Synonyms

Product-Service System; PSS; Technical Product-Service System; Technical PSS

Definition

An Industrial Product-Service System (IPS2) is characterized by the integrated and mutually determined planning, development, provision, and use of products and services including immanent software. IPS2 are offered in business-to-business markets and therefore address industrial applications only. An IPS2 represents a knowledge-intensive socio-technical system (Meier et al. 2010).

An IPS2 is a novel customized solution which uses products, services, and immanent software in an integrated manner in order to deliver a particular value instead of pure functionality to customers with an industrial background. Hence, IPS2 aim at replacing product-focused business strategies. Furthermore, IPS2 demand the integrated and mutually determined planning, development, provision and use of products, services, and immanent software in order to entirely expose each component’s full potential. During an IPS2’s provision changing customer requirements and provider abilities are adopted dynamically (Meier et al. 2010).

Theory and Application

History

In research as well as in industry many termini are used to describe integrated products and services, e.g., Leistungssystem (Belz 1991; Schuh and Kampker 2011), hybrides Produkt (Spath and Demuß 2006), hybride Wertschöpfung (Thomas et al. 2010), Verbundsystem (Corsten 2001; Corsten and Gössinger 2007), customer solution (Tuli et al. 2007), dematerialization (Tomiyama 2001), integrated solution (Wise and Baumgartner 1999), or integrated Product-Service Offering (Lindahl et al. 2008). With regard to the present entry’s keyword, the following explanations only refer to PSS or rather IPS2.

By the end of 1999, Goedkoop et al. first published their definition of a Product-Service system (PS system). Their approach was followed by a multitude of definitions. As a result, currently a consistent definition of the term Product-Service System (PSS) does not exist. Depending on the respective author, e.g., business-to-business or/and business-to-customer markets are addressed, the importance of products and services are weighted differently or environmental improvements are particularly aimed at (Goedkoop et al. 1999; McAloone and Andreasen 2002; Manzini and Vezzoli 2003; Mont 2004; van Halen et al. 2005; Steinbach 2005; Tukker and Tischner 2006a; Aurich et al. 2006; Meier et al. 2010).

Initially, the research on PSS was mostly driven by aspired environmental improvements. In retrospective, the interrelation between PSS and improved environmental impact is debatable. According to Tukker and Tischner, the assumption that PSS equal sustainability is just a myth. Instead, the authors explain that in general PSS own the potential to reduce waste materials as well as the consumption of resources, but only if such a potential has been exposed during a PSS’s development (Tukker and Tischner 2006b). As per Mont, PSS effectively contributed only in very few cases to a modified product design and thereby a better end-of-life-management (Mont 2004). Goedkoop et al. state that the ecologic potential of every PSS has to be assessed individually (Goedkoop et al. 1999).

Aside from environmental benefits, the differentiation from competitors due to customized offers and the increase of profit margins are associated with PSS as well (Goedkoop et al. 1999; Mont 2004; Baines et al. 2007; Tuli et al. 2007). An analysis of such advantages revealed that offering PSS demands an appropriate amount of financial resources, high organizational and management skills, as well as a systematic development. Furthermore, it is of particular importance to know a customer’s business which means to distinguish between customers who really ask for novel, nontraditional business offers and those who are advised best to focus on a product-centered business model (Goedkoop et al. 1999; Mont 2004; Van Halen et al. 2005; Tukker and Tischner 2006a und 2006b; Tuli et al. 2007; Baines et al. 2007; Laurischkat 2012).

While most authors focus either on environmental, economic, or design-related aspects of PSS, the SFB/Transregio 29 holistically studies IPS2 since 2006. In this regard, over 30 researchers jointly investigate, e.g., IPS2 business models, IPS2 development, organizational and capacity planning of IPS2, etc.

