PRODUCT SERVICE SYSTEM

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1 POLITECNICO DI MILANO Scuola di Ingegneria dei Sistemi POLO TERRITORIALE DI COMO Master of Science in Management, Economics and Industrial Engineering PRODUCT SERVICE SYSTEM A Systematic Review on its Definition, Design Methodologies, Value Assessment, and Guidelines for Future Research Supervisor: Prof. Marco TAISCH Assistant Supervisor: Ms. Mahnoosh Zebardast Master Graduation Thesis by: MohamadHossein Pouria Student ID. Number: Academic Year:

2 1 Contents 2 List of Figures: List of Tables Abstract Introduction Systematic Review of Literatures about PSS Concepts and Definitions of PSS: Basic Definitions and Concept PSS Categorization Service Definitions and System Definitions A Sample of PSS, Service Oriented Products List of Articles Used Design for Sustainability: Product Design for PSS Service Design for PSS System Design and Business Models for PSS Design Considerations for PSS Effectiveness List of Articles Used Assessment: List of Articles Used Benefits of PSS: List of Articles Used Challenges of PSS: List of Articles Used Approaches and Best Practices: Conclusion and Guidelines for Future Researches: References: Appendices Appendix A The Fields of Researches and Authors for PSS Definition:

3 9.2 Appendix B - The Fields of Researches and Authors for PSS Design: Appendix C - The Fields of Researches and Authors for Assessment: Appendix D - The Fields of Researches and Authors for Benefits: Appendix E - The Fields of Researches and Authors for Challenges: List of Figures: Figure 1 - Number of Articles Discussed in Each Area...6 Figure 2 - Element Involved in the PSS (Vasantha 2010) Figure 3 - Three types of product (Tukker 2004) Figure 4 - Definition of Service (Tomiyama 2001) Figure 5 - PSS Elements (Mont 2002) Figure 6 - The four PSS dimensions and design process (Tan et al 2010) Figure 7 - Architecture of Sustainable Product Conceptualization System (Wei Yan 2008) 18 Figure 8 - Representation of Sustainability and Cost Criteria (Wei Yan 2008) Figure 9 - P&M Concept (Zhang 2010) Figure 10 - P&M concept development using QFD and FMEA (Zhang 2010) Figure 11 - A generic Remanufacturing Flowchart (Sundin 2009) Figure 12 - Inegrated Product-service lifecycle management (P.P. Wang 2011) Figure 13 - Overall service enabling process (Xiaoyu Yang 2009) Figure 14 - Service enabler reference architecture for consumer products (Xiaoyu Yang 2009) Figure 15 - Inegrated Product-service lifecycle management (P.P. Wang 2011) Figure 16 - Five stages of service design (Rasgado 2004) Figure 17 - Service support system and the Core Subsystems - Example of Bakery Industry (Rasgado 2004) Figure 18 - The relation among three sub models (Sakao 2007) Figure 19 - The proposed design process (Sakao 2007) Figure 20 - Technical service design process (Aurich 2006) Figure 21 - Relative maturity of various issues considered in PSS domain (Vasantha 2012) Figure 22 - A typical scenario of PSS for consumer products (Xiaoyu Yang 2009) Figure 23 a) IPS² basic structure b) Supplier and customer perception of products and Services (Xiaoyu Yang 2009) Figure 24 - Business Model for Product Re-use (Kumazawa 2005) Figure 25 - Expanded design protocol including system considerations (Fiksel 2003)

4 Figure 26 - Work systems for delivering PSS (Alter 2006) Figure 27 - The process for modular development of PSS (P.P. Wang 2011) Figure 28 - External functional analysis: the graph of interactors (Maussang 2009) Figure 29 - Functional bloc diagram representation (Maussang 2009) Figure 30 - Relationship between innovation and eco-efficiency (R.C. Michelini 2004) Figure 31 -Present and Future Human Needs (Fiksel 2003) Figure 32 - Services of SOP-type facsimile machines (Fujimoto 2003) Figure 33 - Reference model in Research for Linkage of ICT and PSS design (Prado 2012) Figure 34- The evaluating hierarchy of product service system (H. Allen Hu 2012) Figure 35 - Value framework in PSS (K. Xing 2013) Figure 36 - Representation of PSS with Service to be the Main Object of the System (Hitoshi Komoto 2005) Figure 37 - Rental/procurement simulation Model in the PSS (Tsai Chi Kuo 2010) Figure 38 - Simulation model for Rental and Procurment in the context of PSS (Tsai Chi Kuo 2010) List of Tables Table 1- The Most Reffered Definitions for PSS...8 Table 2 Reseach Fields in PSS Concept and Definition Table 3 - The RemPro-matrix showing the relationship between product properties and rem. process steps (Sundin 2009) Table 4 - A typical service design problem (Tomiyama 2005) Table 5 - Servicification of washing clothes (Tomiyama 2005) Table 6 - Table 5 - Characteristics of Resilient Systems (Fiksel 2003) Table 7- Sustainability, technical and marketability research themes in PSSs literature (Durugbo 2013) Table 8- Module Configuration of the Three Types (Fujimoto 2003) Table 9 Research Fields in Design for PSS Table 10 - Local and global weights of each aspect and criterion (H. Allen Hu 2012) Table 11 - The subgroups of sustainability for PSS (Ines Omann 2003) Table 12 - Examples of Conventional Sustainability Performance Indicators (Fiksel 2003) 76 Table 13 Research Fields in Assessment Table 14 - Research Field in Benefits of PSS Table 15 - Research Fields in Challenges of Design and Implementation of PSS

5 4 Abstract The evolution of sustainability awareness and the global crisis of environmental issues led to increase the pressure from sustainability legislation for production and consumption. To survive in this competitive environment the players must take these trends into consideration, and yet maintain the customer s satisfaction by offering more customized products while carrying more functions and values. One strategy that can guarantees all of those issues is product service system. It means a shift from product selling to the function selling or improving the intangibles or service and integrate it to the product to increase the value received by user and reduce the material consumption. The idea of PSS is still in its initial stage and it has not become fully mature yet, though there are a lot of articles and study existed in the literature around it. Those papers address mostly the methodologies for designing PSS while lack of value realization for PSS adoption, either by customer side or supplier side, is going to be significant obstacle against product service system. This can be perceived as a gap within the literatures addressing the PSS issue. In this work an extensive literature review on concept of PSS is carried out, the main focuses of the papers were identified and categorized, and the guidelines for the future researches about this newly-born idea is offered. 4

6 5 Introduction The increasing demands form customer side and public awareness about sustainability issues generate new challenges for the industry. On other hand the highly competitive market of today demands more than just reduced price or high quality of product, which again make the sustainability to be a lever to survive. Besides all these issues we are currently in a series of structural economic and social crises in which we are facing rapidly global food crises, inflation, recession, rising unemployment, credit crises, and over-arching crises of confidence in government, the financial system and in many other societal institutions [CARLO VEZZOLI (2012)]. These challenges would enforce industries to follow the strategies that guarantee an acceptable level of sustainability. One promising way to keep living standards and fits well into the criteria of strategies to achieve the sustainability objectives is to adopting product service system. A product service system refers to a shift in focus from selling purely products to selling functions. This implicates to change the focus form tangibles to intangibles, to reduce material consumption in one hand and adding value to the product to satisfy the customer. In short it represents paying less for gaining more. In the context of PSS the producers have the responsibility for the disposal of the product, so it is a strong incentive for them to produce a durable product while manage it to suite recycling plans. This calls for having life cycle perspective from manufacturers. To develop a methodology for PSS design it first needs to consider physical modification of product to be adapted to PSS. Then service improvement and integration of service design to product design. And finally by using the relevant tool a system of product and service could be built. But the final model needed to be evaluated and verified before implementation. Because of its potential to deliver social well-being and economic prosperity while operating within the limits of our planet, a wide number of research projects in the field of PSS [CARLO VEZZOLI (2012)] have been carried out which also addressed those aforementioned issues. In this work an extensive review of such literature is carried out on the subject of PSS. It comprises the fundamental concepts about idea of PSS, design methodology and consideration as well as evaluating their effectiveness. The benefits of implementing PSS are also addressed here to raise the public awareness about the issue and help passing the obstacles to achieve a sustainable PSS. After categorization of the work the gap within the existed literature will be identified and guidelines for future research on the topic would be offered. 5

7 6 Systematic Review of Literatures about PSS This section constitutes the main part of the work and is dedicated to the idea of product service system and everything about it that has been studied and analyzed yet in the literature. To begin with, an extensive literature research has been carried with a key word of PSS, sustainability and product service evolution. Besides there were bunch of articles which I already had that primarily discussed about sustainability and related subjects like product service system. My work was to read and analysis them and pick those which their scope of work match and support the idea of PSS. Reviewing more than 355 papers, I found around 40 of them supporting our title of work, product service system, and finally after reading and analyzing them I came up with the following literature review chapter. To organize the literature review in a systematic way, I categorized the discussed topics in the papers into the main five subjects regarding PSS each of which were dedicated a subsection in this chapter. It starts with definition and concept of PSS, and second sub-section is about design for PSS which is the most common area of focus of the literature in the scope of PSS. This part is divided into the relevant sub-divisions as it is quite long. The next sub-sections go for value assessment, benefits of PSS, and the challenges exist against the design and implementation of the PSS. Figure 1 shows the article counts for different subsections within the analyzed literatures. Number of Articles Discussed in Each Area Article counts Challenges of Design and Implementation of PSS Article counts Benefits of PSS 8 Assessment 8 Design for PSS and Sustainability 29 Concept and Definition of PSS 16 8 Figure 1 - Number of Articles Discussed in Each Area 6

8 At the end of each sub-section I provide a table to analysis which author talk about which subsection and what was the focus of their relevant studies, to have more critical and analytical view of the discussed subject in the area of product-service system. The last part of this chapter dedicated to present some PSS implantation samples offered in the existing literature along with some PSS practices in the industry. This section would help clarifying the subjects discussed in the previous sections and support imagining how the general idea of PSS would be. 6.1 Concepts and Definitions of PSS: This category of articles comprises different types of papers. First cluster are those of which aiming at classifying the literatures content and bring up the ones who present some definitions and explanations that clarify the idea of product-service system and its origins. Another category of papers discussed in this part are the literatures which directly identify some definitions for PSS as a way to start their studies or researches in their own relevant topic in the area of productservice system. With respect to definitions of PSS, the provided articles talk about basic definitions, clarifying the elements of PSS, categorizing the different types of PSS and also introducing some specific kind of product-service system which all of them would come as follows. In short this part tend to answer this question: What is a PSS and how is it commonly defined? Basic Definitions and Concept One of the paper which aims to report the state-of-the-art of PSS research is T. S. Baines (2007). It classified the literature and major outcomes of each study is addressed and analyzed. This paper at first steps refers to a definition presented by Goedkoop (1999), with respect to PSS early definition. It interprets a PSS as a product and service combined in a system to deliver required user functionality in a way that reduces the impact on the environment. A summary of product-service system definitions given by literature are represented in the Table 1: 7

9 Author Goedkoop (1999) Centre for Sustainable Design 2011 Mont (2002) Manzini (2003) Brandstotter (2003) Wong (2004) ELIMA report (2005) Relevant Definition for PSS A product service-system is a system of products, services, networks of players and supporting infrastructure that continuously strives to be competitive, satisfy customer needs and have a lower environmental impact than traditional business models. A pre-designed system of products, supporting infrastructure and necessary networks that fulfil a user s needs on the market, have a smaller environmental impact than separate product and services with the same function fulfilment and are self-learning. A system of products, services, supporting networks and infrastructure that is designed to be: competitive, satisfy customer needs and have a lower environmental impact than traditional business models. An innovation strategy, shifting the business focus from designing (and selling) physical products only, to designing (and selling) a system of products and services which are jointly capable of fulfilling specific client demands. A PSS consists of tangible products and intangible services, designed and combined so that they are jointly capable of fulfilling specific customer needs. Additionally PSS tries to reach the goals of sustainable development. Product Service-Systems may be defined as a solution offered for sale that involves both a product and a service element, to deliver the required functionality. A product service-system is defined as a system of products, services, supporting networks and infrastructure that is designed to be: Competitive, Satisfy customer needs, & Have a lower environmental impact than traditional business models. Table 1- The Most Reffered Definitions for PSS Mont (2002) further explained the PSSs from different actors perspectives; for consumers, PSSs mean a shift from buying products to buying services and system solutions that have a potential to minimize the environmental impacts of consumer needs and wants. For producers and service providers, PSSs mean a higher degree of responsibility for the product s full life cycle, the early involvement of consumers in the design of the PSS, and design of the closedloop system. In general, PSSs are likely to give more attention to the use phase of the product s life cycle (consumer stage), than current product systems do. Ibid (1985) looked at PSS in service marketing perspective which represents the evolution of traditional generic and standardized services towards targeted and personalized ones. From the product management perspective, according to S. Rocchi (1997), PSS is an attempt to extend the service component around the product, in a product oriented business, or generating new service marketed as a product, for developing service oriented business. 8

