An Interactive Design Methodology for Service Engineering of Functional Sales Concepts A potential Design for Environment Methodology

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1 An Interactive Design Methodology for Service Engineering of Functional Sales Concepts A potential Design for Environment Methodology Mattias Lindahl 1, Erik Sundin 1, Tomohiko Sakao 2 and Yoshiki Shimomura 3 1 Department of Mechanical Engineering, Linköping University, Sweden 2 Institute for Product Development and Machine Elements, Darmstadt University of Technology, Germany 3 Department of System Design, Tokyo Metropolitan University, Japan Abstract Manufacturing companies around the globe are striving to increase their revenues and profitability. One way is through Functional Sales, i.e. shifting the focus from the production of products to the production of services. Functional Sales and Design for Environment (DfE) have many common issues, e.g. the life cycle perspective. The paper s aim is to highlight a proposed interactive design method for Service Engineering of Functional Sales offers and to relate this method to selected DfE methods and tools as well as users experiences with these methods and tools. The paper concludes that the proposed method has several benefits that are useful in DfE. One benefit is that the method does not focus on products but rather on how needs can be satisfied by increasing service content. Another is the visualization of e.g. validation in order to facilitate communication between different actors in the product development process. Keywords Functional Sales, Service Engineering, Design for Environment, Method and tool 1 INTRODUCTION Manufacturing companies around the globe are striving to increase their revenues and profitability by obtaining a larger share of the market and controlling a larger share of their products value chains [1]. Products and services are merging together, and a structural change is underway, shifting focus from the production of products to the production of services (see e.g. Sakao et al. [2] and Alonso- Rasgado et al. [3]). This shift can potentially be achieved, in concert with environmental benefits, by a change or at least a move towards a higher degree of Functional Sales [4]. Functional Sales are seeing increasingly successful implementation in a variety of global industries; they are used by, for example, one of the world s leading forklift truck producers [1, 5]. The business concept of Functional Sales can be defined as follows: To offer from a life-cycle-perspective 1 a functional solution that fulfils a defined customer need. The focus is, with reference to the customer value, to optimize the functional solution from a life-cycle perspective. The functional solution can consist of combinations of systems, physical products and services [4]. The environmental effects of Functional Sales are more closely described by Ölundh [6]. Sundin et al. [1] conclude that the development of Functional Sales has many similarities to ordinary product development, since driving forces are alike as well as the design methodology. They further conclude, as do Ölundh and Ritzén [7], that there are no specific methods established and used in industry for developing Functional Sales offers. In a report written by Tischner and Verkuijl [8], a suggestion for how a development method for Functional Sales should be performed has many similarities to the already existing ones within traditional product development. Nevertheless, Functional Sales have thus far had little influence on the design of physical products. Most of the physical products are standard products not adapted for Functional Sales. This is also in line with the study conducted by Ölundh and Ritzén [7], who state that the po- tential benefits of the concept have yet to be realized. Sundin et al. [1] also concludes that the Functional Sales offers seem to have emerged from ordinary product development offers, and there is room for more adaptation in the form of methodologies and physical product design. In parallel, Design for Environment (DfE) has become an increasingly important issue for enterprises [9]. DfE refers to the systematic incorporation of environmental aspects into a product s design and development [10-12]. Bakker [13] defines DfE as the development of products by applying environmental criteria aimed at the reduction of environmental impact along the stages of the product s life cycle. DfE is an approach to design where all the environmental impacts of a product are considered over the product s entire life cycle. The term life cycle has been defined according to ISO [14] as Consecutive and interlinked stages of a product system, from raw material acquisition or generation of natural resources to the final disposal. In both of the definitions above, product refers to any good or service. The reason behind the use of DfE are e.g. increased environmental concern within society, more stringent legislation 2, increased customer demands and an awareness of the gains that an analysis of a product from an environmental perspective could give, such as the life cycle perspective approach. It has been accepted as fact that the environment would reap positive rewards if more environmental aspects could be considered as far back as during product design, as described, for example, in ISO [18]. It has also been estimated that up to 90% of the life cycle cost of a product is determined during the design process [12]. However, one problem with most existing DfE methods and tools is that they focus primarily on the environmental assessment of products, and not on the design aspect and the interactions between products and services. The authors previous research has shown that the design of Functional Sales offers should be a highly multidisciplinary activity and beyond the scope of most existing traditional product development methodology. Not only is 1 All the product s life cycle phases are included and considered, e.g. production, use and end-of-life treatment. 2 E.g. directives like ELV [15], WEEE [16] and RoHS [17] 589

