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Christos Nikolau, U. of Crete, Greece Rory O’Connor, Dublin City U., Ireland Patricia Ordonez de Pablos, U. of Oviedo, Spain Nadia Papamichail, U. of Manchester, UK Joan-Andoni Pastor, Open U. of Catalonia, Spain Harry Perros, North Carolina State U., USA
François Pinet, CEMAGREF - Clermont Ferrand, France David J. Pym, HP Labs - Bristol and U. of Bath, UK Robin Qiu, Pennsylvania State U., USA
Giovanni Righini, Universita degli Studi di Milano, Italy Paul Rohmeyer, Stevens Institute of Technology, USA Vesa Salminen, Lappeenranta U. of Technology, Finland Monique Snoeck, Katholieke Universiteit Leuven,
Belgium
Jim Spohrer, IBM Almaden Research Center, USA Arthur Tatnall, Victoria U., Australia
Lorna Uden, Staffordshire U., UK
Yannis Viniotis, North Carolina State U., USA Zhongjie Wang, Harbin Institute of Technology, China Ding Wei, IBM China Research Lab, China
Li Weiping, Peiking U., China
Robert Winter, U. of St. Gallen, Switzerland Jie Zhou, Tsinghua U., China
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Research Articles
1 Creation of the Training-Chart: A Step Forward to Make the Training More Effective Neetima Agarwal, Jaypee Business School, Noida, India
Vandana Ahuja, Marketing Department, Jaypee Business School, Noida, India
20 Infrastructure Innovation to Attain Service Value Sustainability: Viewpoint of Resource Management H. M. Belal, Japan Advanced Institute of Science and Technology, Nomi, Japan
Kunio Shirahada, Japan Advanced Institute of Science and Technology, Nomi, Japan Michitaka Kosaka, Japan Advanced Institute of Science and Technology, Nomi, Japan
37 Cultural Barriers to the Transition from Product to Product Service in the Medical Device Industry Linda Ryan, Designing Service for Dementia (DSA) Project, Sligo, Ireland
David Tormey, Department of Mechanical and Electronic Engineering, Institute of Technology, Sligo, Ireland Perry Share, Department of Social Sciences, Institute of Technology, Sligo, Ireland
53 The Virtual Computing Lab (VCL): An Open Source Cloud Computing Solution Designed Specifically for Education and Research
Andy Rindos, Center for Advanced Studies, IBM Corporation, Research Triangle Park, NC, USA, Mladen Vouk, Department of Computer Science, North Carolina State University, Raleigh, NC, USA
Yaser Jararweh, Department of Computer Science, Jordan University of Science and Technology, Irbid, Jordan 66 Integrating Product-Service Systems with New Business Models Definition for Manufacturing Industries
Pedro C. Marques, Faculty of Engineering, Universidade Lusófona, Lisbon, Portugal Pedro F. Cunha, School of Technology, Instituto Politécnico de Setúbal, Estefanilha, Portugal
Table of Contents
April-June 2014, Vol. 5, No. 2
International Journal
of Service Science,
Management, Engineering,
and Technology
ABSTRACT
Nowadays, manufacturing companies are pressured to be competitive and innovative. Particularly this concerns the delivery of value to their customers. The assessment of the overall value chain, designed and implemented for a specific product and/or service, should be sustained by new business models (NBM), thus contributing to higher levels of customer satisfaction. Integrated product-services are assuming importance, allowing manu-facturing companies to achieve longer and stable relationships with their customers. This requires, among other, organizational changes and novel methodologies for product-service development. In fact, an effective integration allows product-service innovation, which being exploited, contributes significantly to businesses’ competitiveness and sustainability. In this paper, a “roadmap” for NBM definition and implementation is presented, along with a new methodology for Product-Service Systems (PSS) development. Two case studies are used to test both the roadmap and the PSS methodology. As such, this work is expected to contribute to a clear understanding of NBM and their integration in a methodology for PSS.