10 Hitoshi Komoto (2005) looked at the PSS with the viewpoint of the stakeholders involved in the system within product lifecycle. He pointed out to the necessity of existence of strong collaboration among the stakeholders, like users, governments and manufacturers. Manufacturers have the vital role as they are decision makers to select a PSS application among the design alternatives, while users and governments constrain possible simulation PSSs by means of specification of function requirements and legislation. In this context the main concern of manufactures is to conceptualize the PSS in a product lifecycle perspective and to do this they need to design PSS in an earl phase and progressively update it by means of identifying the advantages and potential risks. Ines Omann (2003) believed that the basic idea of PSS is not to sell the product itself, but rather the service incorporated by the product. It can be perceived that consumers are interested in this service, or the function of the product, and not so much in the product itself. Having believed that PSS has service-centered characteristics, the author said that PSS can be divided into primary and secondary service. Primary service are the classical one, which there is no material components like information service, trade financial service or advisory service. Secondary services are yet divided into the add-to-product ones such as installation and maintenance, and the services that can be substituted by product like renting, leasing or contacting service. The latest has substantial contribution to the environmental and social improvement, as mentioned earlier in the previous definitions and applications of PSS. As a finding from those early description of the idea of PSS, according to T. S. Baines (2007), the PSS logic is premised on utilizing the knowledge of the designer-manufacturer to both increase value as an output and decrease material and other costs as an input to a system. Vasantha (2012) believes three different themes emerge, according to these definitions, namely the development of innovative business models, the integration of products and services into a unique offer and extending services to increase the value realization of products. Innovation and added value will emerge by considering stakeholder involvement, degrees of freedom and evaluation criteria. Figure 2 depicts the elements involved in PSS. It also helps understanding of how the idea of PSS work: 9

11 Figure 2 - Element Involved in the PSS (Vasantha 2010) PSS Categorization There have been various attempts to categorize the diverse types of PSS arrangements. Below is a description of the three main categories of PSS [Tischner (2002)] that have been generally accepted by researchers in this field. These categories were formed based on the interface and relation between the service provider and the customer. [Edward Morey (2003)] 1. Product-oriented services: Customer retains ownership of the product. An extended product service is provided by the manufacturer or a service provider. The most familiar examples of these services include maintenance agreements, repairs, upgrades, and warranties. Take-back and recycling services are other examples within this category. The company is motivated to introduce a PSS to minimize costs for a long-lasting, well-functioning product and to design products to take account of product end-of-life (re-usable/easily replaceable/ recyclable parts). [T.S. Baines (2007)] 2. Use-oriented services: Product is owned by the service provider who sells functions instead of products by means of modified distribution and payment systems. Typical examples include: leasing, pooling, and sharing (e.g. car sharing). 3. Result-oriented services. Replace products with information and services by providing customers with a specific result rather than a specific product. For example, product substituting 10

12 services. Products are substituted by new services, often driven by new technologies (answering machine is substituted by mailbox system ). Typical examples within this category include energy, refrigeration, and cleaning services. Based on this categorization different types of PS system can schemed as Figure 3: Figure 3 - Three types of product (Tukker 2004) According to this classification and considering those definitions came in the previous part, PSS can be seen as an effort towards servitization with focus of utilization of a product or asset in instead of ownership. And this whole process is accomplished by a suitable combination of product and offered service aiming at giving value in use to the customer. [TS Baines (2007)] Service Definitions and System Definitions Having need for a better understanding of the PSS concept, the separate definitions for the elements of product service system would leads us toward its meaning and what the idea is about. Tischner (2002) came up with clear definition of product, service and system as follow: 1. Product: a tangible commodity manufactured to be sold. It is capable of falling on your toes and of fulfilling a user s needs. 2. Service: an activity (work) done for others with an economic value and often done on a commercial basis. 3. System: a collection of elements including their relations. 11

13 Product is a more tangible concept which doesn t need be discussed so much, but when it comes to service, it would need more detailed and sensible description. Vasantha (2012) reviewed the literature and provided a list of definitions for service excited in the literature: Sakao (2007) defined services as an activity where a provider causes a receiver, usually with consideration, to change from an existing state to a new state that the receiver desires, where both contents and a channel are means to realize the service, while a traditional service performed only by a human is called service activity. Aurich et al. (2006) argued that technical services are mainly non-physical and are realized and consumed simultaneously. They classified three basic technical-service functions: support function, requirements fulfilment and information procurement. Maussang et al. (2009) stressed that the physical objects are functional entities that carry out the elementary functions of the system, while the service units are entities (mainly technical) that will ensure the smooth functioning of the whole system. Alonso-Rasgado et al. (2004) pointed out that the functional product supplier provides all the support systems that are required to keep the hardware operable. The support systems are often referred to as services. Welp et al. (2008) argued that industrial services have evolved from being a peripheral addon for technology to become a complementary part of an integral solution. Services exhibit a high degree of intangibility. Vasantha (2012) believes that according to these definitions, there are two different views of service exist; the traditional and the broader perspective. In the traditional approach, a service is a set of activities which intends to keep products functionally available. Such services can be maintenance, repair, overhaul, upgrade or other technical services. In a broader perspective, a service is a set of activities which intends to satisfy customer value. Depending on product lifecycle stage, if it is mature the traditional look is more adoptable and when the product is in its early stage then broader approach is more applicable. Tomiyama (2001) defined a service as a set of activities that delivers service contents through service channels from service providers to service receivers in a service environment, and generates values for service receivers. When we say the service is activity it means that service cannot be stored as opposed to materials and it disappears instantly. It is important to point out that service cannot be free from environmental impacts since service contents are material, energy, and/or information and the service channel in delivering service contents consumes material, energy, and information. Figure 4 illustrates the service concept within the framework of service provider, receiver, content and channel: 12

14 Figure 4 - Definition of Service (Tomiyama 2001) Defining properties of service vary according to the perspective chosen. Service properties such as intangibility, heterogeneity, inseparability, concretization and simultaneous consumption are suitable in the traditional approach. In the case of the broader view the emphasis of the process of co-creation is more adapted to that approach because of the search for global value, but yet the properties of the service cannot be seen clearly. Broader approaches provide wider contexts for considering environmental influences and substitution between tangible and intangible objects. Concerning to a clear lack of common understanding of PSS element Mont (2002) identified main elements of PSS as shown in the Figure 5 to provide a common term of reference for studying and design PSS. He added a PSS may consist of products, services, or various combinations of them but the ideal one is that when Products substituted by services. Services, at the point of sale, comprise personal assistance in shops, financial schemes provided to customers, explanations about product use and, of course, marketing. Maintenance is service of product aiming at extending the life cycle of product. Revalorization services is product takeback and re-use, or recycling materials. 13

15 Figure 5 - PSS Elements (Mont 2002) A Sample of PSS, Service Oriented Products Fujimoto (2003) in his article discussed about the development of service-oriented products based on the inverse manufacturing concept, and adopted this approach as a method to promise controlling the Quality, Cost and Delivery (QFD) of recycled material within the product s life cycle. Apart from the issue that says QFD of recycling system is not adequate to what a manufacturing system requires in today s economy that paper explains the service-oriented products (SOPs) approach which is a good sample of PSS and helps understanding the idea of PSS in a simplistic way. The article states SOPs can revise traditional thought which holds that only products comprising new materials and components are valuable. SOPs should be able to provide customers with new benefits not provided by ownership. Enabling customers to enjoy products they lease and to eventually exchange them for other products would be a good means of providing various services to customers. By leasing system the manufacturers would own the product till the end of lifecycle, so they can control the purchasing and recycle cost and reduce it consequently to raise the profitability. The service range in SOP could be installation support, operation assistance, maintenance, upgrading and collection of post-use products alongside the service a product performs. Required services differ according to usage pattern, the customer s knowledge, awareness of the environmental issues. For example, one customer may require optimal performance, be able to repair a product by himself, but not care about environmental loads of disposed products. Another customer may want to use a product with minimal effort, have expendables provided, 14

16 and care strongly about disposal. To deal with this issue the author suggested several service courses for a product group named it as service menu. This service course lists all the services required to be covered during product lifecycle, like installation and set-up manual, operation support, maintenance support. It can be interpreted as a mass customization defined service wise rather than of product wise. In these service-oriented products, a customer selects a specific service course from a service menu and obtains a product incorporated into the selected service course. They can obtain many services in accordance with the course they select and also alter the service course, if desired, for an extra charge. Manufacturers create several kinds of products according to their service menu by combining functional modules. Reuse of functional modules enables them to be utilized until the very end of their lifetime. And this is simple way of PSS implementation and its consequent benefits for both manufacturer and user and of course leading to less environmental hazards List of Articles Used List of papers that either review PSS definitions or give new definitions are listed in Table Publish Author Area of Focus Year 2001 Mont The Concept of Product Service System - Basics 2001 Tomiyama Service Engineering For the Purpose of Service Content Intensifying 2002 Morelli Review of Methodological Tools Applied in PSS Design 2002 Manzini & Vezzoli Strategic Approach for PSS Design 2003 Ines Omann PSS and How it Impact Sustainability 2003 Fujimoto Service Oriented Product Design, Modeling and Evaluation 2003 Edward Morey Potentials of PSS for Economy and Environment 2005 Tomiyama Methodology and Guidelines for Service Design 2005 Hitoshi Komoto Life Cycle Simulation for Analysis of PSS 2007 T S Baines Review of state-of-art work in PSS 2008 Welp Modelling the System of Product Service 2009 Xiaoyu Yang PSS Realization Introducing a Service Enabler Toolkit 2010 Tsai Chi Kuo Simulation of Purchase and Rental In the context of PSS 2010 Vasantha Review of PSS Design Methodology 2012 H. Allen Hu Sustainability Evaluation Model 2012 Prado Consideration for Sustainable PSS in Small Medium Size Enterprises Table 2 Reseach Fields in PSS Concept and Definition 6.2 Design for Sustainability: When designing for PSS offerings, a broad perspective over the product life-cycle is needed. This includes, for example, the stages of manufacturing, maintenance, logistics and remanufacturing. With respect to sustainability issues in PSS, design is the stage that has the strongest influence on environmental impact, and which sets the product s capabilities. [Erik 15

17 Sundin (2009)]. Although product design and service design focus on different aspects, both product and service should be considered to satisfy customer requirements and this again would level up the significance of design stage [Zaifang Zhang (2010)]. Tan et al. (2010) proposed four dimensions of PSS that had to be considered during design: value proposition, product life cycle, activity modelling cycle and the actor network. Figure 6 represents these dimensions together with methodology steps. They argued that these elements cover the essential design elements of a PSS. They noted that an analysis in these four dimensions appears to give a good understanding of how current products and systems work and is also helpful to uncover parts were dimensions could be aligned better. Figure 6 - The four PSS dimensions and design process (Tan et al 2010) In this part I collected the part of literature which discuss about design of product and service with regard to PSS and how it can affect the efficiency of product-service system and ease its implementation. First part comes with papers that talk about product design for PSS and the second part discuss about elements need to be considered for designing the services. The third part dedicated to the articles that discuss about the designing a system and business model for PSS. The last part would review the articles which discuss about some considerations in PSS design which make it more effective with respect to sustainability along with the some guidelines and frameworks for development and improvement of PSS. 16

18 6.2.1 Product Design for PSS With a more optimized product design, obstacles can be reduced and profits increased. The product used in PSS should have easy-to-perform maintenance and remanufacturing/repairs in order to reduce costs. In this part those papers discussing about product design with respect to product service system are collected. It starts with product conceptualization which guarantees sustainability, and the rest go for product design consideration with respect to product s capability to be offered by relevant services like maintenance in an integrated way, or be remanufacture or re-assembled as simple and costless way as possible. Then the product design characteristics for end-of-life management and some general approach for product design in the context of PSS and within lifecycle perspective would be discussed later. Generally, conceptual design is one of the most important stages because most lifecycle cost and critical performance of a product or service is determined in this stage. Pahl and Beitz (1996) also emphasized the importance of conceptual design because it is very difficult to correct the fundamental shortcomings in the later embodiment and detail design phases. Wei Yan (2008) in his study tried to investigate into integration of functional, marketing and commercial perspective with product sustainability in the early product design conceptualization. He established a sustainable product conceptualization system (SPCS) which guarantees to make design decision-making more comprehensively and resolve the subjective nature of sustainable design knowledge at the early stage in system point of view and would effectively coordinate product sustainability and cost efficiency in technological level. 17

19 Figure 7 - Architecture of Sustainable Product Conceptualization System (Wei Yan 2008) Figure 7 shows a framework of the proposed sustainable product conceptualization system (SPCS). The system consists of three modules: product platform and design options generation module, preliminary sustainable product conceptualization module, and secondary sustainable product conceptualization module. The three modules are described in Wei Yan (2008) briefly as follows: 1. The initial product platform of a specific product is elicited by designers or domain experts using a requirements acquisition technique called general sorting and a knowledge representation structure called design knowledge hierarchy (DKH). With the product platform, design properties (e.g., components, parts and part options) and initial design options can be obtained through combining different part options. 2. The initial design criteria are first solicited by domain experts in such terms as functional, marketing, and commercial perspectives. Later the Hopfield network is used to narrow down initial design solution space that contains a large number of initial design options and the uncertain and qualitative nature of early stage design knowledge. 3. The sustainability and cost criteria are subsequently solicited by domain expert. In order to coordinate product sustainability degree and cost efficiency, these criteria 18

