Design for Industrial Product-Services Combinations-A Literature Review

Article excerpt

Executive Summary

In today's business arena technological advantage no longer automatically guarantees a competitive advantage. The trend towards an increasing emphasis on services in the capital goods sector remains unbroken. This trend is turning equipment suppliers into solution providers by offering combinations of industrial products with services. While the basic principles of this transition have been discussed intensively in both theory and practice, engineering guidelines and design notes are lacking in their recognition of the newly arising technical equipment requirements in providing these combinations. The paper presents the current state-of-the-art in the "Design for Services" area by giving a comprehensive literature review. Against the background of the transition outlined above, the need for enhancing "Design for Services" towards "Design for Product-Services Combinations" is illustrated.

Introduction

During the last decade, a shift in many manufacturing industries has occurred; equipment suppliers are turning into solution providers to stay competitive. Especially when competing with low-cost competitors (Baines et al., 2007), they are changing from merely selling customers their capital goods products in favor of offering them a combination of products and services. This combination of products with services is commonly termed a product-services system. In theory and practice, the basic principles of this transition to providing services along with industrial products (e.g. Wise & Baumgartner, 1999; Mont, 2004) have been discussed intensively. This transition has necessitated corresponding organizational changes (e.g. Oliva & Kallenberg, 2003) as well as rethinking pricing and controlling issues (e.g. Reichwald & Wegner, 2008).

The newly arising technological requirements to accommodate the services aspects of the industrial equipment have been largely disregarded. "Companies often lack knowledge and experience in actually developing solutions that are economically feasible" (Tan & McAloone, 2006, p. 1). One reason might be that up to now no comprehensive set of design rules for the products used in productservices combinations has been developed. Although a large variety of design guidelines exist, with only a few exceptions (Sundin & Bras, 2005; Doultsinou, Roy, Baxter, Gao & Mann, 2009; Sundin, Lindahl & Ijomah, 2009), these have not been related to the combination of industrial products with services. The developments of new services and of new products are not independent but, in product-services combinations, these must be considered together as inter-dependent (Kindström & Kowalkowski, 2009).

Adapting products to the emerging requirements for services is necessary to tap the full potential of industrial services. In industrial senices, some risks are shifted from customer to the producer or supplier (Aurich, Fuchs & Wagenknecht, 2006) of the industrial good. Property rights of the physical assets used are retained by the producer in use-oriented and result-oriented product-services combinations. An industrial services provider will seek to reduce the costs of the services performed as they represent extra costs that producers not providing such services do not have (Toffel, 2008). Design adaptations and innovations are means of cutting the costs of the combined product and services. Yet, neither design for sale-principles nor mere design-to-cost are sufficient any longer to ensure the competitiveness of the industrial companies that also offer services as part of their product.

The need for an integrated development of products and services in the first stages of the development of industrial services offerings has been recognized by several authors (e.g. WeIp, Meier, Sadek & Sadek, 2008; Tan & McAloone, 2006; Doultsinou et al., 2009). Modeling approaches to integrate services and products were used. Baines and his colleagues (2007) in their literature review of product-services system research found a range of tools and methodologies for the development of these concepts exist. …