Product-Service Systems Offerings Research Articles

Value Leakage in Product–Service System Provision: A Business Model Alignment Perspective

To stay competitive, manufacturing companies offer product–service systems (PSS) to avoid commoditization of their products. The potential to create value through PSS offerings lies in a company's ability to successfully implement the PSS business model. However, many companies are unable to realize the benefits because PSS represents significant changes to all the business model elements, which comprise value creation, value delivery, and value capture. This leads to misalignment among the business model elements, which is a topic of interest within PSS and business model literatures. This article aims to provide empirical insights into the business-model-element alignment problems and conceptualize their consequences, which manufacturing companies face during PSS implementation. This article utilizes an abductive multicase study of three Swedish manufacturing companies with long-term experience of PSS provision to provide novel insights by identifying six alignment problems that companies face as a consequence of the interaction among the three business model elements. Furthermore, we contribute to both the PSS and business model literature by conceptualizing the consequences of business model element alignment problems, explaining the three value leakages that occur as a result of inappropriate resource and capability utilization, unattractive offer configurations, and inefficient service network processes in PSS provision.

A value-driven method for the design of performance-based services for manufacturing equipment

Industrial services are increasingly becoming more relational and customer-oriented, due to manufacturers’ adoption of servitisation approaches and product service system offerings. Challenges remain regarding the effective design and delivery of these new offerings, and the understanding of their actual value for both providers and customers. This work focuses on one specific type of product service systems in the context of manufacturing equipment: result-oriented or performance-based services, which aim at delivering an outcome rather than selling the equipment to the customer. A proposal of a value-driven method for their design that engages the customer in the process is presented. This new method has been applied to a real industrial life setting through an application case, involving the service provider and its customer, and targeting manufacturing equipment within customers’ plant. Results indicate the effectiveness of this prescriptive approach. Reported benefits from participants refer to its flexibility, adaptability and applicability for different types of equipment, as well as its potential to help providing a modular service portfolio adequate to equipment specific context and requirements.

Environmental assessment of a product-service system for renting electric-powered tools

To address increasing environmental sustainability concerns among consumers, many companies have developed approaches to provide functions, rather than products through product-service systems (PSS). This study evaluates a use-oriented tool rental service from Husqvarna, called ‘Tools for you,’ with the aim to identify critical processes to improve the sustainability of the offering. The environmental implications of the system are assessed using life cycle assessment for the annual service of one electric chainsaw and compared with a conventional sales alternative. The results suggest that rental service is influenced extensively by the location of the rental depot. Furthermore, while the impacts of the product and accessories, infrastructure, waste management, and use are reduced compared to the sales alternative, their contribution is only minor compared to environmental impacts from transportation. The results are also sensitive to the methodological choices, where the lifetime of the products, data choices, transportation assumptions, maintenance intervals, and other user-related variables for the use of the products have a significant influence on the results. The conclusions confirm and extend previous assertions on the challenges of applying LCA to PSS and add to the emerging literature on sustainable business models through empirical evidence from a case study. The findings also point to the holistic insights required to optimize the potential environmental sustainability of the services for Husqvarna and other retailers interested in adopting use-oriented business models. Future research could focus on the geographical differences of the rental lockers worldwide, models for optimizing their location, in addition to further input on user behavior, and the role of refurbishment and remanufacturing for more robust analyses of the sustainability of PSS offerings.

Implementation of Circular Economy principles in PSS operations

Product-Service Systems (PSS) where customers pay for the functionality of an asset are considered among the most suitable business models for a Circular Economy (CE). The PSS literature assumes that these offerings have potential environmental benefits, because they can break the traditional link between profit and production volume and incentivize resource productivity by the providers. While the theoretical business case for sustainable PSS is clear, it is rather unclear whether manufacturers actually adopt resource efficiency measures in these types of business models. This paper reviews studies from the servitization literature to determine how CE dimensions are implemented in the operations of such PSS offerings. The analysis provides insights into PSS activities and offers new implications for analyzing and improving the circularity of PSS offerings.