20 are correlated to form the sustainability-cost pairs. Thereafter, they are used as decision-making indices for selecting the preferred design options for the purpose of sustainable product conceptualization. We go shortly on the Secondary sustainable product conceptualization part which narrow down the criteria for the product design, to not only the functional, marketing and commercial perspectives but also the sustainability criteria to be included alongside the relevant costs. Although a large number of examples with conflicting market and environment goals could be found, effective incorporation of environmental friendliness into the design of products does not necessarily result in higher product costs. It can possibly lead to reductions in costs of development, assembly, packaging, service, and disposal [Jackson (2008)]. So it is necessary to consider product sustainability as well as cost issue evaluation in a product life cycle perspective during product conceptualization. The sustainability and cost criteria presented in Figure 8 can accordingly be solicited by domain experts or designers. Looking at the criteria precisely, there are some common attributes between sustainability and cost aspects. These may, for example, include energy consumption, resource application, environmental load, package/transport, end-of-life recyclability, supply chain, and green marketing. This implies that a rather strong relationship between these two aspects in sustainable product conceptualization. Nevertheless, different sub-attributes are also solicited pertaining to common attributes upon different aspects. 19

21 Figure 8 - Representation of Sustainability and Cost Criteria (Wei Yan 2008) Maintenance, as one of the main services to be offered in an integrated product-service system, can be combined to the product design at the early design stage. Although product design and service design focus on different aspects, both product and service should be considered to satisfy Customer Requirements (which can be labeled as CRs). Maintenance, still as a representative of service, is the most efficient way to keep the function available during the product lifecycle [Takata et al. (2004)]. An integrated framework of product & maintenance (P&M) development is proposed which can be considered as an initiate work for PSS development. Zaifang Zhang (2010) in his study addressed the conceptual design problems of Product and Maintenance (Namely as P&M), which begin with CRs and end with a set of feasible P&M concepts. An integrated approach based on quality function deployment (QFD) and failure mode and effects analysis (FMEA) is proposed for the issue. Product combining with its related maintenance, as the core of PSS, is the main part for providing and ensuring the 20

22 expected function of customers. In this study the author tried to generate optimum P&M concept considering both product quality and maintenance quality. Aurich et al. (2006), suggested a new model for PSS, based on maintenance as the main service during product life cycle. As shown in Figure 9 Product concept is surrounded by related maintenance concept and maintenance concept is an attachment for a particular product or module concept, which can be described by maintenance strategies and maintenance actions. Maintenance strategies could be generally of different types like failure based maintenance, condition based maintenance, use-based maintenance, and so on. The parameters of maintenance strategies also should be determined, e.g. maintenance frequency or time interval. Action module expresses a process which consisted of the related core activities for implementing the service as shown in Figure 9(b). For example, action module of part polishing may include several activities: order assigning, part disassembling, part polishing, part assembling and debugging. Figure 9 - P&M Concept (Zhang 2010) Determination of interrelationships between P&M is a key activity in the P&M conceptual design. As shown in Figure 9(c), product risk information and maintenance information can be seen as the key interrelationships between product concept and maintenance concept. A FMEA tool is used to identify the potential failure models, analyses their effects, determine their priority and then implement appropriate maintenance actions. Each maintenance concept may have different maintenance information which should be returned to its corresponding product or module concept. According to the information, corresponding improvements should be taken on the product concept. The conceptual product design is developed based on three domain framework [Suh (1990)] as shown at the top of Figure 10. Those domains are requirement domain, function domain and concept domain. The requirement domains express the Customer Requirement of target customer. The function domain represents the function structure and the relevant Engineering Characteristics (which can be called ECs). For a better translation, ECs are divided into product-related-ecs and maintenance-related-ecs {P ECp1, M ECp2}. The concept domain represents product concept and maintenance concept. The product concept is based on a modular structure concept. Depending on product complexity, 21

23 module level maintenance concept should be developed for each module concept and then the holistic maintenance concept is generated through the combinations of these module-level maintenance concepts. To come up with the P&M conceptual design those three domains, utilizing Quality Function Deployment (QFD) method and Failure Mode and Effects Analysis (FMEA) tool, are changed into numerical format to be easily assessed as a quantitative scale. As shown at the bottom of Figure 5 the whole process divided into planning level and operation level. In the planning level there are two mappings, each of which created using QFD method. The first mapping start with receiving CRs as inputs and translating into P-ECs and M-ECs, followed by the second mapping which gets its output, that is relevant ECs, and then again translated them into the product module characteristics and maintenance strategies. The correlation matrix in the first House of Quality (HoQ) is divided into four matrices: two self-correlation matrices of P- ECs and M-ECs, and two correlation matrices between P-ECs and M-ECs. Similarly, the correlation matrix in the second HoQ is divided into three matrices: two self-correlation matrices of product and maintenance, and one attaching matrix between each module with its maintenance. The attaching matrix indicates the affiliations of the maintenance with their modules. In the second HoQ, the relationship matrix between M-ECs and maintenance strategies is used to express the evaluation values of each maintenance strategy with each M-EC. Based on multiplying them with the weights of M-ECs, maintenance strategies are easily evaluated. Generally, only one appropriate maintenance strategy is adopted for a given product or module concept. Considering the complexity, the product can be divided into several modules. The total evaluation score for each maintenance strategy of the product concept can be determined through summing the evaluation score of each module. 22

24 Figure 10 - P&M concept development using QFD and FMEA (Zhang 2010) And then the optimal one for the product concept can be identified. The outputs of the second HoQ are also used to guide P&M conceptual design and then feasible P&M concepts are generated by designers. In the operational level the maintenance actions can be identified using FMEA tool by finding the failure modes of the product concept and its effects and analysis. For a specific module concept, the designers use the FMEA tool to identify and analyze the potential failure modes. For these failure modes, a judgment should be used to estimate whether they can be eliminated. If yes, the designers will give some suggestions for modifying the module concept. If not, other actions should be added to prevent or monitor the failure modes. Based on the results of FMEA and maintenance strategies, the maintenance actions can be determined for a specific product concept. 23

25 As previously mentioned, when designing for PSS offering, a broad perspective over the product life-cycle is needed. This includes, for example, the stages of manufacturing, maintenance, logistics and remanufacturing. Sundin (2009) in his study, targeted the manufacturing and remanufacturing more specifically and scrutinize the product design development procedure to ease the process of remanufacturing, as part of PSS offering. In other word design features that may impede remanufacturing should be identified at the design stage, and investigated to eliminate them or determine how to reduce their negative impacts so that PSS could be optimized. Typically product design focused on functionality or cost based on environmental issues, and this is the point where poor remanufacturing potential coming from. Ishii (1998) claimed that design-for-recycling received more attention than design-for-remanufacturing, although remanufacturing may provide greater environmental and financial benefits than recycling in a way that ensures the designers about the quality of recycled materials to be utilized again. Furthermore, additional energy is required to reform recycled materials into manufactured products because the energy embodied in the materials and purchased parts assembled in the initial manufacture of the product is lost during the recycling process [Jacobs (1991)]. We need to consider all the operations steps of remanufacturing, as a phase of lifecycle, when we want to adapt the product to that. In the case of reassembly, if this process is difficult to perform, the effort that should be put to make the product adapted to remanufacturing is not important. What matters is that the different part of product can be reused, and this is the goal of design for remanufacturing. Figure 11 - A generic Remanufacturing Flowchart (Sundin 2009) 24

26 The need to simultaneously consider all of the remanufacturing process activities is highlighted by Ijomah et al. (2007), who illustrated that particular product features may simultaneously impact on several remanufacturing activities. For example, material type influences the remanufacturing steps of cleaning of components, remanufacture components, and test. In all of these process steps, high-material strength has positive impact since it enhances durability and hence the potential of the component to withstand the stresses of each of those process steps. On the other hand, product features such as type of bonding may have a positive impact on one remanufacturing activity, and at the same time have a negative impact on another. For example, strong adhesives such as epoxy resin may facilitate assembly due to ease-ofapplication, but at the same time hinder disassembly. This will hinder component cleaning and internal component rectification because of accessibility issues. This is a key remanufacturing benefit in assisting PSS, since it can help to reduce the service company s financial outlay by providing a lower cost but effective method for maintaining products. Sundin (2009) represents a matrix called RemPro, depicted in Table 3, which includes the product properties that are suitable for different steps of remanufacturing like inspection, cleaning, disassembly, storage, reprocess, reassembly and testing. According to the case study [Sundin (2004)] that he carried out in some remanufacturing companies in Sweden and Japan he found out that the inspection, cleaning and reprocessing are among the most important steps in the remanufacturing process. In his RemPro-matix he highlighted the most significant product properties that the designer of new product must take into consideration for designing a product well-appropriated to reassembly. Remanufacturing Steps Inspection Product Properties Ease of Identification Ease of Verification Ease of Access Ease of Handling Ease of Separation Ease of Securing Ease of Alignment Ease of Stacking Wear Resistance Table 3 - The RemPro-matrix showing the relationship between product properties and rem. process steps (Sundin 2009) As seen in the Table 3 the ease of access and wear resistance must be paid the most attention at the design stage since these are important for both the cleaning and reprocessing steps. Following this, the designer should prioritize the properties of ease-of-identification, ease-of- Cleaning Disassembly Storage Reprocess Reassembly Testing 25

27 verification, ease-of-handling and ease-of-separation, since these properties are also included as preferable for the crucial steps, but not to the same extent. We need to consider that the only products satisfying environmental legislation can be introduced into the market. Thus, design-for-remanufacturing guidelines would also help to ensure that products can meet current environmental legislative requirements. Another issue to point out is that different products may have different levels of environmental impacts at different stages, so the design-for-remanufacturing process must consider the whole life-cycle to target key environmental impacts and therefore reduce the relevant potential consequents. As environmental regulations urge stronger stewardship for product retirement and disposal can no longer be the primary retirement strategy for end-of-life products, Karthik Ramani (2010) paid a considerable attention to management of product end-of-life. EOL management is the process of converting end-of-life products into remarketable products, components, or materials. It enables manufacturers to comply with legislation while gaining some economic advantage as well. As a result, more companies have become interested in EOL management. But the most significant thing to point out is that the product design has a vital impact in accomplishing a proper, yet as a result profitable, end-of-life management. It means that EOL management should be considered at the design stage in order to facilitate efficient and effective take-back and recovery. Before entering the product design characteristics with respect to EOL management, the process of EOL should clearly defined. End-of-Life management process starts from product take-back, which is the process of collecting products that reach an end-of-life status. After product take-back, the collected products move to a recovery plant where the unrecoverable parts are moved for disposal after functional testing of quality. The recoverable units on the other hand could be treated in different types of reprocessing method including reuse, refurbishing, remanufacturing, and material recovery. Based on adopted EOL strategy the product design should be improved. A number of methods have been developed to evaluate product designs based on their optimal EOL strategies. The optimal EOL strategy reveals the maximum recovery potential of the current product design. This information is helpful in answering various design questions. For instance, how good is the current design, which design is better than others, why, what is the limitation of current EOL management, and how can the product design be improved for better EOL management? Some authors like Pnueli and Zussman (1997) worked on EOL management of single type of product and suggested AND/OR graph to represent a product structure and suggested algorithms to find optimal disassembly and recovery plans for the product. In order to improve overall processes, modular design, where similar components sharing common characteristics are designed into a module, is frequently recommended in literature, like Marks et al. (1993), Ishii et al. (1998). 26

28 In a study that carried out by P.P. Wang (2011) product was one of the dimension for modular product-service. In the concept of PSS the product has the role of delivering function to the customer. On the other hand the Producers have the responsibility for disposal and the motivation to produce more durable goods because they remain the ownership of material artifact. So, producers have to take the lifecycle of products into account and integrate the lifecycle of product and service. A theme for integrated perspective of product-service life cycle can be figured out as seen in Figure 12: Figure 12 - Inegrated Product-service lifecycle management (P.P. Wang 2011) Service Design for PSS To continue the previous section, in the current part yet again we pick the part of literature which offered some guidelines for designing a product-service system. But now we specifically go through the ones who addressed the service design in the context of PSS. Tomiyama (2001) established a service engineering structure, which in the context of sustainability, aiming at intensifying the service content within the product lifecycle as a contribution to dematerialization. In this theory artifacts are devices to deliver, amplify, and automate services. In fact they are part of service channel. If we call F as the function of service object and call Q as the quality of the service channel, the total generated added-value of a service V would be calculated as follow V = F Q The aim of service engineering method is to intensify and improve this service generation. To increase V we need to level up Q and F, or practically, for example, we need the customization of product and the customization of service delivery. According to the author the service engineering can be divided into service design engineering, service production 27

29 engineering and service development engineering. An example of service design engineering is to develop supporting tools and methodologies for service designer. Service production engineering could be engineering tools to facilitate and automate service production process, like ATM as an example. And finally the target of service development engineering is to set an index to evaluate service. Then the author credited the service modelling as the basis for establishing service design, production and development engineering. He introduced the following elements of service to be modelled: Service goal: service is an activity and, when sent by the service provider, changes the state of the service receiver, and the service goal is to satisfy the needs of service receiver by changing its state. Service environment: the environment within which the service occurred contains service provider, service channel, service content and service receiver. Service channel: it indicated the quality characteristics of service like timeliness, frequency, punctuality and convenience. The aim of service engineering is at improving these elements Tomiyama (2005) again in a new study came up with offering methodology for designing new service, considering its suitability to PSS. After providing definition and categorizing the different range of services and identifying the elements involved in service providing and service receiving he added that a design methodology typically begins with functional requirements and converts them in one way or another to physical embodiment structure as a design solution. Referring to Pahl and Beitz (1996) for design methodology, they recommend a procedure of analysis of the problem, identifying required function, decomposition of required function into sub functions, finding embodiment mechanisms of those sub functions focusing on physical effects, and composing those embodiment mechanisms into a whole structure. He started the service design methodology with requirements. The Table 4 depicts the typical service design problem in which service goal is the requirement, service environment, service provider, service receiver, aim of the service receiver s activity, and service target are given as conditions, and the rest are elements to be designed. 28

