on manufacturing servitization and product-service system (PSS) business models, presents a promising alternative to traditional equipment replacement. Midlife upgrades describe the extension of capital equipment’s remaining useful life by means of upgrading components, sub-systems or the like in response to certain triggers from users, environment, or market. However, the concept of midlife upgrade has thus far been discussed primarily from a theoretical perspective in literature. The state of the art lacks empirical evidence regarding the potential and outcome of successful midlife upgrades. In this paper, our objective is to empirically investigate the potential of midlife upgrade of capital equipment as a value-adding alternative to traditional equipment replacement in the context of servitization. To this end, first we develop a replacement decision framework based on the influencing factors and motivations behind equipment replacement. Then we present five case studies of capital equipment that have been upgraded during their middle of life to perform beyond their initial design specification. These case studies are analyzed based on the replacement decision framework with the goal of understanding whether the established influencing factors and motivations behind traditional equipment replacement are also applicable to capital equipment midlife upgrades and if so, to what extent. Our findings indicate that midlife upgrades have the potential to effectively postpone replacement while extending the remaining useful life of capital equipment and thereby facilitate the implementation of the circular economy. Our findings also suggest that midlife upgrades indeed present a value-adding alternative to traditional equipment replacement from the perspectives of both users and manufacturers, especially when provisioned with a servitized PSS business model.

Competitive advantage implication of different Product Service System business models: Consequences of ‘not-replicable’ capabilities

For many companies, the servitization of business grounded on Product Service Systems is proving to be a winning value proposition based as it is on a distinctive mix of economically, socially and environmentally sustainable solutions aimed at satisfying customer’s needs. This research investigates the conjoint effect of three potential sources of PSS’s competitive advantage: the type of PSS, i.e. a value proposition directed at a market segment based on specific customer behaviour, the core resources, competences and organizational processes on which the PSS’s business model is based and their level of protection from competitor’s replication. We adopted a multiple case study methodology to take into account the complex interrelation of the variables characterizing the phenomenon investigated by sampling 10 companies and collecting data by means of semi-structured interviews. Results of within- and cross-case analysis reveal that Use-Oriented PSS business models gain a competitive advantage from physical resources and organizational processes, whether protected against replication threat or not, while Result-Oriented PSS business models from people competences. Human capital is fundamental also for Product-Oriented PSS business models, but companies can reach a competitive advantage only if protected against replication threat from competitors. The paper contributes to the expanding PSS literature by identifying potentially distinctive factors of the PSS business model and by providing useful considerations on PSS competitive and strategic potential, with an in-depth analysis of success elements. • This research investigates the conjoint effect of three potential sources of PSS’s competitiveness. • We adopted a multiple case study methodology involving 10 cases. • PSS type, resources, competences and organizational processes represent key strategic factors. • Protection from replication of strategic key factors is vital for Product-Oriented PSSs.

Evaluating the Environmental Performance of a Product/Service-System Business Model for Merino Wool Next-to-Skin Garments: The Case of Armadillo Merino®

Circular business models are often enabled by means of product/service-systems (PSS). The common perception is that such business models have enhanced environmental performance when compared to conventional business models rooted in the linear economy. This article investigates the environmental potential of developing a use-oriented PSS business model for Merino wool t-shirts intended for use by the British Ministry of Defence as an alternative to the present supply system based on synthetic t-shirts purchased from sportswear clothing companies. To conduct the assessment, we apply the life cycle assessment (LCA) methodology to quantify and compare the climate change impacts and impact potentials of the proposed PSS business model and of a reference business model. Results showed that there could be significant contribution of quantifying environmental potential for PSS business models when justifying the transition to a circular economy. However, when adopting LCA methodology for this purpose, the design of the PSS needs to be well thought to overcome some of the identified challenges. The article concludes by making the case that LCA studies can support the definition, design and value creation of the product/service-systems in early development stages.

Explore and evaluate innovative value propositions for smart product service system: A novel graphics-based rough-fuzzy DEMATEL method

Abstract The rapid development of advanced information and communication technology enables the mainstream trend of manufacturing value propositions towards smart product service system (PSS). Prospect innovative value propositions (IVPs) emerge in the context of smart PSS. The IVPs analysis plays a critical role in the successful planning and design of smart PSS business model, which includes two key steps: identification and evaluation. However, the existing research rarely systematically explore what value propositions can be identified in the emerging field of smart PSS. Thus, this study conducts a comprehensive IVPs identification through literature review and prioritize these IVPs to provide support for later smart PSS concept design. Compared to other evaluation methods, the Decision Making Trial and Evaluation Laboratory (DEMATEL) presents higher effectiveness to evaluate the interrelationship and importance degree of the identified IVPs. Moreover, the previous fuzzy-based DEMATEL is feasible to handle intrapersonal uncertainty (individual linguistic vagueness), and the previous rough-based DEMATEL can effectively manipulate the interpersonal uncertainty (group preference diversity). Nevertheless, there are few researches on simultaneous manipulation of the two kinds of uncertainty which may lead to inaccurate evaluation results. Therefore, this study develops a novel graphics-based rough-fuzzy DEMATEL method for IVPs evaluation. The effectiveness and accuracy of the proposed evaluation method are illustrated through the application in the smart vehicle service system and the comparisons with several different methods. The proposed evaluation model can provide more accurate and informative results, because it integrates the merits of fuzzy set in coping with the intrapersonal uncertainty and the strength of rough set in handling interpersonal uncertainty, and supports to present decision inconsistency along with the final weights based on a proposed graphics-based operator.