Enhancing the Design and Management of the Product-Service System Supply Chain: An Application to the Automotive Sector

The proper design and management of product-service system (PSS) supply chains is a prerequisite for the successful implementation of servitised business models. As underlined by empirical evidence, research on how different types of PSS offerings affect the design and management of the upstream supply chain of PSS providers still appears to be lagging. Therefore, this paper introduces a theoretical explanatory conceptual framework derived from a literature analysis and further developed by four case studies from the automotive sector, which highlight the linkages between the value proposition and supply chain of PSS providers. The results are summarised into 11 propositions that underline the key roles and capabilities that bridge PSS offering features with distinctive characteristics of the PSS supply chain. They also show specific patterns of partners’ relationships and organisational configurations that can be identified during the servitisation transformation.

Assessing transformational change from institutionalising digital capabilities on implementation and development of Product-Service Systems: Learnings from the maritime industry

Digitization is rapidly reshaping industries and economic sectors. It enables novel Product-Service Systems (PSS) that transform customer/supplier relationships and introduces new value propositions. However, while opportunities for novel types of PSS arise, it is not clear how digitization and the institutionalisation of digital capabilities, particularly within the customer organisations, may affect implementation of PSS, potentially leading to transformational changes in the customer organisation. This paper examines one such potential transformational change from three complementary viewpoints – the resource based, the dynamic, and the relational viewpoint. It does so through action research study in the context of the maritime industry, which is particularly attractive for PSS offerings. The research methodology comprised a two-step action research process, focusing on both digitization and PSS development and implementation. The main findings are that rather than facilitating procurement to co-development of PSS, institutionalisation of digital capabilities facilitated development of PSS by stakeholders internal to the company, and strategic co-development with external stakeholders. The new digital capabilities circumvented cost barriers associated with the procurement of services from external stakeholders, supported process standardisation - to the expense of process innovation-, and transformed the network that delivered PSS by closing opportunity gaps for externally procured services. Furthermore, the uptake of digital capabilities highlighted the importance of cost estimation in making the customer more responsive to threats and opportunities.

A Lean PSS design and evaluation framework supported by KPI monitoring and context sensitivity tools

Over the last decade, Product-Service System (PSS) has been established as a prominent business model which promises sustainability. A great amount of literature work has been devoted to PSS issues, but there is fairly limited published work on integrated and easily applicable evaluation methodologies for PSS design, as well as a lack of Lean PSS approaches. Contributing to these directions, the present work introduces a framework for the evaluation and improvement of the Lean PSS design using key performance indicators (KPIs), Lean rules, and sentiment analysis, aiming to feed all the stages of PSS design lifecycle. According to the evaluation phase, a certain appropriate set of KPIs is selected and suggested to the PSS designer via a context-sensitivity analysis (CSA) tool through a pool, which have been identified after intensive literature survey, and systematically classified into five main categories: design, manufacturing, customer, environment, and sustainability. According to the same phase, sentiment analysis has been used to identify the polarity of the customer opinions regarding the PSS offerings. During the phase of Lean design assistance, Lean rules are selected using CSA and are suggested to the designer to ensure the minimization of wasteful activities. Enabler for the context awareness is the availability of feedback gathered from the manufacturing, shop-floor experts, and the different types of customers (business or final-product consumers), as well as the PSS lifecycle which the designer treats. The proposed framework is implemented in a software prototype and is applied in a mold-making industrial case study.

Design for product-service systems: a procedure to enhance functional integration of product-service offerings

Design and development of an integrated Product-Service System (PSS) aims at replacing stand-alone products or services with a functional offering. However, issues regarding this transition are dissimilar and differentiated. This study discusses the importance of PSSs analysing the theoretical studies accomplished in the extent of their design and development processes. Based on this, a novel procedure, built on the Design Science approach, is proposed, where the distinct models from the literature are merged towards a unified structure serving as a robust and generic methodology for designing PSSs. Each stage of this process is then developed to present a comprehensive design procedure, called the Functional Engineered Product-Service System (FEPSS), which is based on morphological thinking to conceptualise PSS offerings. A case study illustrates the use of the proposed framework underlining its effectiveness in merging stakeholders' needs, development activities, as well as products and services elements enclosed in the solution.

Lean rules extraction methodology for lean PSS design via key performance indicators monitoring

Lean PSS (Product-Service System) design comprises a promising strategy for delivering sustainable PSS offerings, considering several well-established lean practices. However, automated ways to apply lean practices and more specifically lean rules in industry are limited. This work proposes a methodology for improving the leanness of PSS design, by combining real-time KPI monitoring with lean principles and practices. Through a correlation of typical wastes with the metrics used in the calculation of KPIs, the Total Leanness Index (TLI) of the procedures is defined. Based on automatically identified trade-off values for TLI, lean rules are extracted to improve the performance of PSS lifecycle phases. The proposed lean rules extraction methodology (LeanREM) is validated through a case study of power waste reduction and the concurrently maintenance time decrease in a mould-making company.

