Product-service System Business Model Research Articles

Smart Product-Service System for Parking Furniture—Sale of Storage Space in Parking Places

Growing competition, changing customer needs, and growing environmental protection requirements mean companies are forced to change their approach to business. Traditional product sales are being replaced by systemic solutions focused on meeting specific customer requirements while reducing negative impacts on the environment. One such solution is the Product-Service System (PSS). This allows manufacturers to offer their products’ functionalities and features through related services. By extending the life of products, promoting the reuse of materials, and reducing the amount of waste, the implementation of PSS strongly supports sustainable development. The paper focuses on a new product group—garage boxes (GB). It discusses a new PSS business model that responds to the needs of people living in blocks of flats with no tenant storage lockers or rooms in the basement. The new business model sells the function (storing various possessions) and eliminates problems faced by tenants due to the lack of sufficient storage space. It provides customers with high-quality GB for as long as they need them. Customers can pick and choose equipment with additional services depending on their needs. The idea of the model is the outcome of a nationwide study carried out in Poland on a group of 500 residents of blocks of flats and consultations with manufacturers, homeowner associations, wholesale and retail traders, and the financial sector. The study provided us with information and data that provided a comprehensive picture of the problem of the absence of storage lockers or rooms for residents and the needs connected with GB. The results of the conducted research indicate that the developed business model responds to the diverse requirements of residents and supports sustainable solutions. It is an alternative to the lack of a storage unit assigned to each apartment. The business model developed in the paper is highly innovative and comprehensive. This makes it an attractive solution for residents of apartment blocks, and its implementation can significantly reduce the environmental impact.

Elderly clothing upgrading in product-service system design using extended Kansei Engineering methodology

PurposeThis study aims to integrate fall-protection function into the elderly clothing to meet both the daily life and fall-protection needs of the elderly people, thereby upgrading the performance of elderly clothing.Design/methodology/approachThis study identified the design strategies of elderly clothing using an Extended Kansei Engineering methodology. Extended Kansei Engineering methodology is a new design framework developed from the traditional Kansei Engineering methodology to meet the design requirements of the product-service system. This study focuses on the product section of product-service system design. According to the product design process of the Extended Kansei Engineering methodology, this study first collected and organized the design elements and Kansei words of elderly clothing. Then a questionnaire was designed using Semantic Differential Scale. Finally, the questionnaire survey was conducted and the collected data was analysed to understand the consumption preferences of elderly people. A total of 399 elderly people aged 65 and older provided valuable design insights for this survey.FindingsThe research findings include the product design strategies for the development of elderly clothing, as well as a product prototype canvas and a product prototype elderly clothing developed based on the design strategies.Practical implicationsThe research findings can provide competitive design strategies for the development of elderly clothing, thereby upgrading the performance of elderly clothing.Social implicationsThis elderly clothing integrates fall-protection function to reduce the risk of injury for elderly people due to falls, thereby helping society alleviate the medical and healthcare pressure caused by falls for elderly people.Originality/valueThe research findings can provide competitive design strategies for the development of elderly clothing. Furthermore, the Extended Kansei Engineering methodology introduced in this study can provide product and service designers with design methods that are more in line with the development trend of modern product-service system business models.

