Product service systems as a vehicle for sustainability : exploring service operations strategies

Facing stagnating demand, high labor costs, demanding legislation and throat cutting competition, OEM’s are increasingly looking at service opportunities to boost their profitability. These manufacturers offer integrated solutions of both products and services called product service systems (PSS). Adding more extensive services, incorporates the after sale resource use in the decision making of the OEM. Because of the prolonged responsibility of the OEM, the incentives of customer and manufacturer align. Both will thrive to lower the total cost of ownership over the life time of the equipment, resulting in a service gain. Through the alignment of incentives PSSs are a market compatible vehicle to reshape the manufacturing strategy towards more sustainability. The fundamental task for success in PSSs is to create a service gain. This task mandates effective and efficient service supply chains and we formulate operational strategies that can guide manufacturer in creating a winning service supply chain. The research reported in this paper is the result of a collaboration with a large OEM and presents five strategies for successfully managing service networks. Each of the five service operations strategies is cascaded into its key operational ingredients, giving a whole set of operational practices to turn service into a real profit generating machine.status: publishe