Maturity-based approach for the development of environmentally sustainable product/service-systems

Despite their substantial potential for enabling increased environmental performance, product/service-systems (PSS) are not intrinsically environmentally sustainable. In order to ensure increased environmental performance, PSS best practices should be integrated with ecodesign best practices, from the early stages of the development process. This paper aims to identify the best practices for PSS development, based on a systematic literature review, and to propose their integration into an existing maturity model for ecodesign, the EcoM2, into which 30 best practices for PSS development are identified and integrated. The proposed approach has the potential to enable the development of environmentally sustainable PSS offerings.

Classification and Mapping of PSS Evaluation Approaches

The evaluation of a Product-Service System (PSS), particularly during its design phase but also throughout its lifecycle, is a challenging problem. It exhibits dynamic nature and is multidimensional, since a large network of stakeholders are usually involved in the design and development of PSS eco-systems and their influence must be considered during the evaluation of the PSS offering. Nevertheless, an effective PSS evaluation can determine the market success of the PSS offering, leading to fewer design modifications and shortened time-to-market. Still, existing literature lacks an exhaustive review and classification of PSS evaluation approaches. Moreover, a lack of critical in-depth validation of performance approaches in real industrial environments is observed. Towards bridging this gap, the present work identifies the most important perspectives in the PSS ecosystem, such as supplier selection and service level, and discusses the utilised evaluation approaches used for each of them. Based on this review, a classification of existing PSS evaluation approaches is provided, by mapping these PSS eco-system perspectives to the methods most frequently used for their evaluation. The results can be used as guidelines for PSS vendors to select the most suitable method for the evaluation of their PSS offerings.

Development of a novel set of criteria to select methodology for designing product service systems

Abstract This paper proposes eight groups of twenty nine scoring criteria that can help designers and practitioners to compare and select an appropriate methodology for a certain problem in designing product service system (PSS). PSS has been researched for more than a decade and is now becoming more and more popular in academia as well as industry. Despite that fact, the adoption of PSS is still limited for its potential. One of the main reasons is that designing PSS itself is a challenge. Designers and developers face difficulties in choosing appropriate PSS design methodologies for their projects so that they can design effective PSS offerings. By proposing eight groups of twenty nine scoring criteria, this paper enables a “step by step” process to identify the most appropriate design methodology for a company's PSS problem. An example is also introduced to illustrate the use of the proposed scoring criteria and provide a clear picture of how different design methodologies can be utilized at their best in terms of application. Highlights This paper proposes eight groups of twenty nine scoring criteria that can help designers and practitioners to compare and select an appropriate methodology for a certain problem in designing product service system (PSS). This paper enables a “step by step” process to identify the most appropriate design methodology for a company's PSS problem. An example is also introduced to illustrate the use of the proposed scoring criteria and provide a clear picture of how different design methodologies can be utilized at their best in terms of application. An example is also introduced to illustrate the use of the proposed scoring criteria and provide a clear picture of how different design methodologies can be utilized at their best in terms of application.

Personalized configuration rules extraction in product service systems by using Local Cluster Neural Network

Purpose – Configuration systems are used as a means for efficient design of customer tailored product service systems (PSS). In PSS configuration, mapping customer needs with optimal configuration of PSS components have become much more challenging, because more knowledge with personalization aspects has to be considered. However, the extant techniques are hard to be applied to acquire personalized configuration rules. The purpose of this paper is to extract the configuration rule knowledge in symbolism formulation from historical data. Design/methodology/approach – Customer characteristics (CCs) are defined and introduced into the construction of configuration rules. Personalized PSS configuration rules (PCRs) are thereby proposed to collect and represent more knowledge. An approach combining Local Cluster Neural Network and Rulex algorithm is proposed to extract rule knowledge from historical data. Findings – The personalized configuration rules with CCs are able to alleviate the burden of customers in expressing functional requirements. Furthermore, in the long-term relationship with a customer in PSS realization, PSS offerings can be reconfigured according to the changing CCs with the guide of PCRs. Originality/value – The contribution of this paper lies in introducing the attribute of CCs into the antecedents of PCRs and proposing the neural networks-based approach to extracting the rule knowledge from historical data.