2 the focus wider in Functional Sales, i.e. a focus both on the hardware and the service needed to provide the function, but it has also a longer time perspective, covering the entire life cycle of products and services, i.e. the production, use and end-of-life phases. One example of this is that when the service provider has control over the physical products during the use phase, the incitement for cost reduction increases. This will, for example, turn revenues from spare parts and maintenance into costs for the provider. Related research concerning Functional Sales has been previously conducted by e.g. Ölundh [6], Mont [19] and Brännström [20]. The authors have therefore conducted research in Service Engineering and proposed an interactive design method for Service Engineering of Functional Sales offers [21] based on studies by e.g. Arai and Shimomura [22], Shimomura et al. [23] and Sakao and Shimomura [24]. 2 AIM AND METHODOLOGY Functional Sales and DfE have many common issues, e.g. the life cycle perspective. Furthermore, both concepts are more or less stimulated and driven by new market and/or legal requirements. Thus, the proposed interactive design method for Service Engineering of Functional- Sales offers can also be useful as a DfE method. Therefore, the aim of this paper is to highlight the proposed interactive design method for Service Engineering of Functional-Sales offers and to relate this method to selected existing DfE methods and tools users experiences with these methods and tools. To do so, we analysed existing literature [1, 4, 21, 23, 25-28], and utilized the discussions with researchers with extensive experience from Functional Sales and companies product and service development processes to reach the concept interactive design method for Service Engineering of Functional Sales offers (see details in [21, 25]). 3 DFE METHODS AND TOOLS During the past years, there has been a trend towards the rapid development of DfE methods and tools to employ in the area of product development. According to Mathieux et al. [29], extensive research on DfE, mainly in the areas of strategy, methodology, and tools, has been carried out by research organizations and industrial companies. The result is a considerable number of DfE methods and tools [30, 31] that fall into a wide range of categories, from relatively simple checklists or general guidelines to more complex software-based decision-making methods [31, 32]. In this paper, some of the more well-known DfE methods and tools are compared and related to the proposed method for Service Engineering of Functional Sales offers. The selected DfE methods and tools are briefly described below. 3.1 Life Cycle Assessment Life Cycle Assessment (LCA) is a method for assessing the environmental aspects and potential impacts throughout a product s life (i.e. cradle-to-grave) from raw material acquisition through production, use and disposal. This is accomplished by compiling an inventory of relevant inputs and outputs of a product system; evaluating the potential environmental impacts associated with those inputs and outputs; and interpreting the results of the inventory analysis and impact assessment phases in relation to the objectives of the study. The general categories of environmental impacts needing consideration include resource use, human health, and ecological consequences. The International Standard [33] describes the principles and framework for conducting and reporting LCA studies, and includes certain minimal requirements. 3.2 Quality Function Deployment for Environment Quality Function Deployment for Environment (QFDE) is a methodology to support DfE developed by incorporating environmental aspects into Quality Function Deployment (QFD) [34] in order to handle environmental and traditional product quality requirements simultaneously. QFDE is a methodology used in the product planning stage to analyze functions required for a product or to determine the product structure to realize these functions. QFDE consists of four phases (see [34] for more information). Design engineers can determine which parts are the most important in order to enhance the environmental consciousness as well as the quality of their products. Furthermore, it also supports the evaluation of the effects of design improvement. 3.3 Environmental Effect Analysis The purpose of Environmental Effect Analysis (EEA), formerly called Environmental-FMEA, is to identify and assess significant potential environmental impact from a product, and during an early stage of its development, in order to properly consider alternative solutions. EEA is a systematic process that is carried out by a multi-functional group. It consists of a number of activities that should be coordinated with other elements of product development work. EEA uses available skills, in conjunction with previous experience, in order to reduce the environmental impact of products [35]. 