Product-Service System business model for plastics industry

Traditional business models increasingly less accurately accommodate changes taking place in the market. Growing competition, sharing economy, digital transformation, corporate environmental responsibility, and increasing customer requirements exert pressure on enterprises to change their business mentality. One can easily observe the need for integrated, environment-friendly solutions that generate new value added to customers. To achieve that, we need new business models that would allow to discover new potential in new markets.In the face of dynamic market changes, traditional business models are increasingly less capable of addressing the growing competition, sharing economy, digital transformation, corporate environmental responsibility, and the rising demands of customers. There is a clear need for integrated, environmentally friendly solutions that generate new added value for customers. Achieving this goal requires the development of new business models that enable the discovery of potential in new markets.Therefore, searching for and creating new business models that would stand up to requirements is vital. These problems could be solved by a PSS considered a personalized business model operating in an extended time horizon. PSS is an opportunity to sell product functions and availability, as well as a perspective for multiple uses of products.This paper presents a pioneering attempt to develop a Product-Service System (PSS) business model specifically tailored for the plastics industry. An innovative approach consists in the integration of a machinery and a tool into a production unit and adding an array of services to it. This groundbreaking research, unprecedented in its scale, involved a comprehensive questionnaire-based study conducted across 60 plastics processing plants employing prevalent production techniques. The study is unique in its extensive scope and depth, as such an analysis of PSS business models within the plastics industry has not been previously explored in the open literature. The research methodology applied is thorough, covering a wide range of practical aspects crucial for the effective implementation of PSS in the plastics sector. This paper stands out for its detailed examination of 60 enterprises in the plastics industry, focusing on their interest in 95 services essential for the optimal operation of plastics processing plants and their engagement with representatives from the plastics industry. This extensive study offers valuable insights into the usage of machines and tools in plastics processing, as well as the specific needs, requirements, and challenges faced by businesses in this sector.Results of analyses demonstrate that interest in services differs depending on the size of an enterprise, processing technique, having a toolroom or not, product range, and the duration of breakdowns. A new PSS business model for plastics processing was built based on the analysis of PSS design methods and sectors to which they are addressed, PSS used in practice, plastics processing sector, questionnaire-based studies conducted among plastics processing plants, statistical analyses, advice and consultancy sessions with experts from the investigated industry, finances and trade patterns for machines. Until to date the question of precise design of such a business model for the plastics processing sector has neither been examined nor discussed or evidenced. The paper aims to bridge this gap. The approach to the issue was innovative, based on a questionnaire survey and consultations with experts which allowed to faithfully reproduce the current condition of the investigated sector. In addition, each service added on to the production unit underwent a detailed statistical analysis. The hereto presented business model is extremely comprehensive as it can be used in plastics processing plants of different sizes.

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.

Evolutionary algorithms for a simheuristic optimization of the product-service system design

Offering Product-Service Systems (PSS) becomes an established strategy for companies to increase the provided customer value and ensure their competitiveness. Designing PSS business models, however, remains a major challenge. One reason for this is the fact that PSS business models are characterized by a long-term nature. Decisions made in the development phase must take into account possible scenarios in the operational phase. Risks must already be anticipated in this phase and mitigated with appropriate measures. Another reason for the design phase being a major challenge is the size of the solution space for a possible business model. Developers are faced with a multitude of possible business models and have the challenge of selecting the best one. In this article, a simheuristic optimization approach is developed to test and evaluate PSS business models in the design phase in order to select the best business model configuration beforehand. For optimization, a proprietary evolutionary algorithm is developed and tested. The results validate the suitability of the approach for the design phase and the quality of the algorithm for achieving good results. This could even be transferred to already established PSS.

ADAPTING A DASHBOARD-BASED APPROACH FOR FEASIBILITY ANALYSIS TO CIRCULAR PSS BUSINESS MODELS

AbstractSustainability and circular economy are currently some of the strongest trends in industry as well as in politics. They are seen as the best chance to tackle emissions, pollution and climate change while maintaining the prosperity of society. Product-Service System (PSS) business models are seen as an enabler of the circular economy. However, the development of such business models is a major challenge, especially for SMEs. Therefore, there is a need for support through a methodical approach in the development and decision-making. This paper combines and extends an existing approach for assessing the feasibility of PSS-driven business models and a decision-support matrix for recirculation strategies to provide support to practitioners in the early development phases of circular PSS business models. The existing approach for feasibility analysis was focused on PSS only. To include the perspective of circularity and sustainability a systematic literature review was conducted to identify necessary criteria. Combined with the decision-support matrix the improved method aims to be a lean method to support feasibility analysis and decision-making in circular PSS business model development.

Barriers and opportunities of digital servitization for SMEs: the effect of smart Product-Service System business models

Digital servitization enables SMEs to propose smart Product-Service Systems (PSS) integrating products and services. Limited discussion of this contemporary and challenging phenomena stimulated our in-depth literature review, which identified four key themes common to both barriers and opportunities: digital strategy, ecosystem network, internal and operational organization, and human capabilities. Industry expert focus group enabled enriching and refining these themes across smart PSS business models. Digital servitization was found to mostly benefit the SME’s digital strategy and ecosystem network and is hindered by insufficient human capabilities and underdeveloped ecosystem networks. Opportunities and barriers vary as the smart PSS business model evolves.

SUSTAINABLE FASHION FROM PRODUCT SERVICE SYSTEM PERSPECTIVE: A LITERATURE REVIEW

Fast fashion perpetuates the perception that clothing products are cheap and are easily disposed of. Consequently, the fashion industry contributes great concern for environmental impact. Product-service system (PSS) may serve as an integrated product-service solution to support sustainable fashion. While there is an increasing trend in PSS studies, the literature studies in fashion PSS remains limited. This paper aims to explore the research topics in fashion PSS studies by examining topics addressed in fashion PSS literature, how PSS may contribute to sustainability in the context of the fashion industry, as well as positive and negative value perceived consumers in adopting PSS fashion. The research is conducted through literature review retrieved from Scopus and analyzed according to the aim of this paper. The results show that topics addressed in fashion PSS are related to potential drivers and barriers to adopt PSS fashion, business model, environmental impact, and life cycle analysis. The role of PSS in the fashion context is product and use-oriented. The consumer perception on adopting PSS fashion is classified as emotional, functional, social, financial, environmental, and psychological aspects.