Services Versus Products

Whereas it is common understanding that the notion “product” describes a physical artifact, in service research a standardized definition of the term service does not exist. Nonetheless, the majority of authors explain services with the aid of three dimensions or rather three constitutive characteristics which result from those dimensions. With regard to the “capability dimension” a service is explained as the ability and willingness of a provider to render the service in question. Such ability is considered intangible. Therefore, the first constitutive characteristic used to define a service is “intangibility.” With reference to the “process dimension” a service is characterized by its simultaneous consumption and production as well as by the integration of so-called external factors. Examples for such factors are customer’s personnel, goods, rights, or information. In this regard, the term “external” points up that a service’s provider is never part of its customer’s company. Hence, the second and third constitutive characteristics, referred to as “uno-actu-principle” and “integration of external factors,” result from the process dimension. The definition of the notion service which follows from the “result dimension” is the most discussed one. While some authors argue that a service results in tangible and intangible outputs, others persist that a service has an intangible output only (Hilke 1989; Knoblich and Oppermann 1996; Corsten 2001; Kleinaltenkamp 2001).

Life Cycle of an IPS2

The life cycle of an IPS2 consists of the following five phases: IPS2 planning, IPS2 development, IPS2 implementation, IPS2 operation, and IPS2 closure (see Fig. 1) (Meier et al. 2011).

Industrial Product-Service System, Fig. 1
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Life cycle of an IPS2 (Meier et al. 2011)

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During the IPS2 planning at first customer’s demands are identified. Based on that, specific customer requirements are derived from such demands. Furthermore, the form of contract is defined. With regard to the aforementioned requirements it is of great importance that those requirements do not relate to particular products or services. At this point, only functions and characteristics are specified (Meier and Uhlmann 2012).

During an early phase of the IPS2 development one or several concepts are developed based on the requirements which result from the IPS2 planning. Each concept represents an IPS2 on an abstract level. During an advanced development stage products and services, which were jointly described with the aid of a certain concept, are now further detailed separately. As a result, the IPS2 which has been offered to a particular customer is described in detail (Meier and Uhlmann 2012).

During the IPS2 implementation several tasks are conducted which are necessary to put an IPS2 into action in the future. This includes the production of products, logistical processes which are connected with the delivery of products, the build-up of resources necessary to render one or several services, and after all the initial operation of the IPS2 (Meier and Uhlmann 2012).

During the IPS2 operation products, services and immanent software are jointly provided to a customer. Furthermore, changing customer requirements and provider abilities are adopted dynamically (Meier and Uhlmann 2012).

The IPS2 closure contains the ending of the contractual relationship between a provider and its customer (Meier and Uhlmann 2012).

To offer a certain combination of products and services advantageous to all partners, dynamic business models are necessary considering the special properties of IPS2 across the life cycle. An IPS2 business model covers a value proposition, the value architecture, and a revenue model. The value proposition describes the benefits and therefore the value a customer or a value partner gains from the business model. The aim of the value architecture is to create the promised customer benefit in an efficient way. The revenue model contains a description of a provider’s sources and ways of revenue generation (Stähler 2002).

Value Propositions in the Context of IPS2

In the context of PSS especially Tukker and Tischner clarified the shifting of ownership between a provider and its customer by introducing product-oriented services, use-oriented services, and result-oriented services. According to Tukker and Tischner a product-service generally represents a value proposition consisting of a mix of products and services used to jointly fulfill final customer needs. Whereas in the context of product-oriented services the business model is still geared toward the sales of products with some additional services, in the context of use-oriented services the product stays in the ownership of the provider. In this regard, the product itself is made available to one or even several customers in a different, nontraditional form. In case of result-oriented services the provider and its customer agree on a certain result without specifying a particular product (Tukker and Tischner 2006a).

Since services and products are considered equal in the context of IPS2, product-oriented services are explicitly excluded from an IPS2’s definition. Use- and result-oriented services, however, represent value propositions which entirely apply to IPS2 and are most commonly used in industrial applications.

Cross-References

Product Life Cycle Management

Sustainability