3.4 MET matrix The MET Matrix is made up of five rows and three columns that help the design team to obtain a global view of the inputs and outputs in each stage of the product life cycle. The rows correspond to the five different product life-cycle stages, while the columns denote three important environmental issues: the material used; the energy used; and waste, including toxic emissions. Hence, the name of the method 'MET' (materials, energy, toxicity). It is a tool that enables the rapid formulation of a list of a product s main environmental aspects, and is a simple input-output model combined with the product s life cycle [36]. It also provides the first indication of environmental aspects for which additional information can be required. 3.5 DfE checklists and guidelines DfE checklists and guidelines are widely used as a means to adapt products to environmental demands, and the literature is full of various types. DfE checklists and guidelines are distilled from DfE knowledge, and their structure varies. However, they tend to focus on a specific issue, e.g. material reduction or on a specific phase of a product s life cycle (see e.g. [10]). The range of different types is from general to company or product-specific, and requires different levels of knowledge and education. DfE checklists and guidelines can be valuable yet simple tools to enhance the design process and ensure some of the more important environmental issues and impacts are addressed. 4 SHORTCOMINGS WITH CURRENT DFE METHOD- OLOGIES The literature review for this paper has resulted in a list of identified shortages with many of the current DfE methods and tools based on the lessons learned from their utilization. 590 PROCEEDINGS OF LCE2006

3 4.1 Product-focused Dematerialization and eco-efficiency are frequently used concepts when discussing DfE. Dematerialization focuses on the input side of material and energy-use, whereas eco-efficiency focuses on the output side of material and energy-use [37]. In the literature, there is discussion about dematerialization and eco-efficiency with a strong focus on increasing the service content in offers to consumers. However, for many utilized design methods and tools, such as e.g. various CAD tools, DfE methods and tools are not designed to deal with offers that require a simultaneous focus on the product and service as a whole. Existing DfE methods and tools are primarily focused on dealing with physical artefacts and their evaluation. See discussion of traditional general engineering with limitation from product-focus in [38]. 4.2 Single objective According to Lindahl [28] and Lenox and Ehrenfeld [39], one of the problems with many DfE methods and tools is that they tend to focus on the single objective of minimizing environmental impact. It is a little bit paradoxical that methods and tools like LCA, which emphasise a holistic view from a life cycle perspective, are in fact very unholistic in the fact that they only focus on environmental issues. Furthermore, when it comes to dealing with the outcome from many DfE methods and tools, there is a lack of practical support concerning what to do and how to make the improvements. The background to this may be that these methods and tools have, in general, been developed with a scientific and theoretical background, sometimes with little regard for their application in practice [40]. It is therefore common that DfE methods and tools are developed to become stand-alone packages, focusing on a single objective such as minimizing environmental impact [39]. 4.3 Lack of design and improvement focus This obstacle with lack of design and improvement focus is related to the obstacle described above with the single objective on environmental issues. Contradictory to this is that many of the existing DfE methods and tools seem to be more focused on the environmental assessment of existing products and services than on design support for how to design products and services with lower environmental impact. More precisely, the lack of methodological modules that support the innovation process and how to, from a life cycle perspective, optimize the products or service functionality in regard to its environmental impact. 4.4 Integration According to Ullman s [41] design paradox, it is essential to learn as much as possible about the evolving product early in product development, because during the early phases of the design process, changes are the least expensive. The later in the design phase environmental issues are introduced, the harder it becomes to implement any changes. Not surprisingly, Bhamra et al. [42] and Ritzén [43], among others, have argued that environmental aspects need to be integrated into product development as early as possible, and not handled independently. However, the above described treatment of the environmental issue with no relation to other aspects is an obstacle for integration with the ordinary product development [35]. The highly complex design of products and services for Functional Sales implies that DfE methods and tools must be better integrated with the rest of the design, and not only to be able to handle the complex trade-off between