Integrating Product-Service
Systems with New Business
Models Definition for
Manufacturing Industries
Pedro C. Marques, Faculty of Engineering, Universidade Lusófona, Lisbon, Portugal Pedro F. Cunha, School of Technology, Instituto Politécnico de Setúbal, Estefanilha, Portugal
Keywords: Life-Cycle Management, Manufacturing Industries, New Business Models (NBM), Product-Service Systems (PSS), Product-Service Design and Development
1. INTRODUCTION
We are facing globalization. Hence, the sustain-able competitiveness of manufacturing compa-nies is important in supporting economic growth and the creation of new employment. This can be made, for instance, through the delivery of added value product-services. Therefore,
manu-facturing companies are challenged to compete in terms of added value, achieving supremacy in the markets, since purely cost-based competition is not compatible with the goal of maintaining social and sustainability values (Brady et al., 2005; Cooka, 2006). The added value is related to the company’s ability in delivering customer-focused solutions, adding, for example, services into their core products. This trend, servicing of manufacturing, is getting more importance in our global economy (Bates et al., 2003;
berg, 2007; Vasantha et al., 2011). To support this trend, companies call for new methodolo-gies, to drive them into a paradigm shift, i.e., from considering independently products and services, to start considering them integrated (Baines et al., 2012). The clear understanding of ‘Product-Service Systems’ (PSS) allows companies to shift their businesses, initially focused in the design and delivery of products, to start delivering systems of product-service (Manzini & Vezzoli, 2002). indeed, companies are becoming more responsible in maintaining product’s life-cycle (Meyer et al., 2013) and consequently, a whole life-cycle’s business model (BM) is required and imperative (Aurich
et al., 2006). With PSS, customers have more
customized offers, with a higher quality and new functionalities (Maussang & Zwolinski, 2009).
Also, companies are having new market opportunities, gaining new competitive advan-tages, and improving the total value delivered to the customer. The definition and implementation of new business models (NBM) enables the growth of new businesses and allows existing industries to sustain their global competitive-ness (Lockett et al., 2011; Chesbrough, 2010). BMs need to be evaluated and managed by manufacturing companies, thus adapting their characteristics to take advantage of market conditions. Thus, the evaluation and re-design of BMs allows manufacturing companies to maintain their sustainability, promoting a more long term relationship with their customers, and innovating and supplying additional added value, related with their products. Through a constant monitoring and evaluation of BM, in-dustries can be in the forefront of their business market (Osterwalder & Pigneur, 2010; Molloy et
al., 2009; Abdelkafi & Hilbig, 2013). The ability
to design products and/or services and competi-tively delivery them into markets require the definition, implementation and management of NBM. BMs are often framed, in response to particular competitive circumstances. They outline how a company generates revenues, with reference to the structure of its value chain and its interaction with suppliers, customers, and other partners with complementary
competen-cies. Over the recent years, visible changes in BMs have included a transition from products to services, the reduction of vertical integra-tion in large businesses, and an increase in the importance of networks of smaller businesses, working in open collaboration, to form a value system (Chesbrough & Schwartz, 2007; Ostaey-en et al., 2013). Furthermore, the developmOstaey-ent of innovative strategies, to add or to integrate services, in their core products, is a response to the market globalization and its volatility, and obliges manufactures of producing goods to adapt their BM, and to an increase of the service content in their offers. This strategy of involving the delivery of services integrated in products is supported by existing core competencies on design, production and distribution of high quality and complex products (Clayton et al., 2012). Thus, the definition and implementation of NBM that sustain the offer of a new product-service, is very close interlinked with product and service development activities. Hence, the research question one might want to explore in the current paper is:
Considering manufacturing companies, what kind of integration between PSS and NBM is possible to occur?
This paper has been structured in order to answer the previous research question. First, we present the related work to both BM and PSS. Then, in methods’ section, we introduce a roadmap to support the definition, implementa-tion and management of NBM (Leitão et al., 2013). The roadmap suggests different meth-ods and tools to drive top managers in NBM definition and management. Also, an original methodology for product-service develop-ment is proposed (Marques et al., 2013). The work is then supported by two case studies: i) testing the implementation of the roadmap for NBM; and ii) testing the importance of using a PSS methodology designed for manufacturing companies. After, a discussion of the previous cases is offered. Finally, conclusions and future work are presented. With the research developed so far, we expect to guide manufacturing
com-panies in the development of NBM integrated within PSS, thus allowing in the formalization of procedures and in the reduction of the time for product-service design and development.
