State-of-the-Art in Product Service-Systems

1. State-of-the-Art in Product Service-Systems Professor : Soe-Tsyr Daphne Yuan Presenter : Maido Hsieh Authors : T S Baines*, H Lightfoot, E Steve, A Neely, R Greenough, J Peppard, R Roy, E Shehab, A Braganza, A Tiwari, J Alcock, J Angus, M Bastl, A Cousens, P Irving, M Johnson, J Kingston, H Lockett, V Martinez, P Michele, D Tranfield, I Walton, and H Wilson Date : 2014/09/29

2. Outline Introduction Research Programme Generation of 9 Key Findings Concluding Remarks

3. 1. Introduction • Product Service-System (PSS) is a case of servitization. • As a market proposition that extends the traditional functionality of a product by incorporating additional services. • Focus on the ‘sale of use’ rather than ‘sale of product’. • For some, the concept a PSS also embraces sustainability. • e.g. Total-Care Package offered by Rolls-Royce plc (R-R).

4. 1. Introduction (cont.) • R-R’s Total-Care Package • Rather than selling the gas turbine engine to the airline, R-R lease out ‘power-by-the-hour’. • The technology is world leading, so is the maintenance. • They can collect data on product performance and use • To improve engine efficiency, • Improve asset utilization, • And reduce total costs and the environmental impact.

5. 1. Introduction (cont.) • PSS is a potentially valuable concept for manufacturers based in developed economies. • Many traditional producers are increasingly challenged. • However, there’s still strong desire that UK should retain a viable manufacturing capability. • They should ‘move up the value chain’ and focus on delivering knowledge intensive products and services. • PSS-based competitive strategythat uses deep product, process, and customer knowledge to reduce the total cost of a product.

6. 1. Introduction (cont.) • The concept of PSS has been openly discussed in the literature for over a decade. • Although many benefits are apparent from literature and existing cases, the uptake of such ideas by industry appears limited. • The study described in this paper has taken the form of a rigorous literature review. • Searching relevant publication databases. • Compiling a set of key findings.

7. 2. Research Programme • 2.1 Aim, Scope and Research Questions • Aim : To identify, interpret, and summarize the literature currently available on PSS. • Scope : Focus on articles that are central and relevant to PSS within a wider manufacturing context.

8. 2. Research Programme (cont.) • 2.1 Aim, Scope and Research Questions(cont.) • Research Questions : • What is a PSS and how is it commonly defined? • How does an enterprise that deliberately configures itself around PSS differ from a conventional design and make enterprise, and what are the consequences? • Where are the leading examples of PSS practice? • Where are the strengths and weaknesses in the existing literature?

9. 2. Research Programme (cont.) • 2.2 Search Strategy • Identifying data bases, covering a diverse range of publication formats. • Identifying key words, such as servitization, sustainability, remanufacturing, service design etc. • Cross-check to ensure publications were all captured. • 2.3 Results and Analysis • 80 articles were filtered to establish 40 documents by applying mind-mapping techniques • These were then presented at an industrial seminar.

10. 3.1 Definition • ‘Product(s) and service(s) combined in a system to deliver required user functionality in a way that reduces the impact on the environment’ • Goedkoopet al. (1999) further define key elements of PSS: • Product • Service • System

11. 3.1 Definition (cont.) • Most authors: Competitive proposition • Directly refer to the need for customer satisfaction and economic viability. • Many: Sustainability • Frequently discussed: Dematerialization • To break the link between value delivered to the customer/user and the amount of physical material needed to create that value.

12. 3.1 Definition (cont.) • Finding 1 • An integrated product and service offering that delivers value in use. • Decouple economic success from material consumption and reduce the environmental impact of economic activity. • The PSS logic is premised on utilizing the knowledge of the designer-manufacturer to increase value as an output and decrease material and other costs as an input to a system.

13. 3.2 Evolution • First publication was by Mark Goedkoopet al. (1999), titled ‘Product Service-Systems –Ecological and Economic Basics’. • The most prolific author has been Oksana Mont. • Peaking in 2003/4 when 11 papers were published. • The Journal of Cleaner Production has also been the most popular dissemination route for articles on PSS.

14. 3.2 Evolution (cont.) • Collectively these articles have covered a range of topics • 20 per cent describing business benefits and drivers, • 20 per cent reviewing the characteristics of PSS, • about 35 per cent focusing on case studies and examples, • other topics are related to product life cycle, service design methods, and service engineering. • In terms of origin, • Since 1999, most were Scandinavian, Netherlands, or Italy. • In recent years, most were from UK.

15. 3.2 Evolution (cont.) • Finding 2 • PSS originated in Northern Europe (principally The Netherlands and Scandinavia) in the late 1990s and, to date, most contributors have been academics from environmental and social sciences who typically published in the Journal of Cleaner Production between 2000 and 2004.

16. 3.3 Features

17. 3.3 Features (cont.) • Traditional purchase of photocopier • Purchase of a document management capability

18. 3.3 Features (cont.) • Product-oriented PSS: • Selling the product traditionally with additional services • Minimizecosts for a long-lasting product • Design product to take account for product end-of-life • Use-oriented PSS: • Selling the use or availability of a product • Maximize the use of the product • Extend the life of the product • Result-oriented PSS: • Selling a result or capability instead of a product • The producer maintains ownership of the product • The customer pays only for the provision of results

19. 3.3 Features (cont.) • Finding 3 • A PSS is a special case in servitization, which valuesasset performance or utilization rather than ownership,and achieves differentiation through the integrationof product and services that provide value inuse to the customer.