different parameters and requirements, e.g. function vs. environmental performance. Related to the integration issue is also the fact that the authors previous research studies have pointed out a need for strengthening internal and external communication in the process of generating Functional Sales offers. There is also a need for an extended perspective and responsibility for the offer [25]. It is not enough to only focus on the production of products, since much of the value is created and the majority of the value is experienced during the use phase. This need of an extended perspective, i.e. a life cycle perspective, is also found in DfE literature. In practice, this implies that companies need to incorporate new competence into their offers. The process of generating the offer must be a fully integrated process that comprises both physical products and needed service. This implies new challenges in the design process. 5 SERVICE ENGINEERING AN INTERACTIVE DE- SIGN METHOD FOR FUNCTIONAL SALES OFFERS The proposed interactive design method for Service Engineering of Functional Sales concepts highlights and illustrates vital and crucial activities in the generation of the offer (see also Lindahl et al. [21]) as illustrated in Figure 1. The two-way arrows in the method symbolize the important communication needed between the different stakeholders within the lifecycle activities. Company Concept generation Concept realization Physical products Service Manufacturing / Remanufacturing Need- & requirement analysis Check & contract Use (Service & Maintenance) Take back Figure 1. An Interactive design method for Service Engineering of Functional Sales offers. Need and requirement analysis The main issue is to start from the customer s needs and requirements in order to generate an efficient and effective business offer in conformance with the value constellation concept by Normann and Ramírez [44]. The identified requirements should primarily be seen as requirements on the requested function, and not as product or servicerelated. In this activity, it is important to have in mind that it is also critical to determine needs and requirements for other stakeholders, e.g. the managing board, authorities and suppliers. The environment is, in this view, not a stakeholder, but environmental-related requirements are stated by different stakeholders, e.g. legislation such as ELV [15], WEEE [16] and RoHS [17] Our research has highlighted the need for companies to be able to follow-up and compare the effect of the implementation of the Functional Sales offer. To do so, there is a need to find measurable customer-related parameters that will be changed due to the offer and measure the current status. It is also preferable if those measurable parameters are related to the customers requirements. Concept generation The concept generation differs from traditional concept generation since it better highlights the need to generate concepts in an integrated way, Customer 13 th CIRP INTERNATIONAL CONFERENCE ON LIFE CYCLE ENGINEERING 591

4 concepts that from the beginning and in a parallel processes comprise both the offers for service and product content. The focus is on finding the best combination of products and services based on the validation of the different requirements stated for the requested function. The combination can be based on standard products and services, but also on customized ones. The previously developed Service Engineering methodology provides good support for this activity [45]. Check and contract In this activity, it is not only important to verify that customers understand what they will gain from the offer; it is also important to verify that the customer is satisfied with the offer. To do so, the determining factor is that the offer can be transcribed for the customer in an understandable format, e.g. with parameters and description that the customer is familiar with and can interpret. One way to convince the customer of the gain is to use the need and requirement analysis activity-identified parameters, and compare the values from the use of the Service Engineering offer with the original values. Concept realization When there is an agreement / contract of the Functional Sales concept, e.g. the function, the next step is to go from concept to realization of the offer, i.e. produce the different services and products needed for the offer. The existing service engineering methodologies support an improved dialogue between different stakeholders in this realization process. Use, service and maintenance It is during this activity that the offers function is used; it is also during this phase that the service and maintenance is delivered. Active communication with the customer during this activity is a good opportunity for companies to learn more about their customers needs for service and how to better identify and fulfil customer requirements. Since the customer focuses on utilizing the offer and therefore has direct experience with the combination of products and services, it becomes easier to obtain an understanding of his/her experience with the offer. This activity also provides an opportunity to have a continuous dialogue with the customer in order to follow-up his needs. If the needs change, it also provides the company with the opportunity to provide the service to help the customer to change his Functional Sales offer, i.e. the mix, so it matches the customer s needs in the best possible way. Take-back In Functional Sales, the products ownership is not transferred to the user, and the products are therefore taken back when the user does not need the offer anymore. It is important to note that the reason for abandoning a product or service is not always that the customer is dissatisfied; it also happens that the need can be changed, but the customer still satisfied with the functionality of the Functional Sales offer. 