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Product service modes of working - operations management implications
Edited by Professor Adrian Wilkinson
Introduction
The dividing line between traditional manufacturers and classic service companies is becoming less clear ([92] Vandermerwe and Rada, 1988, p. 321).
Services now account for a greater share of profits than manufacturing operations in many "manufacturing" firms. The list includes Hewlett-Packard ([11] Brown, 2000), General Electric ([57] Mathieu, 2001), International Business Machines, Siemens ([24] Davis and Heineke, 2005), Shell, British Petroleum and Rolls-Royce ([66] Neely, 2007).
For manufacturers, services were traditionally "considered as a harmful necessity" ([57] Mathieu, 2001, p. 456). Services were regarded as a cost to be reduced, but have gradually gained in importance and are now considered a source of added value for manufacturing firms. The emphasis has shifted to the extent that some "now view the manufactured products as incidental" ([97] Ward and Graves, 2007, p. 465). This means that what is sold is not the manufactured product, but the benefit or "value" which customers derive from the product, and associated services. This can be achieved by offering integrated packages of products and services, which have been referred to as product-service systems (PSS). The effect of this transition is demonstrated in Figure 1 [Figure omitted. See Article Image.], which shows the change in ownership under the PSS model, on the right. Responsibility for maintenance and disposal of a product, under the new model falls upon the service provider, rather than the customer, who pays according to the value extracted. Whether the purchased output is the power produced by an engine, or the experience offered in a restaurant, the provider is responsible for running costs and must ensure that access to value for the customer is not interrupted.
The term "PSS" has been in use only since the turn of the century ([36] Goedkoop et al. , 1999), but similar concepts have been reported under different names in other literatures. Since at least the 1980s, a transition has been recognised from an emphasis on the manufacture of products to the provision of service. This was referred to, initially in the marketing literature, as "servitisation" ([92] Vandermerwe and Rada, 1988). The transition is described by researchers in different disciplines, often describing apparently identical phenomena using different terminology....