Product service systems

As defined the goods-to-services continuum highlights the transition from one extreme to another. Moving from products to services is called servitization and moving from pure services towards products can be called as a productizing. When the products and services from a bundle and act as a single offering it is referred as a product ser-vice system (PSS). (Clayton et al. 2012, p. 273-274). The evolution from products or services to a full product service systems can be defined as a crossing of two sepa-rated paths. One path is servitization, moving from products to services and another being productization, moving from services to products. At the meeting point of these two paths the products and services merge into a single offering which can be de-scribed as a product service system. This evolution is highlighted in the figure 8 below.

(Baines et al. 2007, p. 1546).

Figure 8. Evolution paths from products or services to a PSS adapted from (Baines et al. 2007).

To be more specific product service systems can be divided into five different groups that each have their own way of combining services and products. The five groups are:

1. Integration-oriented product service systems are moving the ownership to the customer but utilizing vertical integration of the services to gain more profitable business

2. Product-oriented product service systems are transferring the ownership of products to the customers, but utilize the services such as deployment, user training or other to create more value for the customer.

3. Service-oriented product service systems are as well transferring the ownership of the product to the customer but provide services as integrated part of the value adding offering.

4. Use-oriented product service systems are usually keeping the ownership of the product at the supplier but provide the end goods to the customer as a value adding service which is then paid according to different agreements.

5. Result-oriented product service systems are offering the end results as a ser-vice not the products that makes it possible. The ownership of the products is kept by the manufacturer and the end products are paid according to subscrip-tion agreement. (Clayton et al. 2012, p. 273-274).

Another way to divide different PSS from each other was described in the paper by Baines et al. (2007). They divided PSS into three different groups: 1. Product-oriented PSS which is described as selling products in traditional manner and providing needed services to support the functionality of the products. 2. Use-oriented PSS is defined as selling the use of the equipment without moving the ownership of it to the customer.

Leasing is one form of this system. 3. Result-oriented PSS is defined as selling the end results to the customer instead of selling the equipment. Good example of such could be providing 3D printed parts instead of selling a 3D printer and materials.

(Baines et al. 2007, p. 1547). These groups are quite like the ones with same names introduced in their paper by Clayton et al. (2012). Major difference is that Baines et al.

(2007). defined more of the functionality of the different PSS groups and Clayton et al.

(2012). focused more on the aspect of ownership of the equipment. Boehm & Thomas (2013). highlighted in their literature review that the three groups of PSS used by Baines et al. (2007). in their paper are commonly utilized as for example in the paper by Tukker, (2004). (Boehm & Thomas, 2013, p. 254).

Regardless to which of these groups the PSS belongs the core principle is that the op-erations are guided by service-led strategy and an aim to differentiate from the compet-itors. PSS can be seen as a special case of a servitization since, it aims to extend products properties by utilizing services. (Baines et al. 2007, p. 1543-1544).

For the manufacturers located in more developed countries PSS might offer oppor-tunity to gain the competitive advance against competitors from locations with cheaper labour and manufacturing costs. By combining the product with advanced services that extend the value added by the product, the cost-value ratio becomes more appealing than purchasing a cheap competing product. This operation also moves the manufac-turer higher up in the value chain by providing important knowledge to their customers.

More practical presentation of the successful PSS has been based on things like:

Xerox offers a guaranteed fixed fee per copy with their combination of products and services. Electrolux offers washing machines for professional use with initial investment fee and additional fee for remote monitoring that guarantees high uptimes through maintenance and rapid fixing of machines. Castrol offers service packages for lubricant that will reduce the consumption of the lubricant. This will reduce the cost over time from their customers and offer competitive advance over competitors. (Baines et al.

2007, p. 1548). As these examples highlight, PSS can vary from each other quite dra-matically, but the common feature is that they offer better value over time compared to the competitors and therefore compete with value instead of more traditional field of competition such as the price.

The main challenges of creating PSS are linked with implementation of PSS. The tran-sition from owning an equipment to purchasing services according to needs is some-thing that requires cultural and organizational changes to both, customer, and manu-facturers organizations. Therefore, creating PSS needs to be done always according to the operation environment in a case-by-case fashion. On top of that the mentality of the providing company needs to shift from product or service thinking to system and solu-tion thinking. This way the mentality is supporting the development and deployment of the PSS. When the PSS is being implemented the relationship between the customer and the provider will most likely deepen since, the shift from delivering just a product or a service to a comprehensive solutions and systems requires deeper knowledge from the operations of the customer for successful implementation. (Baines et al. 2007, p.

1549).

To be able to develop these PSS, the companies need sufficient tools and methodolo-gies. Common methodologies are introduced by different actors, but they are mainly fo-cused on the idea development and other direct development phases to the PSS.

Maussang et al. (2009). states that having an idea for PSS helps for understanding the purpose of the PSS, but it does not provide sufficient information for designers to cre-ate needed products or services. Therefore, the PSS architecture is a guideline that needs the product specification for successful development of needed products. Only with these technical specifications the designers know how to create a physical object that can be then utilized in the implementation of the PSS. (Maussang et al. 2009, p.

355). For the development of PSS there are different tools and methodologies availa-ble, but majority of them are project specific and the methodology highlights the in-tended use environment for it. Therefore, it is critical to use the right tools and method-ology for the PSS development in each use case and operating environment. (Baines et al. 2007, p. 1549).