2. RELATED WORK
The present section starts with the relevance of BM in manufacturing industries. Then, the need for an integrated PSS methodology is discussed. 2.1. The Relevance of
Business Models (BM)
The concept of BM is being increasingly used across all the fields of research. In fact, there are several descriptions to define the BM concept. However, there is no consensus about it. We list some definitions: i) “refers to the logic of the firm, the way it operates and how it creates value for its stakeholders”; ii) “defining the manner in which the enterprise delivers value to customers, entices customers to pay for value, and convert those payments for profits”; iii) “articulates the value proposition, identifies a market segment, defines the structure of the value chain, details how the firm will be paid, describes the position of the firm within the value network and formulates de competitive strategy”; iv) “is the method by a company to generate value. Including the combination of products, services, image, and distribution”; and v) “outlines how a company generates revenues with reference to the structure of its value chain and its interaction with the industry value chain” (e.g. Teece, 2010; Masanell & Ricart, 2010; Chesbrough, 2010). In general, a BM describes some key components that meet the four principal areas of a business: customers, offers, infrastructures, and financial feasibility. It also pretends to answer to a set of questions (Wheelen & Hunger, 2008): Which product/
service is being offered? Who will pay for it? How will it generate profits? How will it be provided? And how will it keep the competitive advantage? Thus, the objective of a BM is to
create value for the customer. The financial issue is normally left out, since it is assumed
that the model is financed by internal corporate resources (Chesbrough & Rosenbloom, 2002). The best approach to clarify the process is to
map a BM, which allows companies to
experi-ment different alternatives. For example, Oster-walder and Pigneur (2010) have done it through dividing a BM into nine main components: (1) customer segmentation, (2) value proposition, (3) customer relationships, (4) channels, (5) key resources, (6) key partners, (7) key activities, (8) cost structure, and (9) revenue streams. Each of the components is now further described (Osterwalder & Pigneur, 2010):
1. Customer segmentation: A deeper study should be performed with the aim to under-stand all the possible customers and their needs. The segmentation process should be completed in 4 phases: i) choice of the criteria to be used, such as age, location and earnings; ii) study of each segment’s feature; iii) choice of the most relevant segments; and iv) in defining the approach with each chosen segment. The entire BM will be designed according to the cus-tomer’s segment it pretends to serve. The customer is the core of the BM, directly related with value proposition. However, in the industrial market, is rather difficult to identify the best variables;
2. The value proposition concerns the product/ service to be delivered to the customer. It is the main reason why customers choose a certain product/service, or not. Some elements can contribute to add value to the product/service itself, such as the case of innovation, performance, design, price, usability and brand;
3. The type of relationship that a company has with its customers is critical. Relationships can range from personal to automate, and they can be managed by specific customer management tools;
4. A channel describes how a company com-municates with its customers. A channel has multiple goals, such as publicizing products/services, helping customers on making a decision, and delivering value
and providing post-purchase support. A company can reach its customers through its own channels or through partners. In the manufacturing industry, the support post-purchase activity is very important, since, very often, it involves the need for maintenance;
5. Key resources refer to the most impor-tant assets to make a BM working. The key-resources can be physical, financial, intellectual (patents, copyrights, brands) or human. They can be from the company itself, leased or from partners;
6. Key partners contribute to the optimization of a BM. Four types of partnerships are nor-mally identified: between non-competitors, between competitors, buyer-supplier, and joint ventures;
7. In order to have full operation of a BM, some key activities are performed. Activi-ties can be categorized into two types: pro-duction (namely design and deliverable), and problem solving;
8. Cost structure concerns important costs related to the execution of a BM. The main goal is to minimize costs; and
9. Revenue streams: described by the way a company generates cash-flows from each customer segment. Revenue streams are generated from asset sales, usage fees, subscription fees, leasing, licensing, bro-kerage fees, and advertising.
Mapping a BM can be a useful tool for suc-cess, however it is meager – it is fundamental to take action after mapping. An innovative BM must be able to satisfy, at least one of the following points: a market need; bringing new technology, new products or new services to the market; and changing a market or creating a new one. During the conception of a BM is also crucial to consider some external factors, i.e., political and legal environments, socio-economic trends, and technological develop-ments. A constant monitoring of a BM must be prepared, seeking to ensure the quality of the products/services, as well as its necessary adjustments. A successful BM is innovative
and hard to imitate. Superior products and services, excellent resources, and leadership skills are not enough to produce sustainable profits, if a BM is not properly adapted to the competitive environment. It is essential to un-derstand how to capture value from innovation (Catulli, 2011; Sawhney et al., 2004). However, to define and implement a BM in a properly manner, it is easier if guidelines exist. Thus, a roadmap is suggested in defining BMs, for manufacturing companies. A roadmap can be useful in deploying a manufacturing company’s strategy into operations, and in defining and developing effective relationships with business stakeholders. Furthermore, we can consider PSS as function-oriented BM (Cooka et al., 2006; Morelli, 2006). That is, when a company offers a mix of products and services, in comparison to traditional focused products (Oksana & Lind-hqvist, 2003). The move into PSS is motivated by the need of traditional manufacturing com-panies in recognizing that a shift to services, in combination with products, can provide higher profits, than products on their own (Clayton et al., 2012; Sawhney et al., 2004). In fact, several authors (e.g. Cook, 2004; Manzini & Vezzoli, 2002) assert that PSS improve eco-efficiency, thus satisfying consumer demands and improv-ing the effects upon the environment. Despite the fact not all PSS result in the reduction of material consumption, they are widely recog-nized as an important part of manufacturing companies’ environmental policy (Mont & Lindhqvist, 2003).