SUSTAINABLE FASHION FROM PRODUCT SERVICE SYSTEM PERSPECTIVE: A LITERATURE REVIEW

Fast fashion perpetuates the perception that clothing products are cheap and are easily disposed of. Consequently, the fashion industry contributes great concern for environmental impact. Product-service system (PSS) may serve as an integrated product-service solution to support sustainable fashion. While there is an increasing trend in PSS studies, the literature studies in fashion PSS remains limited. This paper aims to explore the research topics in fashion PSS studies by examining topics addressed in fashion PSS literature, how PSS may contribute to sustainability in the context of the fashion industry, as well as positive and negative value perceived consumers in adopting PSS fashion. The research is conducted through literature review retrieved from Scopus and analyzed according to the aim of this paper. The results show that topics addressed in fashion PSS are related to potential drivers and barriers to adopt PSS fashion, business model, environmental impact, and life cycle analysis. The role of PSS in the fashion context is product and use-oriented. The consumer perception on adopting PSS fashion is classified as emotional, functional, social, financial, environmental, and psychological aspects.

Exploratory study of the impact of the supply chain on integrated product-service systems design

PurposeManufacturing firms (MFs) nowadays are struggling to design and maintain an integrated product-service offer. This paper aims to explore the role of the supply chain (SC) in the design of the Product-Service System (PSS). In particular, the study focuses on the Design for Supply Chain (DfSC) approach in order to understand its role and contribution to the Design for Product Service Supportability (DfPSSu) approach in supporting PSS design.Design/methodology/approachBased on the multiple-case study approach, this paper used in-depth-interviews method to collect primary data from four multinational car manufacturers and two academic researchers.FindingsThe study reveals how a better design of the SC is required for the development of a service supportability approach that, in turn, facilitates the design of the PSS. Additionally, Internet of Things (IoT) technologies support MFs to analyse the ongoing development of the PSS business model. Finally, a better design of PSS is essential for strengthening the integration of Product and Service Offerings.Practical implicationsThis study suggests that MFs can build dynamic SC capabilities to deal with fundamental changes that occurred when adopting servitization.Originality/valueThis paper is among the first attempts to study the design process of the PSS business model in a real business context taking into account different design strategies.

Evaluation of the Applicability of the Circular Economy and the Product-Service System Model in a Bearing Supplier Company

Today, for most applications in industry, the overall goal of manufacturers and users is to completely rethink and improve reliability and sustainability. In relation to the performance of rotating equipment, examples of ongoing trends and related activities driven by major machine manufacturers include, among other things, saving resources by extending the service life and intervals of individual components on machines, increasing use of the minimum amount of lubrication and the growing focus on reusing, retrofitting and upgrading equipment. The purpose of this work is to evaluate the Circular Economy model of a bearing manufacturing company (Product as a Service: SKF Rotation for Life) using the ReSOLVE framework and five sustainability factors for PSS (Product-Service System) business models. Through the data obtained in the case study, it is possible to observe the link that exists between the models of the Circular Economy and PSS and how, through the reconditioning of bearings as one of the key strategies to achieve a Circular Economy, to reduce, reuse and recycle material, the company can provide services rather than products, focusing on optimizing asset performance and helping to improve the sustainable performance of industrial equipment.

A proposed framework for product-service system business model design

Manufacturing companies still struggle to change their business models to offer product-service systems (PSS). The business model provides an integrating concept that allows the analysis of key dimensions involved in PSS development. However, less attention has been paid to how to plan PSS business models and their implementation. To overcome these challenges, this work proposes a framework for designing a PSS business model, considering the concurrent design of sustainable operations and business models. This work adopts a set of transdisciplinary research approaches, namely: (i) literature reviews; (ii) construction of the proposed framework adopting a concept-based approach; (iii) empirical studies involving two small PSS developers; (iv) assessment of the proposal; and (v) further improvement of the framework based on feedbacks, interactions with PSS developers, and literature reviews. The framework can represent a PSS business model by enabling the joint visualization of the components of the business model and their alignment. It integrates the PSS ‘value network’ based on ‘value proposition’, and includes ‘value drivers’ or sources of value creation, namely: novelty, effectiveness, complementarities, and loyalty. As a result, this paper contributes to offer a framework that adds to the PSS business model research, enabling the development of more sustainable PSS. In particular, it extends the identification of challenges concerning the PSS business model design. Finally, PSS business models should be designed to taken into account value-in-use, co-creation, and integration of the sustainable principles to generate superior value for the ‘value network’.