30 Service environment Service provider Service receiver Aim of the service receiver s activity Service target Service body (as an activity) Service channel Service content Service information Service goal (achievement of an aim, state change) Service quality Service fee Table 4 - A typical service design problem (Tomiyama 2005) Given Given Given Given Given To be designed To be designed To be designed To be designed Requirement To be designed To be designed Given a service database organized according to Table 4, we can perform a service design. First, we need to understand service elements relevant to the service receiver s activity. This will generate information about the required service in the form of Table 4. Then, we might be able to find out a similar (existing) service that can be slightly modified to exhibit required service performance. While there do not exist so many methods to do so at this moment, we can point out that changing ownership plays a crucial role in considering services. Changing ownership is another illustration of PSS which was already discussed in the PSS Definition section. In the context of PSS the focus of added-value generation shifts towards more effective use of physical products, hence less environmental impacts. Table 5 summarizes possibilities of servicification in the context of washing clothes. This table implies that ownership is a key for servicification. Washing clothes is a typical service associated with product life cycle. However, different patterns in ownerships of the clothes and the washing machine result in possibilities of different services. If the service target or service channel is an artifact, we may change the ownership of the artifact and come up with another scenario that involves a new service. 29

31 Possession Reuse of Purchasing Location Washed by Service of Cloth Cloth after and Owning Example Washing of Washing Machine Yes Yes Yes Individual Owner of Washing at household the Cloth Home No Individual Owner of Purchasing household the Cloth washing functions (Pay per wash) Rental washing machines Centralized Owner of Coin-operated the Cloth laundry Outsourcing Laundry/Dry cleaning services No N/A N/A N/A Disposal Cloth No Yes Yes/No Centralized Outsourcing Rental costumes Rental shirts Rental clothes in hospitals Rental uniforms Table 5 - Servicification of washing clothes (Tomiyama 2005) Xiaoyu Yang (2009) in a study introduced a toolkit called "service enabler" which helps create and delivery of effective service by means of product life cycle data acquisition. Before introducing the offered tool some concepts need to be defined. Firstly, the life cycle data can be divided into static data and dynamic data. Static data refers to specifications of the product and details of materials, components and suppliers, configuration options and operation instructions. This kind of data are available at the beginning of the product life cycle and usually remains unchanged during product life time. The typical examples of static data, within the context of product lifecycle data, are bill of materials, hazardous materials, material components, take-back information, disassembly attributes (the sequence and the required tools) and recycling information. On the other hand the dynamic data are mostly coming from usage data which reflects use pattern, environmental conditions and servicing actions. This method used primarily uses the dynamic data. Another tool is IDU (Intelligent Data Unit) which is a device that consists of sensors, a controller, memory and data communication interface and used for obtaining dynamic data. It is either embedded into the product or can be an auxiliary device within the product (suitable for legacy products). Dynamic data are obtained from sensors and represent the measured parameters or values calculated from the data. 30

32 The service enabler proposed in that research study is a software agent and defined as an information management system or expert system or combination of both that is capable of receiving product lifecycle data and using them to facilitate the creation and delivery of appropriate product related services during a product life cycle. The service enabler software components grab the required data (Dynamic data) and process and translate them into suitable information or knowledge and integrate them into suitable service content to feed the service provider. Figure 13 demonstrates overall service enabling process. Figure 13 - Overall service enabling process (Xiaoyu Yang 2009) The whole process of service enabling can be describe as (i) Utilize statistical analysis, data mining and ICT facilities to extract information and discover knowledge from data. (ii) The generated information and knowledge usually need to be configured or transformed into a certain template or format which is usually pre-defined by the service provider to form the appropriate service content. With the availability of the service content, service providers can deliver corresponding service to customers. Figure 14 represents the service enabler reference architecture for consumer products. 31

33 Figure 14 - Service enabler reference architecture for consumer products (Xiaoyu Yang 2009) Life Cycle Data Communication Interface is responsible for receiving data from various channels. Service Content Delivery Interface is a user-oriented interface through which a variety of created service content is delivered. Security Manager holds the commercial value of the data, information or service content. Data/Information Store not only provides a persistent storage for data, information or service content, but also provides all the essential housekeeping functions to enable others (e.g. information engine, service enabler manager) to manage and provide access to the stored content. Information Engine consists of various analytical tools to facilitate information processing, which leads to exposure of implicit and explicit information, and unexpected patterns and relationships within the data set. Knowledge Base and Inference Engine contains the know-how from which the inference engine draws conclusions and finally Function Modules include query engine, scheduler, notifier, and report generator, etc. which are designed to provide essential functionalities. P.P. Wang (2011) in a study that talked about modular development of PSS, service was one of the dimension of the modular product-service. According to the author, to exploit the ecological and economical potential of PSS we need a whole system optimization which calls for an integrated product-service lifecycle perspective as discussed in the previous subsection and depicted in Figure 12. Having this life cycle view about service, this would guide us to transform from providing basic service (such as consultation, distribution, installation, commissioning, diagnosis, and so on) to providing total service (such as agile proactive service and integrated solution). For this transition we firstly need to increase customer value by replacing product- 32

34 oriented service by customer-oriented service. Figure 15 illustrates the transformation roadmap for lifecycle service. Figure 15 - Inegrated Product-service lifecycle management (P.P. Wang 2011) Rasgado (2004) provided a detailed service system design structure in the context of functional product. The success of total care products (or functional) depends upon both hardware and services. Well established methods exist for the design of hardware. In comparison, design processes and methods for services are not so well developed. That s why the main focus of the author s study is on service system design. As functional product is described as a hardware combined with service support system, it can be seen as a practice of PSS and as a result its relevant service system design is going to be a desirable topic to discuss. In this context the service system is required to include all the actions needed to ensure that a certain function is provided to a customer like actions on hardware (remanufacture, spares provision, on-site work), decision-making, forecasting, operations planning, data collection storage and intellectual property (education of users and suppliers). The author identified five stages to design a service system support as follows, which are also described in the Figure 16: 1. Concept creation for the service support system. 33

35 2. Identification of subsystems required. 3. Integration of the subsystems that together will provide the service. 4. Modelling of the proposed service system. 5. Testing and implementation. Figure 16 - Five stages of service design (Rasgado 2004) The general activities or steps involved in the development of concept design for products or service systems (in general, and specifically for functional product) identified by Bitran and Pedrosa (1998) are as follows: Step 1: collect the voice of the customer. Step 2: requirement ranking. Customer requirements are collected from step 1. Some form of ranking is required in order to distinguish between the more critical and the less critical needs. Step 3: concept generation. The concept generation step starts when designers begin to consider what attributes and functions of the physical system are likely to fulfil the design requirements. Step 4: concept selection. Quite the same procedure required for the case of functional product but the functional product concept is gradually built up between client and provider in iterative process in which the client discusses business potential and the provider discusses ways by which the potential may be realized. The identification and integration of the required service subsystems phase is carried out in concept creation. The required subsystems to establish a service system are identified and then 34

36 the supplier would decide if those subsystems can be adapted to perform service system or the further innovative subsystems would be required. The four typical subsystem to form a service support system are identified as follows: Operations planning. Hardware maintenance and remanufacture. Data storage and decision-making. Service processing. In the Figure 17 the service support system and these four core service subsystem, for the case of product in bakery industry, can be seen: Figure 17 - Service support system and the Core Subsystems - Example of Bakery Industry (Rasgado 2004) Before getting into service support system modelling for functional product the author carried out an extensive literature review for the modelling of service. One of the main approach for the mapping of the structure of service is service blueprinting approach proposed by Shostack (1984) and is also reviewed in Rasgado s paper. Shostack bases the service blueprinting methodology on systems that have been developed to deal with processes, that is, time/motion or methods engineering, Program Evaluation Review Technique (PERT)/project programming and computer systems and software design. The basic requirements of a service blueprint are identified as follows: It must show time dimensions in diagrammatic form, as does PERT charting. It must identify all main functions and sub-functions of the service, as methods engineering does. 35

37 It must define the tolerance of the model (i.e. the permissible variation from the blueprint s standards). The actual process of designing a blueprint involves the consideration of several issues including identifying the processes that constitute the service, isolating the points in the system where failure may occur, establishing time frames including standard execution times and deviations, and analyzing profitability. The potential benefits of service blueprinting are identified below: It provides a visual and quantitative description of any service element. It allows a service to be created on paper. It allows the marketer to know exactly what is being tested (e.g. deviation tolerances, fail points consumer values associated with specific functions, etc.) It can be used to mock up a prototype or pilot service that can provide the marketer with concrete actionable feedback that can be used to modify the service. Reviewing this modeling approach and after forming the service system by integrating required sub-system, this is time for modelling and simulation to test the functionality of the service system. The author applied computational model to construct a representation for service system. In that simulation model two variables are considered; time taken to perform the service and the quality and information flow within the system. Data acquired from this model would enable service perform times and data quality and flow to be investigated, providing a sense or indication of quality and time. And the last step is testing the model. According to the literature, which the author reviewed, the aim of testing must be to evaluate if the users: Understands the idea of the proposed service. Reacts favorably to it Feels it offers benefits that answer unmet needs. Sakao (2007) introduced the service engineering as a novel engineering discipline which is aligned with eco-design technics (as practice in PSS). In that paper first the scheme of service engineering was explained then a methodology of modeling and designing services was presented and finally those methods and tools are verified to be effective through applications. In this study applied the terms that were used in Tomiyama s (2001) paper in defining service like service provider which provide service content to the service receiver, through service channel, to change the state of service receiver. In this context the service in integrated into the product which together are able to satisfy the customer or service receiver. Now service engineering SE is new defined as a discipline to increase the value of artifacts and to decrease the load on the environment by reason of focusing service and aims at intensifying, improving, and automating this whole framework of service creation, service delivery, and service consumption. The whole technic would finally facilitate the quality and function of the service content. 36

38 The author then defined receiver state parameter RSP to consider the state change of customer. In this way the service design carries more customer satisfaction as opposed to traditional engineering for designing physical object. The customers state changes are reflected by set of RSPs which their values are defined according to Boolean logic, and could be value, if change state is positive, or cost, if the change state is negative. RSPs change directly by received contents, whose flow is changed by a channel so the variables that control CRPs are the service content and service channel, which are called functional parameters FPs. The outline of the service model consist of sub-models such as flow model, view model, scope model and scenario model. Sequential chain of intermediate agents existed through the network of service is indicated by flow model. A scope model includes all the RSPs within the relevant provider and receiver and specifies a range of a service spanning from an initial provider to a final receiver. A view model expresses the mutual relationships among RSPs and FPs and helps designers with customizing value and costs in the form of RSPs by changing corresponding realization structures represented in the form of FPs. A great scheme of these models can be seen in Figure 18: Figure 18 - The relation among three sub models (Sakao 2007) Finally the scenario model demonstrates receivers themselves and their behaviors in receiving the service. It serves as a direct source for producing a variety of RSP sets depending of customers properties. Therefore, this will be a key element for understanding customers needs and wants. It contains two types of information, the behavior of receiver and the property of the receiver. The behavior id described as a transition graph whose node represents a state of a receiver and whose arc refers to a transition between two states (either temporal or causal). The property is represented by an application of the concept named Persona which is usually used in practical design of software interfaces. This can take demographic data or physical data. 37

39 Based on those models the author came up with a service design procedure depicted in Figure 19: Figure 19 - The proposed design process (Sakao 2007) 38

40 Aurich (2006) offered a systematic process of technical service design, which he believed that is perquisite for technical PSS design. It starts from the finding and analyzing customer demands and assessment of the economical and technical feasibilities and continues with concept development and identifying the potential solution for meeting the customer requirements and ends with realization planning and prototype testing. The whole process is depicted in Figure 20: Figure 20 - Technical service design process (Aurich 2006) System Design and Business Models for PSS Before start reviewing the methodologies for product service system design and presented business models for PSS, I refer to a study which realized the main issues that the existed literatures have focused on for designing a product service system. Vasantha (2012) carried out and extensive literature review on existed methodologies for PSS design and found out twenty dimensions and issues that were addressed in them and then introduced a maturity model showing the level of development of those issues in those methodologies. Those dimensions are: 1. The driving factors such as added value, innovation, risks, uncertainties and cost reduction of PSS are not properly modelled. Also the changing customer requirements, which reflect risks and uncertainty, are not incorporated in the methodologies. 2. The roles and the capabilities of the stakeholders participating in co-design PSS are not discussed. 3. The importance of co-creation between stakeholders is only mentioned. 39