2.2. The Need for an Integrated Methodology for Product-Service Development
The bases of competition are radically chang-ing and in many circumstances products dif-ferentiation competition is giving away place to differentiation through an offer of integrated product and services. This trend is related to a new paradigm that is a new base of com-petitiveness with respect to practices so far dominants in the market and referred as new product-service paradigm (Biege et al., 2009).
It has been presented by a wide range of authors and, in common, there is some consensus on the importance of combining products and ser-vices, as a whole system that offers added value throughout their product-service life-cycle. The adoption of product-service paradigm involves understanding the need for the integration of activities of product and service development, their implementation and monitoring, both in terms of internal and external links upstream and downstream of the value chain. In many cases, there must be a profound cultural change in organizations, only possible through the design of training programs adjusted to the reality of each company and applied in a systematic and persistent way. It requires a focus on routines and practices of effective cooperation with external actors with divergent views, but reconcilable. This ability to integrate and reconcile interests is a new challenge to integrate the product and service development and of course the design of the BM that supports it.
By expanding the scope of the offering, including services on the product, companies can capture profits throughout the offering life-cycle and at the same time improving customer satisfaction (Davies, 2004). Moreover, this integration promotes closer ties with customers, thus allowing continuous streams of revenues that tend to have higher margins and require fewer resources, than isolated supplied prod-ucts. This new strategy implies the existence of core competencies in production and systems integration, i.e., this product-service paradigm is not just for providing services but also by how services are combined with products to provide integrated solutions with high value, taking into account the needs of each customer.
Product development refers to a set of ac-tivities starting with the perception of a customer needs and finishing in the production, sell and delivery of a product in the market (Ulrich & Eppinger, 2005). Nevertheless, in PSS, not only the product and its design deserve special at-tention during the process of development. The service is also an important integrated part to be taken into account. Unlike traditionally happens the service component has a great significance
on the product design. Thus, the components of the product and the service must be integrally designed. Several product and service develop-ment methodologies have been proposed, but none have already stated.
Based on the work of Vasantha et al. (2011) and Meier et al. (2010), it was possible to obtain a holistic vision about this thematic and some existent methodologies were deepened. The objective is not to describe them, but instead understanding their main aspects, thus contribut-ing to the development of a new methodology. Hence, it is imperative to analyze what innova-tions can be brought to the process of product development in order to optimize production and create a pattern that can be used to produce useful PSS. Within this context, analyzed prod-uct development methodologies (Marques et
al., 2013) give little or no attention to services.
Service development methodologies are less in number than product ones. We propose the main activities identified and implemented in manufacturing industries: (1) Identification of Ideas/Needs; (2) Planning and Customer Requirements; (3) Concept Development; (4) Preliminary and Detailed Design; Prototyping/ Testing; and (6) Implementation. Similarly, for service development we propose the following activities (Marques et al., 2013), particularly which concerns technical services: (1) Iden-tification of Needs, (2) Feasibility Analysis, (3) Concept Development, (4) Modeling, (5) Realization Plan, and (6) Testing. Thus, this research was also guided with the aim to sug-gest a methodology for PSS.
3. METHODS
The following section presents the methods used in this paper. It begins with the proposed roadmap for NBM and then the projected methodology for PSS.
3.1. Roadmap for New Business Models (NBM)
The development of an innovative product-service strategy is a clear response to the
global market and requires adapting the BM to new challenges and the increase of service content (Baines et al., 2012). This new strategy is based on the development of solutions for customers, strongly supported by core compe-tencies on systems’ integration, involving the provision of services, rather than just design, development and distribution of high quality products. This implies certainly changes in the planning, conception and implementation of integrated PSS (Clayton et al., 2012). There-fore, one can consider a need for a roadmap in helping manufacturing companies to change their approach on BM and support them in its definition, implementation and management. Several authors propose different phases for BM life-cycle. Although, no satisfactory roadmaps for BM design were found in the literature. Therefore, Leitão et al. (2013) proposed a new approach for BM roadmap. The roadmap presents a sequence of phases and activities that support the conception of NBM. This is an iterative process consisting of several loops. A first-class roadmap should be simple, logi-cal and intuitive – comprehensive and easy to implement. The proposed roadmap consists in four phases: analysis, design, implementation
and evaluation. Each phase is divided into a
set of activities (See Figure 1).
