Product service system
Encyclopedia
A product-service system (PSS), also known as a function-oriented business model, is a business model
, developed in academia, that is aimed at providing sustainability
of both consumption and production.
.
The initial move to PSS was largely motivated by the need on the part of traditionally oriented manufacturing firms to cope with changing market forces and the recognition that services in combination with products could provide higher profits than products alone. Faced with shrinking markets and increased commoditization of their products, these firms saw service provision as a new path towards profits and growth.
While not all product service systems result in the reduction of material consumption, they are more widely being recognized as an important part of a firm's environmental strategy. In fact, some researchers have redefined PSS as necessarily including improved environmental improvement. For example,(Mont)defines PSS as a "a system of products, services, supporting networks, and infrastructure that is designed to be competitive, satisfy customers' needs, and have a lower environmental impact than traditional business models" Mont elaborates her definition as follows: A PSS is pre-designed system of products, service, supporting infrastructures, and necessary networks that is a so-called dematerialized solution to consumer preferences and needs. It has also been defined as a "self-learning" system, one of whose goals is continual improvement.
This view of PSS is similar to other concepts commonly seen in the environmental management literature, such as "dematerialization" and "servicizing."
Product Oriented PSS: This is a PSS where ownership of the tangible product is transferred to the consumer, but additional services, such as maintenance contracts, are provided.
Use Oriented PSS: This is a PSS where ownership of the tangible product is retained by the service provider, who sells the functions of the product, via modified distribution and payment systems, such as sharing, pooling, and leasing.
Result Oriented PSS: This is a PSS where products are replaced by services, such as, for example, voicemail
replacing answering machine
s.
van Halen et al. state that the knowledge of PSS enables both governments to formulate policy with respect to sustainable production and consumption patterns, and companies to discover directions for business growth, innovation, diversification, and renewal.
and School of Management. Its work on PSS is funded through the Innovative Manufacturing Research Centre (IMRC
).
Business model
A business model describes the rationale of how an organization creates, delivers, and captures value...
, developed in academia, that is aimed at providing sustainability
Sustainability
Sustainability is the capacity to endure. For humans, sustainability is the long-term maintenance of well being, which has environmental, economic, and social dimensions, and encompasses the concept of union, an interdependent relationship and mutual responsible position with all living and non...
of both consumption and production.
What is PSS?
Product Service Systems, put simply, are when a firm offers a mix of both products and services, in comparison to the traditional focus on products. As defined by (van Halen, te Riele, Goedkoop) "a marketable set of products and services capable of jointly fulfilling a user's needs". PSSes can be realized by smart productsSmart products
Recent innovations in mobile and sensor technologies allow for creating a digitalrepresentation of almost any physical entity and its parameters over time at any place. RFID...
.
The initial move to PSS was largely motivated by the need on the part of traditionally oriented manufacturing firms to cope with changing market forces and the recognition that services in combination with products could provide higher profits than products alone. Faced with shrinking markets and increased commoditization of their products, these firms saw service provision as a new path towards profits and growth.
While not all product service systems result in the reduction of material consumption, they are more widely being recognized as an important part of a firm's environmental strategy. In fact, some researchers have redefined PSS as necessarily including improved environmental improvement. For example,(Mont)defines PSS as a "a system of products, services, supporting networks, and infrastructure that is designed to be competitive, satisfy customers' needs, and have a lower environmental impact than traditional business models" Mont elaborates her definition as follows: A PSS is pre-designed system of products, service, supporting infrastructures, and necessary networks that is a so-called dematerialized solution to consumer preferences and needs. It has also been defined as a "self-learning" system, one of whose goals is continual improvement.
This view of PSS is similar to other concepts commonly seen in the environmental management literature, such as "dematerialization" and "servicizing."
Types of PSS
There are various issues in the nomenclature of the discussion of PSS, not least that services are products, and need material products in order to support delivery, however, it has been a major focus of research for several years. The research has focussed on a PSS as system comprising tangibles (the products) and intangibles (the services) in combination for fulfilling specific customer needs. The research has shown that manufacturing firms are more amenable to producing "results", rather than solely products as specific artefacts, and that consumers are more amenable to consuming such results. This research has identified three classes of PSS:Product Oriented PSS: This is a PSS where ownership of the tangible product is transferred to the consumer, but additional services, such as maintenance contracts, are provided.
Use Oriented PSS: This is a PSS where ownership of the tangible product is retained by the service provider, who sells the functions of the product, via modified distribution and payment systems, such as sharing, pooling, and leasing.
Result Oriented PSS: This is a PSS where products are replaced by services, such as, for example, voicemail
Voicemail
Voicemail is a computer based system that allows users and subscribers to exchange personal voice messages; to select and deliver voice information; and to process transactions relating to individuals, organizations, products and services, using an ordinary telephone...
replacing answering machine
Answering machine
The answering machine or message machine, also known as the telephone answering machine in the UK and some Commonwealth countries) and previously known as an ansaphone, ansafone, or telephone answering device is a device for answering telephones and recording callers' messages.Unlike voicemail,...
s.
Impact of PSSes
Several authors assert that product service systems will improve eco-efficiency by what is termed "factor 4", i.e. an improvement by a factor of 4 times or more, by enabling new and radical ways of transforming what they call the "product-service mix" that satisfy consumer demands while also improving the effects upon the environment.van Halen et al. state that the knowledge of PSS enables both governments to formulate policy with respect to sustainable production and consumption patterns, and companies to discover directions for business growth, innovation, diversification, and renewal.
Research
A number of universities are actively engaged in product service system research including Cranfield University School of Applied SciencesSchool of Applied Sciences
The School of Applied Sciences at Cranfield University, formerly the School of Industrial and Manufacturing Science, operates across materials, manufacturing, natural resources and sustainable systems. The School’s focus is on research and its application to meet the needs of industry and society...
and School of Management. Its work on PSS is funded through the Innovative Manufacturing Research Centre (IMRC
IMRC
-Cranfield IMRC:Cranfield's Innovative Manufacturing Research Centre is a EPSRC funded centre undertaking research that addresses many of the issues identified in the Government’s recent High Value Manufacturing strategy.-Research Themes:...
).
Books and papers
— a set of reports commissioned by the Dutch Ministry of Economic Affairs and the Ministry of Housing, Spatial Planning and the Environment- Robin Roy