41 4. The overall process of integrating product and service are discussed and well detailed but the intricate steps within each stage are not mentioned. 5. There is no detail of design process for creating innovative business model. 6. The impacts that a business model could have on product or service offer are not well considered. 7. Many multi-disciplinary approaches in design process need to be adopted to lead to a sustainable PSS. The lack of this issue can be seen from the methodologies 8. The differences in PSS design processes for different types of PSS (product/use/result oriented) are not discussed. 9. There is a focus in methodologies to achieve sustainability but there is no support in there to guarantee reaching those sustainability objectives 10. The generation of PSS offerings is considered in most of the methodologies. 11. The PSS evaluations tools and methodologies require to have long-term perspective. 12. The initial life-cycle phases of PSSs involving planning and design are illustrated in all the methodologies. 13. Some phases of life cycle like implementation and monitoring were significantly ignored. 14. The interactions and feedback loops existed between the stakeholders and different steps of PSS process are hardly described. 15. The representation technics of PSS need to be merged into the commonly agreed technics. 16. The levels of granularity in PSS representation are not detailed. 17. A better ontology is required to have a common understanding of elements used in methodologies to create PSS. 18. The quantitative factors involved in defining PSS are more correctly represented than the qualitative ones. 19. The dynamics involved in PSS characteristics are not suitably considered. 20. The methodologies did not distinguish the industrial domain, such as B2B or B2C, of business. Figure 21 (starting from Requirements list for developing PSS, and rotating clockwise) illustrates the maturity for different issues considered in the PSS domain. 40

42 Figure 21 - Relative maturity of various issues considered in PSS domain (Vasantha 2012) T.S. Baines (2007) also review the methodologies existed in the literature for PSS design and he believed that these tools and methodologies tend to lack a critical and in-depth evaluation of their performance in practice. They are typically a subtle development of more conventional processes, and there is a lack of evidence for the completeness of the set of tools and methods proposed, he added Now we review some methodologies to design and model product service system. Xiaoyu Yang (2009) after introducing its software agent, service enabler, which was discussed in the previous part, provided a scenario or PSS utilizing that methodology as shown in Figure 22. The author believed that the rationale for this methodology is that: (i) product life cycle data is a valuable asset which has potential to add value for the manufacturer, the consumer, and other associated stakeholders. ii) The application of statistical analysis and intelligent data mining techniques can be used to find hidden patterns and extract knowledge from data which can then be packaged or integrated into suitable service content. 41

43 Figure 22 - A typical scenario of PSS for consumer products (Xiaoyu Yang 2009) Welp (2008) carried out a study to present a modelling approach for integrated development of integrated product-service system (IPS²) concepts in early development phases. Linking three different business model to IPS² by using a case study that the authors carried out, they came up with the following structure as a basic for IPS² model: 42

44 Figure 23 a) IPS² basic structure b) Supplier and customer perception of products and Services (Xiaoyu Yang 2009) Business model defines and covers the entire delivery/use phase. It therefore contains abstract constructs like customers and suppliers targets as well as a representation of possible contradictions between their preferences. Surrounding conditions and their respective changes as well as requirements and restrictions are also inherent parts of the business model. In short it defines the architecture for products, services and information flows along with the description of business actor and their roles. The IPS² systems behavior expresses the link between the business model (answer to what ) and the IPS² itself (answer to how ). The IPS² systems behavior enables to assess the interplay of product and service artefacts as well as the reaction to anticipated changes of surrounding conditions during the entire delivery and use phase. The term IPS² itself refers to technical process for transformation of input into output. The technical basis is composed of a mechatronic core system and an associated human core resource. The mechatronic core system includes its mechatronic components and supplementary IPS²-induced artefacts. In this context the phrase IPS²- induced is related to extraordinary product or service artefacts which are not necessarily in accordance with the definition of functions of the product in common productoriented business model but is in close connection with their relevant functions in use and result oriented business models. As illustrated in part b of Figure 23 the objective of assessing systems behavior during IPS² concept modelling is initiated by defining an IPS²-function, in this case monitor system s condition. Looking at this model would help us understand that supplier may perceive a solution 43

45 as a product, while the customer sees that exact same solution as service. Viewing products and services from a different angle, it becomes obvious that in order to fulfil IPS²-functions, two types of artefacts are needed in general. As illustrated in Figure 23 b, IPS²-objects, for instance a human resource or a technical device, constitute a physical structure. Furthermore, IPS²processes, for example an algorithm for observing and reporting, need to be determined in order to reach a desired system state. By defining IPS²-object + IPS²-process pairs, products and services can be developed in an integrated concept model. The connection of multiple IPS²-object + IPS²-process pairs represents the IPS² systems behavior along the entire delivery/use phase. Regarding the IPS² basic system this corresponds to the replacement of product and service artefacts by IPS²-object + IPS²process pairs. In the lack of sufficient study for product reuse business, involving various market segments, Toshimitsu Kumazawa (2005) tried to provide a business model for the businesses in transition from sale to re-use. To come up with the new idea for re-use business model the author defined three types of problems in dealing with sale to re-use transition. First of all, as in the transition process the sales business and re-use business should be evaluated separately, and yet in many cases this transition occurred very gradual, the author suggested a simulation method which is capable of evaluating transition estate in which a sales business and a reuse business are mixed simultaneously. Second issue is the adaption of the product in re-use model to have the required specification for the new market segments that is going to be offered, as a re-used product cannot always fulfill the customer satisfaction in the same market segment that used to be for sale business. And the last factor to consider is the profit and loss corresponding to lease or rental business, as they are more applicable in the case re-use model that sale model. The author defined three phases for setting up a business model, product model, process model and supply and collect plan. In the product level, the target product is described in three levels; product, component and material. As seen in the Figure 24 the product mass, the product useful lifetime, the recyclable mass, and the component constitution of a product are set out at the product level while component mass, the component useful lifetime, the recyclable mass of components, the cost of component manufacture, and the material constitution of components formed the component level and the material level, material mass and cost and the generated environmental load are categorized. 44

46 Figure 24 - Business Model for Product Re-use (Kumazawa 2005) In the process model, the cost, the profit, the environmental load, and the processing time per product or component are set in each business process, such as manufacture, transport. Moreover, specific items for each process, such as the defective ratio, the collection ratio, and the maximum product inventory, are set out. The material flow is defined ae well. The time of sale and number of product sold are set in the supply and collect plan phase. Besides, the information like number of supplied product, product usage period, price and type of business system (rental or sale) are set. In the transition mode from sale to business the usage period range in sales business would be certainly more than in re-use one, so it is going to be difficult to formulate the supply and collect data plan based on the sales data of the relevant market segment in sales model. The author also some formulation plans to deal with this problem by defining market segment and setting out transition condition and calculating transition timing for each of them. Fiksel (2003) offered a general approach to design a sustainable system (of product or service) based on system thinking. He defined the characteristics of Resilient System which 45

47 consider a broader view, than merely environmental and social considerations, to apply for a sustainable system design. In the Table 6 he identified four major system characteristics that contribute to resilient of that system. Those are: 1. Diversity: existence of multiple forms and behaviors; 2. Efficiency: performance with modest resource consumption; 3. Adaptability: flexibility to change in response to new pressures; 4. Cohesion: existence of unifying forces or linkages. Diversity Efficiency Adaptability Cohesion Product System multiple product configurations and extensions value delivered relative to total cost of ownership end-user product customization; failure recovery Strong brand identity; unique product features Enterprise System encouragement of diverse business strategies Efficient decision processes; resource productivity organizational learning; cash reserves distinctive corporate culture; strong partnerships Ecosystem biodiversity in terms of species variety Efficient ecological cycling of energy and nutrients tolerance and assimilation of exogenous burdens natural habitat boundaries; tightly clustered food web Socio-economic System ethnic, cultural, institutional, and political diversity cost-efficient means for human needs satisfaction transparency and flexibility of major institutions geographic boundaries; strong national identity Table 6 - Table 5 - Characteristics of Resilient Systems (Fiksel 2003) Author believed that most of the previous studies that practiced to sustainable system design, like sustainable supply chain system, sustainable building system and sustainable industrial network mainly focused on particular system characteristics- ecological efficiency. Based on the resilient factors, shown in the above table Fiksel 2003 presented a general approach for s system design which guarantee its sustainability. He suggested that to encourage systems design that incorporates sustainability thinking explicitly, it is useful to have a systematic protocol depicted the Figure 25 as follows: 46

48 Figure 25 - Expanded design protocol including system considerations (Fiksel 2003) One of the most important steps in system design is establishing a clear, practical definition of the function and boundaries of the system. Based on the system scope, the design methodology and technological alternatives can largely vary. A common way to define systems, for purposes of customer value analysis and life cycle analysis of designs, is in terms of a unit of functional value [Fiksel (2003)] For requirement management there are three main functions which iterates; (i) Requirements analysis which involves interpreting customer needs and verifiable requirements. (ii) Requirements tracking which is analysis of design tradeoffs, including project risk, schedule, cost constraints, and performance goals. To keep track of changes in system and subsystem requirements a traceability hierarchy is frequently applied. (iii) Requirements verification that determining whether a system design will meet the specified requirements. The earlier verification can be performed, the more likely to fill the gaps before a large investment is made. Some typical examples of such requirement definition in natural resource extraction industries such as mining, oil production, agriculture, and forest products is to emphasize appropriate land use, ecosystem protection, and worker safety. In industries such as petroleum refining, metals, chemicals, and electric utilities these considerations refer to emphasizing process safety, conversion efficiency, and waste minimization. The last step is to select theologies and create a design. For instance using information technology and applying electronic communication which can reduce the physical transportation need and record-keeping. Utilizing advanced communication and groupware technologies, it 47

49 gives the chance to the design crew to share their ideas while they are distribute geographically and progress via interactive computer interface. For design of complex systems, the ability to iterate rapidly is especially important since design teams need to assess the robustness of alternative designs under a variety of circumstances and different scenarios Design Considerations for PSS Effectiveness Effective design for PSS is studied by Baines (2007). One of the main consideration by Manzini and Vezzoli (2003) is that a company must move from product thinking to system thinking, and breakdown the business as usual attitude in PSS context. In particular, PSS requires manufacturers and service providers to extend their involvement and responsibility from making a product available to purchase to phases of the life cycle that are usually outside the buyer seller relationship (e.g. maintenance, take-back, recovery of materials, re-use, refurbishment, and remanufacture). The relationship between the customer and the company plays a key role in the design of an effective PSS. Baines (2007) added a successful PSS needs to be designed at the systemic level from the client perspective and requires early involvement with the customer and changes in the organizational structures of the provider. Mont (2002) identified some key roles as the main characteristics of a system of productservice and developed some consideration for designing effective PSS. As some other papers pointed out the role of producers is significant to have a successful development. An effective PSS requires that manufacturers and service providers extend their involvement and responsibility to phases in the life cycle, which are usually outside the traditional buyer seller relationship, such as take back, recovery, reuse and refurbishment and remanufacturing. Reduced material flow also requires a stronger co-operation with suppliers. He highlighted the role of consumers and relationship between companies and customers as some proactive companies have started working more closely with their customers, who then have depended on them for many types of information, including environmental. There is also an organizational basis needed for developing PSS. They must change their traditional structure. One way to make this change occurred is extended involvement of the organization with other organization. These intra-organizational changes modify the relationships between the business functions within the company. The author also listed the reasons why the design methodology for entire productservice system is different from product design methodology; Designing a PSS requires close integration of all actors within the life cycle of a product service. Schemes for taking back products at the end of their life, as well as all necessary arrangements with business partners, should be focused on ensuring maximum closing of the product flow and reduction of transport distances. Alternative scenarios of product use could be analyzed and the range of these scenarios may be presented to the consumer, providing information on economic and environmental features of the PSS. 48

50 Marketing strategies could be developed in ways that teach and promote an environmentally and socially more acceptable way of function fulfilment. Alternative scenarios of servicing the products could also be given at the point of sale to ensure the proper product exploitation during the use phase. Mont (2002) also identified some circumstances under which a PSS can be profitable. First of all, PSS will be profitable if the costs of use and disposal phases (and the collection of end-oflife products) are internalized. The development of a proper PSS with an efficient take back system could stimulate consumers to return products. The second condition is if the product, at the disposal stage, has a high market value. The third condition of a profitable PSS is when an alternative scenario of product use generates additional profit (or reduces a current cost). Take the example of a chemical producer who is required by law to take care of its chemical after selling them. To avoid this additional cost, which can be seen as the maintenance cost, in PSS version scenario the producer of chemical can provide the functions of chemical instead of selling it which is more profitable for itself and less environmental hazards will occur. Manzini and Vezzoli (2003) suggested a strategic design for sustainable PSS which tends to design activity aiming at an integrated system of products, services and communication, based on new forms of organization, based on the roles reconfiguration of different companies, clients and other stakeholders. A strategic design liking the long term goals with existing trends. In other word it stands for the capability to create new stakeholder configurations and develop an integrated system of products, services and communication that is coherent with the mediumlong term perspective of sustainability, being, at the same time, economically feasible and socially appreciable today. Durugbo (2013) in his articles studied how work systems can be managed for competitive PSSs. The author did a research on the existed literature with a lens of precise view for critical analysis of sustainability, technical and marketability within PSS context. Knowing that marketability, technical and sustainability are the key requirements for an integrated product service system, he conceptualized the PSS, based on literature review, as a work system and this would be the key contribution for having a competitive PSS. To offer fresh and deeper insights into PSS as work systems of competitive firms he did a case study on two big corporation and two small firms to confirm the researches finding in this subject. Many studies have been done to demonstrate sustainable and technical requirements for integrated PS offerings have been extensively as avenues for competitiveness through delivering value. On the other hand marketability, in the context of PSS, is a performance measure that determines the viability and longevity of business operations. It describes the ease with which products and services can be introduced into the market place to exploit new market opportunities and niches and requires skills and acuity to look over the horizon of a single customer to avoid being locked in with the customer [Matthyssens and Vandenbempt (1998)]. 49