The Analysis phase focuses on the char-acterization of a company’s internal and ex-ternal environment. A fine understanding of the contextual environment contributes to the development of a competitive and efficient strategy. On the internal point of view the aim is to look for the main weaknesses and strengths. On the external perspective the goal is to look for opportunities and threats. This phase is divided into four activities: needs characteriza-tion, internal analysis, external analysis, and definition of requirements. The scope of the activity in characterizing needs is to formalize the needs for NBM that go through the market and competition as well as the study of exis-tent BM. In the external analysis one looks for understanding the contextual environment and characterizing opportunities and threats that surround our market environment. To perform
this one suggests the use of a set of tools such as Porter’s analysis, Benchmarking, and political, economic, social and technological analysis. In the internal analysis, the aim is to analyze strengths and weaknesses of the company and look for minimizing organizational and tech-nological potential problems. Finally, in the definition of requirements, the main goal is to realize what one needs to carry out BM and what are their aims and goals (See Figure 2).
The Design phase consists in the creation/ development of NBM. This is a creative and innovative phase (Marques et al., 2014). An open minded approach is mandatory. The de-sign phase is divided into six activities: team establishment, ideation, modeling of ideas, prototypes and scenarios, and preparation to implementation. During team establishment activity, the plan is to define team members’ profile and selection. The team should be mul-tidisciplinary. Commitments must be defined as well. Within ideation, the scope is to carry out several brainstorming sessions and come up together with a set of ideas for the BM. This activity is then followed by modeling and selection of better proposals that will converge in a BM prototype (See Figure 3).
The Implementation phase includes opera-tional activities such as definition of working plans and schedules. This phase is divided into four activities: planning, communication, ex-ecution and monitoring. The planning activity consists in the elaboration of a business plan, an activities plan, and the identification of milestones. Then, the BM, the business plan and the plan of activities must be presented and explained to all partners. This is elementary to involve all the team. After communication, one is ready to execute the BM. A constant follow is made and constraints reported. This continu-ous monitoring enables going backwards in the roadmap thus correcting or ending it (See Figure 4).
The mean of the Evaluation phase is to compare results obtained during expected performance and draw conclusions for chang-ing the current BM. This phase is divided into three activities: preparation to evaluation,
Figure 2. External analysis activity. Description of the input, the involved team, the main activi-ties and the outputs.
Figure 3. Prototypes and scenarios activity. Description of the input, the involved team, the main activities, and the outputs.
Figure 4. Monitoring activity. Description of the input, the involved team, the main activities and the outputs.
rent BM evaluation and action propose. The preparation to evaluation consists of defining key performance indicators and performing a survey to evaluate stakeholders’ satisfaction. The evaluation of the BM consists properly in a critical reflection of the contextual environ-ment using, for instance, SWOT analysis. The final activity is action proposal. The output of this activity is evaluated and changes proposed, communicated and applied.
3.2. Product-Service Systems (PSS) Methodology
After analyzing methodologies for product/ service development in previous section and recognizing the need of a more completed one, we propose a methodology that integrates both product and service development. The proposed methodology for a PSS is divided into four phases (Marques et al., 2013): (0) Organizational preparation, (1) Planning, (2) Design, and (3) Post-Processing, as illustrated in Figure 6, and incorporating a BM definition (earlier described):
1. Organizational Preparation: The focus on providing solutions to the customers, including the offer of a service, implies changes, namely in the planning, design, and integrated realization of product and service development processes. These changes imply an adaptation regarding the organizational level, and without it is impossible to advance into the develop-ment of an integrated propose. Therefore the organizational preparedness phase is introduced, before the Design phase of the methodologies. The result of this phase is the set of organizational pre-requisites for the PSS in which one should include, among others, a review of existing design processes, the implementation of design services processes and the implementation of organizational and modular processes. 2. Planning: This phase starts with the
identification of an initial idea and/or a customer/market need, being this idea and/
or need a stimulus to trigger the design of products and/or services for the new PSS. Typically one starts by identifying needs and then develops ideas for the new PSS, on the basis of external and internal inputs, in order to define objectives that aim to represent customer’s life-cycle perspective. Internal inputs result from the manufacture’s strategy while external correspond to customer needs and all the players involved in the value chain. Inter-nal aInter-nalysis is important to validate how the product is inserted in the company’s portfolio. The cost-benefit analysis should have into account a detailed analysis of costs necessary for project execution and its expected benefits. A study of viable solutions should be included, assuring the existence of technical requirements that allow the idea to occur or its development timely. An analysis of customer needs can be done through market surveys or direct contacts with clients, giving more emphasis on those considered important to the organization. The analysis of the external environment and the gathering of information based on customers, suppliers, competitors, and substitute products should be made in order to satisfy identified needs, avoiding these way unnecessary solutions. Ideas are developed and evaluated against the goals of the customers. Requirements should be established in the context of PSS, instead of isolated product or service. Also, to offer an advantageous combina-tion between product and services, NBM should be developed, considering possible adaptations during its life-cycle.