Alliance formation by intermediary ventures in the solar service industry: implications for product–service systems research

Product–Service System (PSS) business models let firms sell the functionality of a physical product rather than the product itself, typically while retaining ownership and control of the product. PSS business models can increase the sustainability of product industries as the life-cycle responsibility of PSS firms incentivize the creation of more durable products, facilitate effective repair and maintenance regimes, and make obsolescence plans for products important.Extant PSS research is predominantly concerned with how manufacturing firms add PSS offerings to their existing operation, a process that often is difficult. This article argues that a key source for PSS growth may be intermediary firms, purpose-built for the business model to constitute a link between manufacturers and customers. The topic has been touched upon indirectly by scholars but not dealt with by PSS literature as a phenomenon in its own right. Yet intermediary PSS actors are already reshaping technology sectors. The solar panel market in the US, today dominated by the business model, is a prominent example. Firms with intermediary PSS business models are also advancing in areas such as local heating solutions and electric vehicle sharing.So how do intermediary PSS firms emerge? Based on comprehensive case studies of intermediary firms in the solar industry and other sectors, this article presents central insights on how intermediary PSS ventures are built and what role they can play. The study focuses on the types of alliances and alliance formation processes needed by intermediary ventures while also suggesting hypotheses on the sustainability impact of the business model. In addition to theoretical contributions the article provides advice to manufacturers aiming to benefit from the growth of intermediary PSS business models.

Advancing Development of Product-service Systems Using Ideas from Functional Product Development

In existing literature concerning integrated product-service (IPS) offers within manufacturing industry there are various closely related business concepts covering the shift from offering only physical artifacts (e.g. material goods, hardware) towards provision of integrated products and services, as well as further advanced offers. It has been observed that manufacturing companies offering, for instance, Product-Service Systems (PSS) face certain challenges during the development process. Further, research regarding Functional Products (FP) has developed ideas and methods that are also applicable to the PSS development process. FP and PSS are, depending on the level of complexity, often developed and later operated by regional or global provider consortiums. This paper, based on a literature review, highlights unsolved challenges in the development of PSS offerings and further proposes how ideas and methods from FP development (FPD) may resolve some of those challenges. Thus, ideas from FPD may advance the development of PSS, as well as other IPS offerings, towards being additionally robust and innovative, though also more complex.

Defining product-service network configurations and location roles: a current and future state analysis framework for international engineering operations

Many manufacturing firms have developed a service dimension to their product portfolio. In response to this growing trend of servitisation, organisations, often involved in complex, long-lifecycle product-service system (PSS) provision, need to reconfigure their global engineering networks to support integrated PSS offerings. Drawing on parallel concepts in ‘production’ networks, the idea of ‘location role’ now becomes increasingly complex, in terms of service delivery. As new markets develop, locations in a specific region may need to grow/adapt engineering service ‘competencies’ along the value chain, from design and build to support and service, in order to serve future location-specific requirements and, potentially, those requirements of the overall network. The purpose of this paper is to advance understanding of how best to design complex multi-organisational engineering service networks, through extension of the ‘production’ network location role concept to a PSS context, capturing both traditional engineering ‘design and build’ and engineering ‘service’ requirements.

Development of product-service systems: challenges and opportunities for the manufacturing firm

Product-Service Systems (PSS) raise interesting opportunities for the manufacturing firm as the function is provided to meet customer needs rather than the physical hardware itself. PSS offerings based on the manufacturer's knowledge about the product and the technology can increase its status as problem-solver and solution-provider, reduce life cycle cost and produce high revenue. However, PSS including, e.g. hardware, services, software and electronics are efficient and competitive only if developed for the specific purpose with features such as easy to maintain, upgradeable, with built-in sensors for collecting in-use and service data, and easy to use. This changes the requirements on the manufacturing firm's development process. Looking back historically, the last century gives an interesting changing landscape of the rationale for the product-development methods used in manufacturing firms. This article, based on the previous research in the product- and service-development fields, and on empirical results from studies at several manufacturing firms, looks into how the engineering work is affected by PSS and how it can be enhanced for PSS, especially in terms of required competencies and other capabilities. It results in recommendations for a new, functional product-development process.