51 Table 7 summarizes sustainability, technical and marketability research themes in PSSs literature. Sustainability agenda Technical(Industrial) agenda Marketability agenda Underpinning expectation Lower environmental impact in comparison to more traditional transaction Enhanced manufacturing capability based on efficiently blending goods and equipment with services Competitive customer solution Focus of innovation and emphasized dimensions of performance Innovation through eco-design for sustainable production and consumption Innovation through industrial design for enhancing value of core products Innovation through design to market approach for a wide range of domains and industries Main value stream Use of environmentally friendly technologies that optimize the use (or function) of goods and services Technical services that create value during the life of a core product or technology Service and goods mix that contribute to competitive advantage Focus of contribution for global economies Dematerialization for functional economies Servitization for service and functional economies Productisation and servitization for service economies Table 7- Sustainability, technical and marketability research themes in PSSs literature (Durugbo 2013) The concept of work system introduced by Alter (2006) as a set of human resources and machines carrying out the work by using information, technology and other resources and then produce the products or services. Alter (2006) divided the work system into service and information system, showed in Figure 26, to reflect: (i) the problems, opportunities and types of work within these work systems and (ii) the relationships between these different work systems and how their elements could generate integrated PS offerings. Service systems avoid blurred difference between products and services by focusing on the arrangement that delivers servicebased solutions for customers. Within PSS research, service systems are based on servitising and optimizing products to meet customer demands. Information system, as instance of work system, maintains the organizational, operational and human information flow using human or computer base system. Electronic , smart cards, radio frequency and other information and communication technologies are the primary elements within information system and are keys to responsiveness and standardization of the 50

52 process [Morelli (2002)]. Having this significant function, an information system could contribute to organizational culture and provides access to timely, appropriate and updated flows of information though out the business and organization. Figure 26 - Work systems for delivering PSS (Alter 2006) Vasantha (2012) after carrying out a study on analyzing the state-of-art methodologies for PSS design in the existed literature, identified the weaknesses of the models and tried to suggest some considerations and even hint some guidelines for further research to fill the gaps and develop the PSS. He believed that Sustainability issues are hardly supported. As for life-cycle thinking, only the initial phases of design are covered and the other phases and particularly feedback loops between stakeholders and different steps of PSS process have been left out. Representation is unequally treated and essentially there is a need for harmonization. He also added there is a knowledge transfer tool between academics and industrial practitioner is in vital need to increase the applicability of design methodologies, which was extensively missed out in the literature. In response to these comments Vansnatha (2010) came up with the three important dimensions in improvement of sustainable PSS as follows: 1. Ontology for PSS: Common understanding of terms within the domain could be an important measure to define formal specification. Since we are at the beginning stage of research in PSS scope, it would be good to develop a robust ontology, while less effort needed for that as 51

53 it can be progressively updating. In addition, it could help researchers to communicate and share their views without ambiguity and lead to more effective implementation of methods and tools in industry. Based on analysis of the papers in this regard, he summarized the challenges for development of ontology as follows: Ontology needs to be understood and appreciated, but it should be properly planted within a suitable framework to avoid cross-use of terminologies. The challenge is not in generating new information technologies but to develop a common representation within the PSS community. Semantics for each term should be properly described to avoid ambiguity between researchers and industries. To develop and understand this fundamental structure of PSS a substantial initial effort is required within the PSS community. Software platform and mechanism need to be developed for progressively updating the ontology. It must be intuitive so that it could be easily utilized in industries. For validation and proving the usefulness of PSS ontology, many applications need to be generated around it. 2. System modelling techniques in PSS Design There are variety of representation technics in literature aim at defining different processes involves products and services. According Vasantha 2010 the characteristics of the applied representation modelling technics in the existed literature are summarized as follow: They must be clear, flexible, unambiguous and consistent, simple, complete, extensible, intuitive, easy to learn, capable of translating and illustrating areas of interest with varying levels of detail and capable of rationalizing capture (aid to understand decisions). They should be widely used and supported in industry with less but more consistent notations supported by standards. Also, they need to be traceable, easy to interpret and not time consuming. They must represent dependencies and highlight the impact of changes made, be easy to integrate with related methodologies and capable of creating different views supporting visibility and interactions that are easy to document and easy to maintain. But to have a representation model that can be systematically shared by stakeholder, we need a co-creation approach to design such conceptual model. Here are the main issues that will help the process of co-creation of PSS: The specificities of PSS call for multi-disciplinary, multi-level approaches. To achieve this there are two types of strategies: the first seeks a unified model capable of piloting the overall system and is inspired by system engineering methods or models such as the V-cycle. The second will aggregate heterogeneous models or views of the different sub-parts of the system in a clear coherent framework. 52

54 Detailed research studies are required to help stakeholders choose the appropriate modelling techniques based on applications at different stages of PSS modelling. PSS models must represent stakeholders, products, services, support systems, business elements and processes, work flow and interactions among them alongside the value (economic, environmental and social), and functional maps and behavioral predictability of the system. They need to be detailed with reference to PSS characteristics and be able to facilitate validation of system behavior in a given context; verify suitability of system and analyze performance 3. Sustainability Considerations The author summed up with some challenges to develop the sustainability in the context of product service system. The main issues that he referred to about PSSs are: PSS must afford opportunities for manufacturers to develop the business potential of environmentally conscious design and differentiate their products by meeting diversely segmented customer needs in a sustainable manner. They must provide more convenience through service so as to intensify physical use with less energy and material consumption. It is necessary to identify the main stakeholders in the business relationships and develop close collaboration between the customer and supplier in an iterative procedure involving needs, expectations and solution exploration that ultimately would lead to the creation of the functional product. The PSS cost must be compared to the value provided In order to respond to industrial trend toward PSS P.P. Wang (2011) proposed a guideline for modular development of PSS. This modular development process belongs to the concept development and the system-level design stages of product-service development. Talking about modularization of product-service system, the author introduced six dimensions for PSS modularization (product, service, process, production, and interface and collaboration dimension) and then discussed about modular development of PSS based on three elements; functional modularization, product modularization and service modularization. According to the Figure 27 in the functional modularization part, based on analysis of customer needs, the product-service family planning would develop and the customer option will be defined according to customer need and product service options. The objectives of modularization is defined on the basis of the firm strategy and the product-service family. Modules consistent with probable technological capabilities are identified and defined according to the decompositions of product-service functions. The module interface then identified according to the functions and specifications and then modular product architecture (MPA) and modular service process (MSP) are established according to the interfaces and goal of modularity. 53

55 In product modularization, the physical alternatives is built based on a verified MPA (the one which has been assessed if meets the goal of modularity). Realization of interfaces is to realize interfaces in physical alternatives, to establish various related specifications according to interface definitions of MPA, and to make up related specifications of test and assembling. Realization of modules is to realize modules in physical alternatives, to establish various related specifications. Figure 27 - The process for modular development of PSS (P.P. Wang 2011) Service alternatives are built and screened according to MSP. After the realization of interfaces and modules, the service elements of service modules and interfaces should be 54

56 developed based on the summarization of the realization of modules and interfaces, and to ensure that it meets customer needs and the goals of modularity. Modularization can divide services into smaller units. By free selection and combination, customers feel their needs can really be achieved through customization and will not purchase extra services. Maussang (2009) believed that the role of designers during the PSS design is quite different from the development of conventional products because it is necessary to take into account the organization of the whole system. During the preliminary design phase (conceptual design), designers should not focus at first on a solution based on a physical product or service unit. Different alternatives should be considered and compared with each other, she added. Then, the objective is to establish the global organization of the system. The proposal of the author is on this basis so that it focuses not only on the design of physical objects, but rather to consider the whole system and detail the physical objects and service units necessary to develop a successful PSS. After reviewing of the existed literatures on PSS design methodology, the author did not find out them as a capable structure to obtain specific technical criteria to develop the products involved in the PSS. Her suggestion is going to bridge the gap between the architectural definition of the PSS and the product specification to optimize PSS development as a whole. The author emphasized the needs for technical specification for physical objects of the system for the engineer designer and proposed using the tools like the graph of interactors for the external functional analysis and Functional Block Diagram (FBD) for the internal representation of PSS. The graph of interactors can be used at the beginning of the design process to formalize the relevant needs for PSS. It can also be helpful to give the designer the required specification of the physical objects in the system. The graph of interactors, as depicted in Figure 28, provides the external functions that the customer and actors can expect from the product during lifecycle. The external functional analysis would then be carried at each stage of life cycle, use, manufacture, maintenance and recycling, to express the expected needs and constraints that have impact on design of product. 55

57 Figure 28 - External functional analysis: the graph of interactors (Maussang 2009) The interaction functions (IF), which correspond to the functions provided by the product to an outer environment during the product life cycle The adaptation functions (AF) that reflect reactions, resistances or adaptations by the outer environment (E1, E2, E3); The constraints that are defined as a design characteristic, effect or provision for design, and made compulsory or forbidden for whatever reason The functional block diagram (FBD) (Figure 29) is a particularly interesting tool to model and analyze a PSS structure. It represents: The frontier between the PSS and the outer environment (the two horizontal lines) The different components of the product (boxes for products and boxes with round corner for service units) and the interactors existing in the outer environment of the PSS (ellipse) The contacts between the components or between components and interactors (the black lines) The functional flows between external interactors that go through components (red flux) The technical functions (green buckles) that are, for example, design choices used to assemble components or to put them in position. In the case of a PSS, the design buckles can represent the organizational choices between products and service units. For example, the information about failure is given to a maintenance service unit by the customer or directly by a machine via a specific module. Consequently, it will influence the links between the elements. 56

58 Figure 29 - Functional bloc diagram representation (Maussang 2009) It is a very flexible tool and can accommodate a wide range of systems. It requires a minimum of details on the solution elements, but gives a lot of information to start a study on the PSS architecture. The FBD can be realized during the conceptual design stage. R.C. Michelini (2004) suggested the name enhanced product or extended delivery for the PSS business as a response to level up economic wealth in today competitive market where industrialized countries focus on increasing manufacturing goods and consequent tangible consumption increase. The concept of enhanced product aims at generating wealth through intangibles, information, knowledge, technology, know-how, etc. as a tool. It can be interpreted as customized product which can replace the economy of scale by economy of scope, which was previously perceived as a lever for competitiveness. This revolutionary modification from traditional way, focusing on tangibles, to intelligence, relying on creating value by intangibles, requests Technology Innovation, Function Innovation and Method Innovation according to the author. The new scenario presumes that new habits establish, and coherent social and legal structures develop. For turning the product into the function market, and addressing the manufacture delivery toward products services the author categorized three essential innovations as this: Technology innovation: the industrial deliveries are re-designed for enhanced competitiveness, with large added value in intelligence. The improved efficiency generates market growth, higher return and bigger consumption (waste) rise, by the rebound effect. Function innovation: the artefacts market of industrial economy is superseded, by product service provision, satisfying clients and remunerating suppliers. The eco- 57

59 consistency visibility is inherent attribute of the function market (the rebound effect is monitored). Method innovation: to achieve the sustainability efficiency, on proper long-term basis. The environment impact is neutralized and the rebound effect progressively soothed (by enacted rules and users conscious habits). Function innovation, can be achieved as long as a careful balance of tangibles yield and technology up-grading exist to reach the desired eco-efficiency. Once sustainability achieved there method innovation is needed to enable wealth generation primarily into intangibles. Those extended delivery are obtained by integrated design, opportunity typically given by the information tools. By method innovation, successful businesses will foster scope economy patterned frames, by a mix of shared facilities and diversified competencies, to look after: trade policies, offering enhanced products and granting the related functions delivery; tangibles yield effectiveness, aiming at closed life-cycle by reverse logistics (from dismissed scraps, to new raw materials); Figure 30 - Relationship between innovation and eco-efficiency (R.C. Michelini 2004) In general, the intelligent factory, by enhanced products, increases its market share, with critical role played by information extended infrastructures, monitoring eco-consistency by virtual set-ups, binding, at the points-of-service, suppliers and users with accredited control bodies. A bylaw frame can be built for such industrial system by considering the following dimensions: 58

60 Pricing based on the enterprise over-all productivity, involving the resource effectiveness, besides the investment, labor and technology effectiveness; Product-service offers, by all-inclusive indentures, with visibility on sustainability prescriptions (assured by the appropriate product enhancement); Information infrastructures, with access on the supporting know-how and transparency of products life-cycle performance (by means of enterprise extension); Ecological responsibility up to the points-of-service, with eco-monitoring, further to the clients satisfaction at the points-of-sale; Accredited eco-consistency-driven quality systems, by third party overseeing and control of the supplied product-service, through interoperated nets. Fiksel (2003) to develop the sustainability requirement of a PSS system suggested a mental map of human as illustrated in Figure 31. Basic survival needs are associated with the physical realm, while higher-order needs are associated with the socioeconomic realm. The intersection of the two realms is the energy needs which plays a vital role. The current status of these needs may provide boundary conditions for system design; for example, in a region with severe water shortages, industrial depletion of water should be avoided. Practically speaking, the needs of society must be clarified and prioritized through stakeholder engagement, including a dialogue among corporations, government policy-makers, and public interest groups. Figure 31 -Present and Future Human Needs (Fiksel 2003) Garetti (2012) hinted some guidelines for development of the current life cycle simulation methodology for designing PSS to enable new simulation tools for virtually emulating the 59