3. Design: The design phase of a PSS focus on an integrated management of product and service, making use of defined processes and available means, methods or techniques to accomplish this design. The first activity is to start the development of a concept, based on previous identified customer needs and requirements. A classification should be made, in terms of functional, non-functional, and other relevant
require-Figure 5. Current BM evaluation activity. Description of the input, the involved team, the main activities and the outputs.
ments. For this activity, descriptions and sketches showing target specifications and
functions of the product are outlined. Sev-eral alternative concepts (product/service) are elaborated and further evaluated. From the several alternative concepts one or more are chosen for further development, validation and testing. The creation of a preliminary design is the next step, defining the components and the interactions of the concept. The product/service architecture is created. The output is typically a geo-metrical layout of the product/service to be developed with detailed specifications of each component and the final diagram of assembling. Detail design is the next step, defining all technical specifications, raw materials and respective suppliers, and documents describing the designed service. Such as customer requirements, product/ service design is an interactive and itera-tive process. After this, a prototype and a realization plan is created, tested and validated. Finally, the product/service is produced/implemented.
4. Post-Processing: Once the process of product-service development is finished, the staff allocated to the project will be involved with a set of activities, to ensure a correct translation of all the decisions and options so that the product-service can be produced or performed and made available to the customer consistently and on time. After product/service design is completed, it is necessary to conduct prepared production/servicing activities, in terms of logistics and organization, namely in relation to human resources, tangible and intangible resources. Being organization prepared, regarding the above listed topics, the phase of full production/ servicing can begin, in which the product/ service is produced/performed according to specifications, drawings, models and plans. The main objective of this activity is a final and marketable product/service and the company’s portfolio is valued for improving future implementations.
4. RESULTS
After presenting previously the roadmap and the PSS methodology this section proceeds with two case studies, in order to test both issues. 4.1. Case Study One
Aiming to demonstrate the timeless of the presented roadmap, an industrial case study is now presented. The data collected was based on interviews, i.e., qualitative, and was related to the implementation of NBM, for a manufac-turing company, regarding the optimization of the production processes and the supply chain management. The company typically designs, manufactures, and delivers technological ad-vanced products for cork transformation, all over the world. The case study reports a contact from a potential customer in the Eastern Europe.
The “client” requested a specific machine tool with significant modifications, regard-ing software and control systems for remote maintenance. In their own words, the analysis phase started with a request from the customer, represented as an inquiry (sometimes data from prospective studies can also be used). For this case, customer needs and technical requirements, such as regional potentialities and cultural issues (power supply specifications and language) were observed.
From this analysis, the company estab-lished the value proposition - adding services to the product. The idea was to supply equipment with a set of technical and maintenance issues for self-learning. The design phase started with a concept, representing how the company delivered the value proposition and earned the profits. The preparation to the implementation was found to be vital for the definition of new contacts, logistics and bureaucracies (e.g. con-fidentiality contracts).
All these activities were central to define a complete business plan. Thus, the implemen-tation phase was supported in a business plan that looked into each customer’s segment, the expectation of the selling volume, and the level of customers’ satisfaction. Finally, evaluation
was considered to be decisive and was based on customer inquiries, informal talks and data col-lected from sectorial unions/associations. What was proposed in the roadmap was the evalua-tion to be performed for each BM component. 4.2. Case Study Two
Seeking to test the proposed methodology a real case was used. The existing data and experi-ences in product-service development allowed mapping each stage of the proposed method-ology. The real case reports a product-service conceived by an Automobile Manufacturing Company in a collaborative project with one Service Company and a Research Centre for the Automotive Industry. The data collected about the case was qualitative and based on interviews, regarding the concept and design development of a Mobile Care Vehicle (MCV) for decentralized municipality services (see Figure 7).