Multichannel digital service delivery and service ecosystems: The role of data integration within Smart Product-Service Systems

Services for Smart Product-Service Systems (PSS) business models can be delivered through multiple digital channels like smart products, cloud systems, and workers enhanced by virtually augmented systems. Since these channels are data-intensive dependent, they usually require data sources from the company's service ecosystem. Prior studies have shown how to build network capabilities for Smart PSS, but little is known about the extensive integration of data in such service ecosystems. We aim to understand how multichannel digital services can be supported by the integration of real-time data from service ecosystems to provide Smart PSS business models. Using the organizational information-processing theory, we consider the integration of data from three ecosystem actors (other business units, suppliers, and customers) and analyze how such data sources can support the use of these digital technologies in three types of Smart PSS business models. We examine these relationships through regression analyses based on a survey of 92 manufacturers, providing a typology of different Smart PSS business models in the ecosystem. Our study enlightens how data flows through the ecosystem actors to support Smart PSS business models. Practitioners and scholars can learn how to treat Smart PSS according to the specific business models to be implemented and how to combine digital technologies with data integration channels in the service ecosystem. Moreover, we show how this combination of digital transformation and Smart PSS help expand the organizational information-processing theory in the innovation ecosystems' domain, also providing a new vein of research to the digital servitization literature.

Revenue Mode Innovations for Product-Service Systems: Overcoming the Service Paradox

Industrial manufacturers aim to increase competitiveness by innovating their business model and offer product-service systems (PSS). However, firms often fail to exploit sufficient profits from PSS business model innovation (BMI). The role of revenue models to create and capture val-ue from innovating revenue streams for PSS is often neglected in practice and theory. The innova-tion literature has a profound understanding of the PSS concept and its value proposition design. However, it lacks knowledge and insights on how revenue model innovation (RMI) impacts the success and competitiveness of a PSS business model. From a perspective of the resource-dependence theory (RDT), we assume that RMI is a source of competitive advantage by reducing uncertainty and increasing interdependencies between economic actors of a PSS. Our research ap-plied a qualitative multiple case study with semi-structured interviews of leading PSS providers. We identified three dimensions of RMI-enabled customer value creation and provider value capture, reducing customer uncertainty and increasing dependence according to the RDT. Our research im-plies from the RDT perspective that PSS providers create a joint competitive advantage from RMI by giving additional value to their customers, which supports the power balance between both par-ties by a positive increase in interdependence. Our study contributes to the theoretical understanding of the role of RMI for PSS business model success. The study results will extend the theoretical knowledge about successful servitization through PSS and address its problem of exploiting reve-nues from the service business – the service paradox.

Capability Framework Implementing Pay-Per-Outcome Business Model in Equipment Manufacturing Companies

The primary objective of this paper is to enhance our understanding of the capabilities necessary for implementing a pay-per-outcome business model and how equipment manufacturing companies can successfully implement such a business model. Based on systematic literature research, we analysed 12 research publications that discussed pay-per-outcome capabilities in the equipment manufacturing industry. We identified 36 capabilities and formulated a capability framework for pay-per-outcome business models in the equipment manufacturing industry. We also identified that pay-per-outcome business models require specific capabilities related to customer relationship and contracting, compared with other service-based business models (such as pay-per-use business models). Since earlier studies have failed to distinguish the capabilities necessary for pay-per-outcome business models from those for other types of product–service system business models or focused on some specific required capabilities for the former business models, we contribute to current business model literature by uncovering the unique characteristics of pay-per-outcome business models in the equipment manufacturing industry.