61 product behavior with respect to the services with which the product is integrated during its expected operating life cycle. After analyzing the current trends, characteristics and industrial applications of Life Cycle Simulation for PSS design, he extracted the guidelines for development of future LCS as summarized in four requirements: (1) Modularity, (2) Stochastic Behavior of Modules, (3) Life Cycle Cost Perspective, and (4) Social and Environmental Impacts. The reason for carrying out such study is that a general optimization for reaching a more sustainable condition can be obtained only by accumulating and efficiently managing a deep knowledge of the entire system life cycle, even product wise or service wise (collecting information about the product realization, utilization, maintenance and disposal), and providing it to engineers in the easiest way possible with advanced tools. Other important fact to be considered in this regard is that the entire service network linked to the product, in order to guarantee the correct use of all the information related to services. Fujimoto (2003) who was studying service oriented product model, offered three types of prototypes of service-oriented facsimile machines based on modules making it more suitable for re-configurability and re-usability, as aspect of PSS. According to the level of adaptation to evolution of technological advancements, the author categorized three types of group products; advanced type, balanced type and mature type. For example, balanced-type products are seen between the growth and maturity periods of a product and a new technology could be introduced into a certain product of that type, but the cost will determine whether the introduction is made. For the balanced type product it is easy to adopt functional module for re-use and, and this is the reason why we can apply the concept of SOP for this type of product. Choosing facsimile machine as a type of product belongs to balanced-product category, the horizon of its future growth could be offering new services for which the communication function is used and the development of highly functional machines by upgrade of the image input/output and/or display components. The author came up with three prototypes of the service courses (Figure 32) based on growth directions as follows: Basic: This course focuses on customers who are uneasy using facsimile machines and do not have a lot of mechanical or electronic knowledge. This service course has only conventional functions. SOHO: The target of this course is SOHO users and features the use of high-end functions, such as a laser printer and a large size display. Amusement: Assuming use by younger customers, this course aims at new deployment of usage of facsimile functionality. 60

62 Figure 32 - Services of SOP-type facsimile machines (Fujimoto 2003) To make the models reconfigurable and reusable, as much as possible, the prototype is modularized so that there is a common module in all three versions. The over-modularity was avoided as it can lead the product to be like a set of toy blocks. In these three prototypes although the unity of each type is maintained, the styles and performances of the types are quite different which signifies that the author reached to a re-configurable design. To have a better picture of the product prototypes, the Table 8 would indicates the modules used in each type. 61

63 Table 8- Module Configuration of the Three Types (Fujimoto 2003) Hitsoki Komoto and Tomiyama (2005) used life cycle simulation method for evaluating the environmental and economic performance of the PSS model (his method will be discussed in the next section) and applied that method for case of washing machine. Then he defined the following condition to have a sustainable PSS model based on inference from life cycle simulation study: (1) An appropriate balance between total supply and demand of service, (2) unit size of supply and demand of service derived from PSS-events, (3) infrastructure to provide efficient usage of products, and (4) feasibility at both service providers and service receivers. Several aspects of the development of product-service systems are related to the discipline of design, from the analysis of technological potentials to the investigation of users behavior and attitudes with respect to new products, technologies, and services. In this regard Morelli (2002) in his study focused on the design of PSS from a designer s perspective, emphasizing the role of designers in developing innovative PSS. The involvement of designers in the development of PSS would provide designers with the necessary expertise to manage the particular characteristics of PSS. Then a new dimension for the design activity would be open which has some methodological implications as a result, which author talked about these issues in his paper. 62

64 In the most common view, the core of the design activity is the technological definition of industrial artifacts. But since the users, designer, service provider and even technological actors of PSS constitute the main characteristics of a PSS system and their social, cultural, economic and technological frames are equally involved in the system, we can project the design role upon two dimensions: the domain of the organizational and design culture and the domain of the social construction of technology. The organizational domain and design culture refer to capability to re-organization of some of core functions using innovative methods and models. In this perspective the PSS can be perceived as a catalyst for innovation. The domain of social construction of the technology reflects the ability of the social actors to influence innovation processes in which new technologies, products, and services can be accepted or refused. Having this new dimension for design activity, it requires that designers make use of new methodological tools to address the main characteristics of PSS, which was already mentioned. To do this the designers need tools to explore, understand, and address the needs of different actors. The various events characterizing the use of the service must be planned in advance in order to anticipate and organize the interaction between clients, providers, and the technological infrastructure. And the last challenges that the designer need to deal with is how to represent material and immaterial component of PSS. Chihiro Watanabe (2011) offered open innovation methodology to improve the functionality, that is, service or delivery method or even product change, occurred at the stage where the product moves into the marketplace or shortly the diffusion process. This effort implies creating value to the product using intangible, by means of innovation as a tool, which can be applied to the PSS business to improve it. Open innovation in this context refers to a dynamic system an organization needed to have to be capable of constantly substituting imitator (follower) by the innovator (leader) and open the road for increasing the functionality and creating value. In short the paper describes mathematically the open innovation and the sustainable functionality development in order to enable firms to remain competitive in a highly competitive and resource-constrained marketplace. Prado (2012) in a research on some small medium-size enterprises, tried to find out how the integration of product and service design with ICT can contribute to generate PSS and develop sustainability within the system. To begin, the author firstly developed an extensive literature review to embody a reference model for his research activity, which aimed at realizing of how to link the use of ICT and product design and service design as a bridge to sustainability, and then based on that reference framework he implemented the research methodology in the selected small medium-size enterprises from Colombia. According to the result of author s research for the enterprises and their methods of linkage between ICT and product and service design, four 63

65 types of relationships were identified; Design Based, ICT Based, Design and ICT as Supporters, Integrated Design and ICT. One of the element existed in the model in ICT which is quite vital due to its potential as a transforming agent and engine of organizational change. It increases competitiveness, reduces transactions cost, increases speed and reliability of operations, improves communication between stakeholders and relationships with customers. For the connection of ICT and PSS there are not any clear methodologies enabling their integration but existence of product and service design as a process in the model is a key to that integration. After selecting some Colombian companies and carrying out a study on them to explore the perception of these firms about PSS, sustainable business development, use of ICT and the role of the design process, the second version of model was refined. In the sense of connection between ICT and PSS development the main results of the analysis was that it identified the need for a methodology to develop sustainable PSS based on the contribution of the changes that ICT can produce in the product and service design process. This can be reflected in the refined model. That reference model is presented in the Figure 33: 64

66 Figure 33 - Reference model in Research for Linkage of ICT and PSS design (Prado 2012) 65

67 6.2.5 List of Articles Used Most of the authors contribute in this part the research, design for PSS, as it believed that the design stage has the most significant impact of the whole system of product service, either for ease of implementations or for improvement of its sustainability implications. Many papers have the focus on design methodology or improvement suggestions for development of PSS. Other groups will focus on servicification and service design as an effort, in line with PSS, to achieve sustainability. The articles worked in this area are listed as Table 9: Publish Year Author Area of Focus 2001 Tomiyama Service Engineering For the Purpose of Service Content Intensifying 2001 Mont The Concept of Product Service System - Basics 2002 Manzini & Vezzoli Strategic Approach for PSS Design 2002 Morelli Review of Methodological Tools Applied in PSS Design 2003 Fujimoto Service Oriented Product Design, Modeling and Evaluation 2003 Fiksel Guidelines for Designing a Sustainable System 2004 Rasgado Design of Functional Product A total care System 2004 R.C. Michelini Providing Metrics for Sustainability Evaluation of PSS 2004 Erik Sundin Product and Process Design Considerations for PSS 2005 Toshimitsu Kumazawa Simulation of Re-use Business Model 2005 Tomiyama Methodology and Guidelines for Service Design 2005 Hitoshi Komoto Life Cycle Simulation for Analysis of PSS 2006 Aurich Modular Design of Technical Product Service System 2007 T S Baines Review of state-of-art work in PSS 2007 Sakao Increasing Product Value Using Service Engineering 2008 Welp Modelling the System of Product Service 2008 Wei Yan Sustainable Product Conceptualization 2009 Xiaoyu Yang PSS Realization Introducing a Service Enabler Toolkit 2009 Erik Sundin Product Design for PSS 2009 Maussang Methodology for PSS Design Product and Process Specifications 2010 Zaifang Zhang Conceptual Design of Product and Maintenance 2010 Tsai Chi Kuo Simulation of Purchase and Rental In the context of PSS 2010 Chihiro Watanabe Functionality Development of Product Using Open Innovation 2010 Karthik Ramani Sustainable Lifecycle Design 2010 Vasantha Review of PSS Design Methodology 2011 P.P. Wang Modular Design and Development of PSS 2012 Marco Garetti Utilizing Lifecycle Simulation for PSS Design 2012 Prado Consideration for Sustainable PSS in Small Medium Size Enterprises 2013 Christopher Durugbo Considerations for Competitiveness in PSS Table 9 Research Fields in Design for PSS 6.3 Assessment: One of the main achievement that expected to be reached by implementing product service system is to increase sustainability in each different aspects like social, environmental and 66

68 economical perspective. In one hand sustainability is becoming a source of competitive advantages in the today highly competitive market while the price and the quality are not the only actors anymore, on the other hand the trending toward PSS is increasing day by day and, as a consequence, the need for a performance indicator identifying its contribution to social, environmental and economical sustainability is becoming more significant issue to be discussed and analyzed. This section discuss about sustainability evaluation models and performance indicators (only focusing on resource consumption and customer satisfaction). H. Allen Hu (2012) did a comprehensive literature review to find out the criteria existed for evaluating sustainable performance. The author found out 32 criteria, categorized in product aspect and organization aspect, and assigned relevant weight to each of them using Fuzzy Delphi Method and came up with an evaluation framework for sustainability performance of PSSs. 67

69 Figure 34- The evaluating hierarchy of product service system (H. Allen Hu 2012) As it can be seen from the Figure 34 the organizational and product level were explored separately. This evaluation hierarchy was developed by Fuzzy Delphi Method over four experts. 68

70 Then by using analytic hierarchy process, the weight for each criteria is determined, showed in the Table 10. Table 10 - Local and global weights of each aspect and criterion (H. Allen Hu 2012) 69

71 The upshot is that in product level, economic has certainly the highest rank and needs the most consideration by companies. The second rank was dedicated to environmental sub-aspect which indicates the close attention paid by businesses to the environmental impact of the product or service. This also indicates public agreement on the importance of environmental protection for sustainable development. For the other aspect, the organization was separated into two subaspects: management capability and external factors. The results indicate that management capability is more important (weight = 0.660). In this sub-aspect, there are four criteria with rankings in the lead: Integrated service plan, Product development and design, Optimized transportation network, and Cash flow system. This shows that to have a complete service plan is an important factor that will affect the implementation of PSS. The product design and development should also be carefully considered. In this study, the high ranking of optimized transportation network is a rather surprising result. Transportation is very important since it directly impacts costs such as manpower, material, and time. In general this research paper proposed an evaluation model incorporates most of the evaluation criteria needed for initial implementation of PSS. K. Xing (2013) tried to incorporate the sustainability consideration into the technical performances and cost measures to generate a comprehensive value assessment model for PSS development. Then a sustainability-oriented value assessment model for PSS development is proposed using Net Present Value and Life Cycle Assessment (LCA) as the measures of lifecycle performance, lifecycle costs and lifecycle environmental impacts. In the PSS the focus is on the delivering functions to the customer through strategic bundling of products and services. So in PSS context there is a strong correlation between product features and service attributes. In this respect, value over PSS business, can be realized from two different perspectives; how customer would evaluate the solution/function offered by the system, which is the perspective from customer domain, and how the product and services are incorporated to deliver the desired solutions and functions, which is the perspective from supplier domain. The value frame work is represented in Figure 35 which would also demonstrate how customer domain and supplier domain look at the value stream by a PSS system as well as the correlations among key value measure. 70

72 Figure 35 - Value framework in PSS (K. Xing 2013) The customer side can perceive two types of value realizations; value for money which reflect how much customer must pay to get the desired function and functional value, which assigns for how well the function could satisfies the required specifications anticipated by customer side. Service price and transaction mode (e.g. payment per unit of output, payment per use, etc.) are the best levers to assign and evaluate the economic value (value for money) in the customer perspective. Respectively for the assessment of functional value, voice of customer and its level of importance (by how much they are reflected in product and service characteristics), are the main measures. In supplier domain, the sustainability value creation is dependent on how well the products, which is the supplier capital asset over their life cycle, can perform functionally and economically to satisfy the customer s needs over a desired period of time with minimum environmental impacts caused. So the product service value in supplier perspective would lie on asset value which, according to the author, can be represented by the functional, physical, economic, and environmental dimensions. Functional dimension of value asset can be suitably determined by voice of customer which shows product functional fitness. The physical fitness of a product to serve is directly related to its uptime for use, or level of reliability, and is critically affected by maintenance or replacement services. When the value of an asset is assessed in economic terms for investment appraisal, costs and revenue related to the development/acquisition, use, and disposal of the asset are calculated for its overall financial worth. In this economic analysis, the value of a capital asset consists of two major parts, i.e. initial value and residual value. While initial value is positively correlated with the purchase price or cost of development, residual value is defined by the price 71