1. Organizational Preparedness: The MCV allowed the possibility to provide a set of multiple- services (e.g. access to data, licensing, applications and on-line payments) to assist householders living in remote places of the municipality. The City council had a strategic vision of decentralizing some services due to region characteristics. The interest of the company was to evolve its activity for personalization of MPV car, adding value to the user with specific needs. Thus, both two entities defined the product-service concept. The company supplied the vehicle, while the servicing company recognized the importance of incorporating external design competencies, thus acting as a project integrator. Several meetings and workshops were performed between the stakeholders and a detailed project plan was prepared. All these activities and the establishment of partnerships correspond to the initial phase of the methodology. The data collection performed allowed to map
the following phases of the methodology proposal.
2. Planning: This phase started with an initial idea for the MCV. Customer needs and requirements for both the product and the service were identified. It was necessary to adapt the vehicle to the space to be occupied by the service desk, the accommodation of two operators performing the service and the users of the service, and other details such as necessary anchoring points inside the MVC. The customer requirements for the table desk were based on the experience gathered from individuals on fixed services. The services to be provided were identi-fied and all physical (printer, portable pc, wireless internet access, forms, prints, etc.) and human requirements (competences, formation of teams, security issues, etc.) to perform the service listed and adapted. The MPV was considered a standard product, but the needs of the service contributed to a personalized product/service with many options.
3. Design: Based on the previous phase, speci-fications and functions of the product/ser-vice were defined and alternative concepts were developed and evaluated, in particular the ones which concern the development of the customized inner design of the MCV. A concept selection regarding the table desk design was reported, involving all the stakeholders of the project, to select the best one for further development. The service desk was developed and designed in 3D CAD according to the previous customer requirements (e.g. space available, ergo-nomic issues, etc.). Materials´ selection for the service desk was performed and different colors schemes were presented to the promoter. A preliminary design defined the components and the interactions of the product/service. Main product service characteristics included: MPV, 2 rotary seating, 2nd battery, 6 outlets 230V, fire extinguisher, additional interior lighting, block of drawers, and a service desk which concerned the vehicle interior design. After,
the vehicle was assembled and finished as a prototype to be tested.
4. Post-Processing: To test the service it was necessary to establish key partners (stop-ping points) and itineraries. The service was tested with householders in real situations and is being continuously monitored. The prototype is the only vehicle currently in operation. On a second phase, services were extended.
5. The development of an innovative vehicle to provide services was an initial experience that allows creating a virtual organization that integrates different competencies to promote new developments. An example of such new developments is the development of a second Mobile Care Vehicle version for replication to a potential customer with a fully integrated product-service concept and mobile vehicle for medical care. With these developments, the servicing company is prepared to present a NBM for mobile services. To the success of this first inno-vative vehicle concept to provide munici-pality services and all the development of product-service concept it was important the closer cooperation established between stakeholders and it is recognized the added value of this experience. Nevertheless, the case was reported as being reactive, based on a migration of services to the vehicle. One believes that using a formal methodol-ogy, as the one proposed, could have helped in shorten the time to development, risks mitigation, earlier service incorporation in the development and a proactive evolution process of ideation.
5. DISCUSSION
The first case study showed the relevance of in-cluding software tools which allows companies to follow each phase and activities defined in the roadmap. The benefits of having such kind of software tools can also come from the introduced ability to visualize graphically each stage of BM definition or from the use of wizards to support
the definition of alternative scenarios, and the generation of new ideas. In general, tooling, by itself, can be particularly useful for structuring and conducting meetings, involving different individuals with different competencies. Also, the possibility in recording and printing data or different types of outputs (e.g. diagrams, graphical visualization, and cost structure) is considered to be value added for the analysis and decision-making process executed in dif-ferent phases of product-services´ life-cycle. A software tool prototype is now being developed in order to test the concepts presented so far. The software tool prototype is being structured with a menu bar, where four options are displayed, corresponding to the roadmap’s phases. In the main menu, components of the BM, i.e., BM name and number; key-partners, -activities, and –resources; value proposition; customer relationship and segmentation; channels, and revenue stream. The software will be web based and will allow information to be registered, saved and used in further stages of the BM life-cycle. The formalism introduced with the existence of a software tool to create BM helps in the definition of cost structures for product/ service BM. Part of the data defined and saved allows the representation of different scenarios and prototypes, quantifying and qualifying each alternative, and performing cost versus benefit analysis.