Adding sustainable value in product-service systems business models design: A conceptual review towards a framework proposal

Product-Service Systems (PSS) are offered to deliver superior value propositions to customers while achieving better results for business organizations. To achieve these benefits, PSS business models should be designed to cover improvements in sustainability's economic, environmental, and social dimensions. Nevertheless, these sustainable aspects regarding PSS business model are dispersed in the literature and generally not considered when developing a PSS. In this sense, this study is a conceptual literature review aiming to synthesize PSS and business model publications from a sustainable value perspective. The review was developed in three stages to cover a diversity of publications on PSS and business model. Based on the literature content analysis, this paper deals with PSS value architecture components: value proposition, creation, delivery, capture, and value network. A set of opportunities to enhance sustainable production and consumption were pointed out with regard to the PSS business model's value architecture components and sub-components. Creating sustainable value propositions could be improved by maximizing utilization of resources and skills, employing effective operations, and aligning the product-service system solution with the triple concern people-planet-profit. The developed framework aims at contributing to both the development of theory on PSS and servitized business models. In addition, the framework also contributes to enhance PSS business models focusing on sustainable and responsible practices.

Designing a circular contract Template: Insights from the fairphone-as-a-Service project

Recent scholarship has started to recognize the need to understand the role of contracts in processes of circular business model innovation, particularly in Product Service Systems (PSS) business models. Ownership, usage right and risk allocation are key aspects of contract design, all influencing circular business model innovation. However, current knowledge of how contracts support emerging circular business models is limited. In this paper, we address this gap by presenting an in-depth analysis of a case study drawing on data stemming from the Fairphone-as-a-Service project to define key elements for a Circular Service Contract Template. Our findings support the idea that contracts, ownership, and usage right issues strongly influence the core elements of a PSS business model, such as servitization, longevity and modularity. Particularly, evidence from the case study confirmed the presence of tensions between ownership and contractual aspects when attempting to manage the circular business practices.

Capabilities for the internet of things enabled product-service system business models

ABSTRACT The Internet of things (IoT) transforms how businesses operate, create, and deliver products and services. Despite increasing interest in IoT business models, knowledge of the capabilities needed to implement them remains vague. The objective of this paper is to investigate patterns found in 21 empirical tested cases covering several industries. This paper identifies the most common capabilities (connectivity, data management and storage, monitoring, data analytics, control, operations management, maintenance, communication, applications, and security) in an IoT-Product Service System (PSS). Industry practitioners can use this information to visualise linkages between their intended business model and capabilities when developing IoT-PSSs.

Preparing for smart product-service system (PSS) implementation: an investigation into the Daimler group

This paper aims at investigating the main factors behind advancing the integration of products and services in the Brazilian subsidiary of Mercedes-Benz (MBB), and how Smart PSS has been perceived by other business units of the Daimler Group. We conducted an in-depth qualitative single-case study research to investigate the critical steps preceding the implementation of a smart PSS. The study was based on the main tactical areas of a PSS business model which was applied to MBB’s possible integration of their equipment (called Fleetboard) in a smart PSS solution. The findings demonstrate that the internal culture of a product-centric automotive manufacturing firm can prohibit the sales of services, even when service technologies are available. On the other hand, financial pressures can create the sense of urgency required for the firm to appreciate the necessity of change. The process of change is too complex, since it requires capabilities in key areas such as the law, marketing, networking/partnerships, design, sustainability, and organisation and human resources management. Our study shows how the company considers alternative options in order to reduce organisational barriers, develop partnerships and legal competence to offer PSS contracts, as well as seeking alignment between design, marketing and sustainability requirements.

Investigating drivers of circular supply chain with product-service system in automotive firms of an emerging economy

In the rise of global emphasis on circular economy, the automotive firms in an emerging economy such as India in this context are bracing themselves for circular supply chain to recover the expended resources after formalization of End-of-life vehicle (ELV) norms, but these firms lack the knowledge about how to transform from Product-Service System (PSS) business model to circular business model. The extant literature doesn't mention clearly as to what drivers and sub-drivers are needed for adoption of circular principles in PSS business model. This paper aims to propose a multi-theoretical framework (the resource-based view, resource-dependence theory, and stakeholder theory) and identifies and evaluates drivers and sub-drivers. The paper adopts Grey-Decision-Making Trial and Evaluation Laboratory multi-criteria decision-making method to evaluate the inter-relationship between the sub-drivers. A structural model has been developed based on the outcome of the empirical analysis. The study recommends that firm should focus on the important drivers (sub-drivers) – Circular Value Marketing (Recovery/Recycling information on a Product), Circular Services (Supplier adaptability for closed resource loop), Circular Product Design (Design of Sustainability Capability), and Reverse Flow Drivers (Incentives in Secondary Market for Recoverable Products). The implications are related to design, sourcing, and marketing functions and suggest the adoption of the influencing drivers and sub-drivers to create circular value. This study contributes to the literature of the circular supply chain by discriminating the causal relationships between factors that would help managers to develop product service systems strategy(s) to create circular value in the supply chain.