20. 3.4 Applications • Goedkoop et al. provides almost 150 examples of separate PSS during a questionnaire-based survey. • E.g. DuPont Flooring System (USA) • Mont gives 35 examples of PSS initiatives categorized from ‘take back/remanufacture’. • And more cases were provided too.

21. 3.4 Applications (cont.) • Parkersell (a UK lighting company) offer an integrated lighting system solution for Sainsbury’s . • Xerox, Canon, and Oce are seen as PSS leaders with their ‘pay per copy’ lease and take back programmes. • Most authors were attracted by the novelty, completeness, and environmental benefits • Rather than in-depth assessments of implications to competitiveness.

22. 3.4 Applications (cont.) • Finding 4 • There is a diverse range of PSS examples in the literature, apparently demonstrating economic success but tending to emphasize the environmental and social gains.

23. 3.5 Benefits • For the customers • A PSS provides value through more customization and higher quality. • Remove administrative or monitoring tasks away from customers and back to the manufacturer. • Customers receive value in a form that is close to current needs.

24. 3.5 Benefits (cont.) • For traditional manufacturers • PSS is claimed to provide strategic market opportunities and an alternative to standardization and mass production. • Deliver same or better value-in-use while using less energy or material is said to offer the potential to reduce cost (as well as environmental impact).

25. 3.5 Benefits (cont.) • For a State and the global environment • Lead to reduced resource use and reduced waste generated. • Offset the loss of jobs in traditional manufacturing. • Make the business environmentally sustainable.

26. 3.5 Benefits (cont.) • Finding 5 • There are a wide range of benefits of a PSS; to the producer it means an offering of higher value that is more easily differentiated, to the customer it is a release from the responsibilities of asset ownership, and to society at large a more sustainable approach to business.

27. 3.6 Barriers • The main barrier is the cultural shift necessary • for a consumer to place value on having a need met as opposed to owning a product. • PSS solution have been more readily accepted in Scandinavia, the Netherlands, and Switzerland.

28. 3.6 Barriers (cont.) • The producer might refuse to deploy PSS solution • Limited experience in pricing such an offering. • Fear of absorbing risks that were previously assumed by customers. • Lack of experience in structuring an organization to be competent at designing, making, and delivering a PSS. • More complex for a manufacturing organization than the existing way of delivering functionality.

29. 3.6 Barriers (cont.) • Finding 6 • The principal barriers to the adoption of PSS are positioned at both sides of the dyad: consumers may not be enthusiastic about ownerless consumption, and the manufacturers may be concerned with pricing, absorbing risks and shifts in the organization, which requires time and money to facilitate.

30. 3.7 Features in design • A PSS must be designed, made, and delivered on a case-by-case basis and viewed from the client’s perspective. • A company must move from ‘product thinking’ to ‘system thinking’. • PSS requires manufacturers and service providers to extend their involvement and responsibility from making a product available to purchase to phases of the life cycle. • Several stakeholders may need to be involved in the process. • Users should be treated as innovators.

31. 3.7 Features in design (cont.) • Finding 7 • A successful PSS needs to be designed at the systemic level from the client perspective and requires early involvement with the customer and changes in the organizational structures of the provider.

32. 3.8 Tools and methodologies for designing a PSS • Many of these methods are presented by illustrating their intended use. • The MEPSS Handbook offers a methodology and toolkit for developing a PSS model. • Mont proposes that a PSS may be created in a step-by-step fashion based on the Deming cycle. • Goedkoopet al. offer a four-axis model for auditing a PSS. • Few exceptions like • Aurichet al. develop a process for the systematic design of technical services supporting a product with a case study.

33. 3.8 Tools and methodologies (cont.) • In-depth and critical evaluation of these methods tends to be limited. • There is a strong generic flavour to these methodologies with many having a clear heritage in Concurrent Engineering and Lean Product development methodologies. • It is argued by some authors that these may need further development to facilitate business wide implementation of PSS. • However, Mont (2006) considers the development of generic methodologies as unlikely and unnecessary.

34. 3.8 Tools and methodologies (cont.) • Finding 8 • A range of tools and methodologies exist for designing PSS; however, these tend to lack a critical and in-depth evaluation of their performance in practice; they are typically a subtle development of more conventional processes; and there is a lack of evidence for the completeness of the set of tools and methods proposed.

35. 3.9 Future research challenges in the PSS literature • With regards to topic, tools need to be developed which enable the modeling of PSS. • Assessment tools are also required. • Environmental benefit • Customer can base decisions • More quantitative methods are called for. • To understand the perceived value • To evaluate the level of service

36. 3.9 Future research challenges (cont.) • Understanding the management of the transition • As an organization moves from a traditional product-sale model to a PSS model. • There has been insufficient work carried out to capture and present successful PSS applications. • To engage relevant stakeholders in the process of research, evaluation, and testing at both theoretical and practical levels. • In industry, testing of PSS. • In academe, design of methodologies.

37. 3.9 Future research challenges (cont.) • Finding 9 • The PSS literature highlights that in-depth and rigorous research is needed to develop models, methods, and theories. More widespread adoption of the PSS concept needs better understanding of PSS practices, of methods to assess value, and of organizational transitions.

38. 4. Concluding Remarks • Summary of the paper. • Most importantly, there are still challenges to be faced. • To understand how their customers will value their services. • To configure their products, technologies, operations, and supply chain to support this value offering.

39. 4. Concluding Remarks (cont.) • They raised following research questions: • How are servitized organizations and PSSs designed? • How are servitized organizations and PSSs built and delivered? • How are servitized organizations and PSSs sustained by the network? • How can the value-in-use delivered by PSSs be assessed? • How can ‘traditional’ manufacturing firms make the transition to servitized organizations? • The authors’ own research will report both these and their progress.

40. The End. • Thanks for your listening.