6 DISCUSSION AND CONCLUSIONS In Table 1, DfE methods and tools are listed, compared and validated with the proposed Interactive Design Method for Functional Sales Offers. The listed comparison parameters are based on features found in the literature that the authors considered a DfE should have to be useful. Product-focused Unlike many other DfE methods and tools, the proposed method is not product-focused but instead focused on providing a suitable offer to the customer. This incorporates a focus on dematerialization and eco-efficiency, e.g. by not focusing on products but instead on how the need can be solved by increasing the service content. This also implies a focus on identifying requirements that also relate to the use phase. Nevertheless, a very strong focus on artefacts is still relevant when solely focusing on physical products, but as described earlier, increased customer demands tend to diminish the relative importance of the artefact, and the service content s importance increases. Single objective The proposed method covers all types of stakeholder requirements, and has a method for validating and relating different requirements. Furthermore, the proposed method also includes a sub-methodology to visualize the validation in order to facilitate communication between different actors in the product development process, but also for communication with the customer. This facilitates e.g. the ability of the customer to validate and confirm if the offer corresponds with their needs and wishes. The visualization also facilitates a discussion with the customer concerning how to better provide their desired needs. Lack of design and improvement focus The visualization of different requirement s importance and validation facilitates the generation and improvement of offers. It is, for example, easier to understand what functions are most important to fulfil and how those are related to other functions. This reduces the risk for sub-optimization. Furthermore, the structure also provides an image of how the solution should be designed, and also generates new ways of thinking in order create the offer, as was shown in two of the studies [5, 23]. Parameter Table 1. A listing and validation of different DfE methods and tools. Service Engineering EEA QFDE LCA MET matrix Checklist & guidelines Life cycle perspective Yes Yes Yes Yes Yes No Modules within the method or tool that support Yes No Yes No No No innovation and improvement. Focus on more issues than environment Yes Yes Yes No No No Visualization of relations between products Yes No No No No No and services Trade-off between different requirements Yes No Yes No No No Modules for identification of requirements on Yes No No No No No the product or service Can manage stakeholder requirements Yes Yes Yes No No No Can be effectively used in early phases of the product development process, i.e. does not require quantitative data Yes Yes Yes No No Yes/No 592 PROCEEDINGS OF LCE2006

5 Integration As highlighted in this paper, the proposed method is not stand alone but instead a method to use for the entire development of offers. In the product development literature, several examples of methods and tools can be found that can handle many different types of requirements, e.g. traditional Quality Function Deployment (QFD). However, in this paper the focus has mainly been on comparing the Service Engineering approach with existing DfE methods and tools. DfE methods and tools tend to be used as complements to more overarching design methods (e.g. LCAs and checklists). It is too early to draw any general conclusions concerning the proposed method, but it seems to provide many benefits that are useful in DfE (see Table 1). Therefore, the authors of this paper will conduct further research in cooperation with Swedish and Japanese companies to further verify the method as such and in support of integrating DfE in the product development process. ACKNOWLEDGMENTS The authors of this paper would like to thank all participating companies for their support in the development of the method. This research was partially supported by the Swedish Governmental Agency for Innovation Systems (VINNOVA) and through a Research Fellowship Programme by the Alexander von Humboldt Foundation in Germany. REFERENCES [1] Sundin, E., Lindahl, M., Sakao, T., Shimomura, Y., and Björkman, M. New Engineering Design for Functional Sales Business. in International Conference on Engineering Design, ICED 05. Melbourne, Australia, [2] Sakao, T., Shimomura, Y., Lindahl, M., and Sundin, E., Applications of Service Engineering Methods and Tools to Industries, in Innovation in Life Cycle Engineering and Sustainable Development, ISBN , D. Brissaud, S. Tichkiewitch, and P. Zwolinski, Editors. p , [3] Alonso-Rasgado, T., Thompson, G., and Elfström, B.-O., The design of functional (total care) products. 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