The second case study showed that the development of an innovative vehicle to pro-vide services was an initial experience that allows creating a virtual organization that integrates different competencies to promote new developments. An example of such new developments is the development of a second MCV with a fully integrated product-service concept for medical care. With these develop-ments, the manufacturing company is prepared to present a NBM for mobile services. To the success of this first innovative vehicle concept to provide municipality services and all the development of product-service concept it was important the closer cooperation established between stakeholders and it is recognized the added value of this experience. Nevertheless,
the case was reported of being reactive, based on a migration of services to the vehicle. One believes that using a formal methodology, as the one proposed, could have helped in shorten the time to development, risks mitigation, earlier service incorporation in the development and a proactive evolution process of ideation.
6. CONCLUSIONS AND
FUTURE WORK
Manufacturing companies have not only to be innovative in their product or service but also in the BM they use to support customers in an effective and efficient use of their products. BM definition or its design it is a holistic ap-proach to establish a value chain for design, manufacturing and delivery product-service, identifying suppliers, partners and segmenting customers. The ability to evaluate effectively the existing BM will bring benefits in manag-ing product and service design and improve its requirements throughout its life-cycle. BM definition, its evaluation and redesign must be dynamic and executed involving key persons in the organization. The existence of a roadmap with all its phases, activities, methods and tools, will allow a clear understanding about its exten-sion in the organization and support the design and develop of software tools to automate the analysis and decision making processes that exist in BM definition. The development of software for BM definition can be considered for integration with other management systems (e.g. ERP) allowing to link different depart-ments and formalize processes, especially in the design and evaluation phase. The existence of a methodology for product-service develop-ment is considered to be timely and of high relevance due to the need to have a formalized set of procedures and tasks to be performed, involving different stakeholders and supporting companies to differentiate their offers.
Differentiating their offer delivering product-services companies establish a more enduring relationship with customers, with a consistent value proposition throughout product
service’s life cycle. Part of the value provided to the customers is often created from provided services and therefore the need to define them at the stage where its products are conceived and designed, as illustrated by our case, which was consistent with the proposed methodology. The methodology proposed was recognized to contribute to shorten the time to market of product-services, ensuring compliance with the requirements that are set out in the early activities of development. The maturity of any method depends on its full use within compa-nies and, with this research, it is preview to fully implement the proposed methodology to drive the developments within the consortium presented in the case study, integrating the methodology for product-service develop-ment with a roadmap for BM definition that one proposes to be done in the design phase of the product-service, answering this way to the research question of this paper.
As future work, we intend to validate of both the roadmap and the PSS methodology. Whilst the roadmap will be evaluated, validated and demonstrated through a planned workshop involving different manufacturing companies, the PSS methodology is expected to be further tested and validated by those companies. The ultimate goal of this research is to integrate both discussed issues in a larger possible number of manufacturing companies.
ACKNOWLEDGMENT
Authors would like to express their gratitude to the three anonymous reviewers of this paper and their contributions to the enhancement of it.
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Pedro C. Marques received his PhD degree in Engineering Design and Advanced Manufacturing from the University of Lisbon/MIT in 2012, and Master degree in Engineering Physics in 2005. Lecturing Industrial Engineering and Management and Mechanical Engineering since 2010 at Lusófona University and Polytechnic Institute of Tomar, he is an Assistant and Invited Adjunct Professor, with experience and research interest areas in the field CAD-CAM, creativity and innovation, mechanical design, and PSS. He is also vice-director of the BSc in Industrial Engineering course and a Chartered Mechanical Engineer. As published in international peer reviewed journal and conferences within his subject of specialization.
P.F. Cunha is currently Professor of Advanced Manufacturing Technologies and Operations Management, in the Mechanical Engineering Department at Instituto Politécnico de Setúbal, Portugal (Polytechnics Institute of Setúbal/School of Technology (ESTS). He holds a degree in Physics and Materials Engineer-ing from Universidade Nova de Lisboa, Portugal (New University of Lisbon - UNL/FCT) and a Masters degree, in Computer Aided Engineering, from Staffordshire Universit, UK. He took his PhD in Mechani-cal Engineering at Instituto Superior Técnico (TechniMechani-cal University of Lisbon IST). He is currently the Director of CENI – Centro de Integração e Inovação de Processos (Centre for Integration and Innovation Processes, http://www.ceni.pt) and from January 2006 he is a Member of CIRP (International Academy of Production Engineering Research, http://www.cirp.net). P. Cunha was the Chair of the 3rd CIRP
Inter-national Conference in “Digital Enterprise Technology” and of the 46td CIRP International Conference on
“Manufacturing Systems”. He has been a member of various Scientific Committees of refereed conferences.
He has been involved and coordinating different R&D projects and he is author and co-author of more than 40 scientific publications.