Exploring Opportunities of IoT for Product–Service System Conceptualization and Implementation

Product–service systems (PSS), integrating physical products and services, currently play a crucial role in sustainable economies. In addition to the highly competitive global economy, the emergence of new digital paradigms is supporting the shift toward servitization. Although the great potential of such paradigms is recognized by both practice and research, their implications for PSS are not yet clear. In particular, features of Internet of Things (IoT), such as total connectedness and ubiquity of smart sensors and actuators, provide various new opportunities for PSS. This study explores such opportunities by conducting structured literature review and 13 interviews. We organize the findings in two folds: First, we introduce four degrees of IoT involvement in PSS business models and elaborate the opportunities that they create for different types of PSS. Second, we present the key technologies and approaches that IoT provides concerning PSS lifecycle management.

How does servitisation affect supply chain circularity? – A systematic literature review

PurposeThe purpose of this paper is to test the link between servitisation and circular economy by synthesising the effect of product-service systems (PSS) on supply chain circularity (SCC).Design/methodology/approachFollowing a systematic literature review methodology, the study identified 67 studies and synthesised them using content analysis.FindingsA conceptual model is developed illustrating how PSS business models impact SCC through increased product longevity, closure of resource loops and resource efficiency. It also identifies six contextual factors affecting the implementation of SCC including: economic attractiveness of SCC; firm sustainability strategy; policy and societal environment; product category; supply chain relationships; and technology.Research limitations/implicationsThe conceptual model proposes that SCC increases with servitisation. It also proposes that the main circularity effect stems from increased product longevity, followed by closed resource loops and finally resource efficiency. The model is deduced from the literature by using secondary data.Practical implicationsThe review provides practitioners with a framework to increase SCC through PSS business models. It also gives insight into the various contextual factors that may affect how a manufacturer’s servitisation strategy contributes to SCC.Originality/valueThis review contributes to the understanding of the relationship between servitisation and SCC by synthesising the different effects that exist. Moreover, it creates new knowledge by identifying a range of contextual factors affecting the relationship between PSS and SCC.

Configuring New Business Models for Circular Economy through Product–Service Systems

Product—service systems (PSSs) are often outlined as potential enablers of new business models for circular economy. However, not all business models based on product-service systems have superior circularity potential. This research demonstrates how the application of a previously developed business model configurator for circular economy can support the design and assessment of customer value, economic and resource decoupling potential for product-service system business models in practice. By applying action research in two Nordic manufacturing companies from the furniture sector, different business model concepts based on product-service systems were proposed and assessed. Results indicate positive uptake by companies regarding the usefulness of the obtained outcomes. This research identified two key findings about ‘product-service system business models for circular economy’: (i) their configuration should fulfil certain simultaneous conditions—i.e. superior customer value, economic growth, and resource decoupling potential—to contribute to circular economy; and (ii) they are often ‘niche solutions’, fulfilling specific needs and customer segments, and more likely to flourish with certain types/characteristic of products, segments or geographical locations. Lastly, a framework outlining the conditions and trade-offs for assessing the circularity potential of business models based on product-service systems is introduced as one of the key contributions.

Unintended Circularity?—Assessing a Product-Service System for its Potential Contribution to a Circular Economy

Product-service systems (PSSs) are seen as valuable facilitators of a circular economy (CE) on a business level. However, that PSSs contribute to a CE is not a given and is determined by the chosen PSS business model and strategy applied throughout the entire lifecycle. Thus, in order to support companies in implementing circular business models such as PSSs, an increasing number of frameworks and methods have been proposed in prior research. This article hypothesizes that many industrial companies are expanding to become PSS providers with neither such support nor a strong sustainability focus. There is a gap in the literature regarding the potential contribution of such PSSs to a CE. Thus, the research reported aims to provide initial insight regarding whether unintended circularity, i.e., an unintended contribution to a CE, may occur when becoming a PSS provider. Applying and adapting an existing framework for the assessment of PSSs’ potential contribution to a CE, the use-oriented PSS of an industrial company was assessed in-depth. Results regarding the relative resource reduction and the prospect of achieving absolute resource decoupling are reported and discussed. While relative improvements over product sales are identified, e.g., resulting from end-of-life efforts on reuse and remanufacturing, opportunities for additional enhancement are found, e.g., in adjustments of the PSS design process. Concerning absolute resource decoupling, a fundamental challenge lies in the use-oriented PSS’s dependency on an increasing number of physical components as the company’s business expands. This article advances the discussion on PSSs’ potential contributions to a CE with an in-depth empirical study. For practitioners, the results reported expand on important aspects of efficient and effective PSS provision throughout the lifecycle.