73 of reselling the asset after its retirement or the depreciation rate. The environmental impact potential for PSS is mainly subject to material and energy consumptions related to how the products, as assets, are developed, operated, and managed over their whole life, all of which are affected by PSD options. After embodiment of this value framework the author improved the value assessment model, by applying LCA and net present value tool, which measures importance of service attributes and products, functional fitness, physical fitness, economic burden and environmental burdens. As claimed, it delivers the required results and to link those measures with technical characteristics and configurations of products and services. R.C. Michelini (2004) after introduced enhanced product and extended deliveries enriching economic wealth by focusing on intangibles instead of tangibles. He tried to provide metrics to measure Knowledge, Investment (capital), Labor and Tangible involved in the system. Hitsoki Komoto and Tomiyama (2005) applied life cycle simulation technic to analyze the PSS properties during product life cycle and would demonstrate how the analysis influences the product and life cycle design to improve economic and environmental performances. A life cycle simulator must be able simulate stochastic behaviors of component lifetime distribution as well as permanently-changing behaviors of users and other stakeholders involved in the system during life cycle. The simulator calculates economic and environmental performances according to the occurrence of the event during the entire simulation course. The author used the terminology of service model proposed by Tomiyama (2005) (discussed in service design part) like service, service receiver, service provider, PSS events and products which include structure and property of product. The PSS-events comprise three sub-events; generation and elimination of product, deterioration of products due to operations of products or generation of service and recovery of the state of products through maintenance. Figure 36 illustrate how those component interacts and what are the relations: 72

74 Figure 36 - Representation of PSS with Service to be the Main Object of the System (Hitoshi Komoto 2005) The author defined the act of life cycle simulation based on capturing the number of PSSevents and the time needed for its activation. In the simulation we can construct an event occurrence vector called E which is ne dimensional vector, and ne is number of PSS-event in the simulation. The activation of PSS-event which lead to its subsequent events (generation, deterioration and recovery) generates and consume (natural, financial and human) resources r. The resource r represents any entity which can be generated, consumed and transferred (for example life cycle cost, material, energy and water consumption, and environmentally unfriendly substances). This equation indicates that the resulting performance of product life cycle is a function of occurrence of the PSS-events E and their individual performance Crij. Later the author carried out a case study about washing machine (function of washing in general) and identified this resource consumption and material flow during life cycle and then suggested some basic requirements for having sustainable PSS model according to the life cycle simulation, which you can find the previous section. The task of the evaluation is to support the decision process with a multi-criteria evaluation tool which helps to analyze and evaluate which impacts eco-efficient PSS and their implementation strategies have on different sustainability criteria, such as reduction of environmental burden, competitiveness of the companies, employment situation, consumer satisfaction, and others. In respond to these comments Ines Omann (2003) offering some guidelines for multi-criteria evaluation of the PSS. The author s aim for evaluation is to help 73

75 decision makers to lead to sustainability and for this reason in multicriteria approaches the extended stakeholder involvement is required, he believed. The multicriteria decision procedure has eight steps as follow: Step 1: Defining and structuring of the problem The problem - to evaluate PSS according to the goals of sustainability - itself was clear from the beginning, but the structure of the problem was formed during a discussion process among the participating experts when the conditions of the evaluation were defined and the criteria as well as the evaluation tool were generated. Step 2: Definition of objectives The objectives result from the concept of sustainability. Transferred to the company level, they can be summarized as: (1) maintenance of the competitiveness of the companies, increase of welfare (2) increase of life quality (equity) and increase of job quality (3) maintenance of ecosystems functions Step 3: Definition of a set of evaluation criteria and their indicators There are three main dimensions of sustainability which are economic, social and environmental aspects. Each dimensions has its own subgroups so that for each of subgroups there are some criteria relate to the company. These main dimensions and the relevant subgroups are depicted in the Table 11: Dimensions Economic Dimension Environmental Dimension Social Dimension Subgroup Company key figures, product related figures, macroeconomic figures, relation to stakeholder Resource and material input, energy use, water use, land use, transport, waste, sewage water, emissions, environmental management Structure of employees, social management, (working)safety and health, social justice, equal chances, gender issues, human dignity, international justice, customers Table 11 - The subgroups of sustainability for PSS (Ines Omann 2003) Step 4: Generation and clear definition of the options There are usually completely different interpretation of PSS concept within a company and among the staff. Consequently the ideas that were evaluated with the tool differed extremely. So a common and a clarified definition of options is needed Step 5: Preparation of the decision - elaboration of the evaluation table 74

76 In our case this step was done together with the next both steps. With their ideas in mind the companies applied the evaluation tool alone or together with an expert. Step 6: Identification of the preference system of the decision maker The decision maker the company is allowed to integrate her preferences concerning the sustainability criteria through changing the weights on the second level after filling evaluation tables Step 7: Choice and application of an aggregation procedure Step 8: Interpretation of the result and application of sensitivity and/or robustness analyses The evaluation tools is also important element as it allows the companies to compare the effects on sustainable development of their new ideas with an already existing reference product. The author then introduced the tool required for the evaluation. When Fiksel (2003) was talking about evaluation of the anticipated performance of system, he first took the example of Boeing which used computer-aided design and manufacture (CAD/CAM) to design the complete aircraft and assessing its performance without testing the prototype. Then he pointed to lack of validity for this method and that s why he came up with life cycle assessment tool for this respect as an alternative solution. Life cycle assessment is a systematic method for identifying and quantifying the environmental burdens associated with the life cycle of a product or process, for example a life cycle inventory can be used to profile the system-wide energy and material consumption and waste generation in terms of flows per functional unit. In short life cycle methods can be useful for relative comparisons of alternative system design options, thus supporting business decisions. According to the author, the aim of system evaluation is to support decision making for design choice by quantifying the relevant performance indicators. Table 12 provides example of sustainability indicators that have commonly been used to characterize the performance outcomes of system design. Such indicators can be extremely helpful in generating quantitative system model, or even to develop subjective or qualitative assessments of the directional impacts on key indicators. 75

77 Table 12 - Examples of Conventional Sustainability Performance Indicators (Fiksel 2003) In the previous sections I wrote about the service oriented product and the case facsimile machine introduced by Fujimoto (2003). To evaluate the prototypes environmental friendliness and profitability, the author executed a life cycle simulation of the developed prototypes by using the Life Cycle Simulation (LCS) which evaluates the entire life cycle of a target product from an integrated view combining environmental loads and corporate profitability. To clarify the advantages and issues of the SOP business the author compare five scenarios for simulation: Case 1 (Dumping). The user buys and uses the SOP facsimile machine and merely throws it away when it is broken; disposed products are just dumped. Case 2 (Recycling). In addition to case 1, as much as possible materials are recycled from disposed products. Case 3 (Reuse). In addition to case 1, material recycling and module reuse are performed as much as possible. Case 4 (SOP). Users rent the service-oriented products rather than buying facsimile machines. In this case, all maintenance, reuse and reconfiguration, and material recycling are implemented as much as possible. In this case, all modules in a product 76

78 can be reused in all types and all generations of the products, as far as the module fits the destination product. Case 5 (SOP with Traditional Product). The service-oriented business is conducted in the same manner as case 4, but products are designed by employing just the design for reusability. That is, all modules in a product can be reused in the same type of product but cannot be reused in other types or in other generations. The life cycle model is designed based on three sub-model; lifecycle process model, lifecycle product and lifecycle user model [Fujimoto (2003)]. In the life cycle process model, the life cycle is perceived as a network of process like manufacturing, operation, recycling and remanufacturing. Each processes are characterized by input and output parameters and the existing relation between them. Then the module inspection process was defined based on specific conditions. If a module sent to this process satisfy those conditions, the module is judged as reusable and sent to the module warehouse process through the module reuse process otherwise the module is headed to material recycling process. In LCS, a product is modeled as a set of modules and a module is modeled by a set of attributive parameters. The author configure the modular model of the three SOP prototypes, introduced in the previous section, and identified the attributive parameter of each module. Then according to that the failure of model with the parameters of lifetime and failure change rate was modeled. And finally in the user model the author assumed that there are initially 1000 users for each three types of product in the market. The behavior of each user is categorized as follows: Traditional business: if a module breaks down the user throws the product away and buys new one. A product selection probability list was provided that shows which type of product the user choose in the case of buying new product. Service-oriented Business: If the product breaks down the buyer keep using it by obtaining required maintenance program. The payable charge fee list is provided, as every 12 months the user changes the type of product List of Articles Used Usually after offering a design methodology for PSS there is and evaluation or assessment part existed in the papers identifying some performance indicators to verify the model. For this reason you can find a meaningful overlap between this section and the Design for PSS part. Table 13 summarized the authors and their works who have contribution to sustainability evaluation: 77

79 Publish Year Author Area of Focus 2003 Fujimoto Service Oriented Product Design, Modeling and Evaluation 2003 Fiksel Guidelines for Designing a Sustainable System 2003 Ines Omann PSS and How it Impact Sustainability 2004 R.C. Michelini Providing Metrics for Sustainability Evaluation of PSS 2005 Hitoshi Komoto Life Cycle Simulation for Analysis of PSS 2010 Tsai Chi Kuo Simulation of Purchase and Rental In the context of PSS 2012 H. Allen Hu Sustainability Evaluation Model 2013 K. Xing Value Assessment Model for PSS Based on Sustainability Table 13 Research Fields in Assessment 6.4 Benefits of PSS: This section of literature dedicated to review part of the papers which directly indicates the benefits coming after implement PSS business. Also within previous sections of the work there exist some parts which reflects the implications of applying PSS, but here I just picked those who directly listing the benefits. Mont (2002) in an answer to why using product-service system remarked that PSS has the potential to transform such changes in production and consumption patterns which leads towards more sustainable practices and societies. The author then looked at benefits from companies, government and societies, and consumers viewpoints and also shed lights on environmental consequences. From companies perspectives understanding PSSs provides the opportunity to see strategic new market opportunities, market trends and developments and potentially to stay competitive as patterns of production and consumption are transformed by environmental limits. In some cases companies extend their existing offers as an attempt to reach PSS and in this respect the enhanced product to which some service elements were incorporated would bring about the manufacturers: To attach additional value to a product, for example, financial schemes or refurbishing or upgrading. To base a growth strategy on innovation in a mature industry. To improve relationships with consumers because of increased contact and flow of information about consumers preferences. To improve the total value for the customer because of increased servicing and service components, which include activities and schemes that make the existing product last longer. To anticipate the implications of future take-back legislation, and might have the potential to turn them into a competitive advantage. 78

80 Government would also benefits from implementing PSSs as the better understanding of PSS by people. Companies and every stakeholders allows to easily formulate policies for promoting and implementing sustainable pattern in the society. In societies point of view many jobs per unit of material product might be created because of such labor-intensive services as take back systems, repair, refurbishment, or disassembly which are all part PSS practices to extend the services. Consumers also receiving greater value form the integrated product and service and within the customized offers and higher quality. The service component, being flexible by nature, induces new combinations of products and services, better able to respond to changing needs and conditions. Within the strategy of PSS the producers have the ownership of product during the whole life cycle period. This signifies a higher responsibilities of product from producers. For instance they are encouraged to take back their products, upgrade and refurbish them and use them again. Looking at it in another perspective, by introducing alternative scenarios of product use, for example, sharing/renting/leasing schemes to consumers the producers decrease the total amount of product and material use. All in all less waste are generated and environment would face less hazards. Edward Morey (2003) indicated the PSS contributions to environmental and economical efficiencies. Economic efficiency refers to an allocation of resources that maximizes net benefits which can be raised either by increasing profits on decreasing costs. In this respect a PSS can achieve private economic efficiency if the services provided can either increase the private benefits or reduce the private costs in comparison to a pure product offering. Environmental efficiency, also known as eco-efficiency, is described as an allocation that maximizes value, while minimizing environmental impact and can be formulated as: Eco efficiency = Value added output Environmental impact Number of units sold, profits, and sales establish the value-added output. Environmental impact refers to three types of environmental indicators: raw material consumption, waste and discharges to the environment, and land use area associated with the life of a product or service. And the eco-efficiency factor in general reflects how the state of environment can be influenced by particular production and economic activities. PSS can achieve eco-efficiency by increasing environmental benefits per output unit as compared to a pure service offering, and reduction of materials flow, energy use, water use, and hazardous waste. 79

81 Arnodl Tukker (2006) claimed that the product-service system compared to products can produce superior tangible and intangible values by delivering more customized solutions, and reduce the efforts of the customer to make the product work. They also can lower system costs. For instance, sharing and leasing concepts lead to a more intensive and hence efficient use of products. He said that PSS can be a road to competitiveness. According to T S Baines (2007) from the consumer perspective the service component, being flexible, can also deliver new functionality better to suit customer needs and is often described as removing administrative or monitoring tasks away from the customer and back to the manufacturer. Competitive edge is enhanced as, for example, a service element that is not easy to copy and facilitate, communicates information about the product service package. K. Xing (2013) also shed light on beneficial consequent of adopting PSS strategy and said for the service provider, PSS enables the establishment of a long-term business customer relationship and brand loyalty. In addition, PSS solutions are seen not only as offering improved services, but also as having the potential for improved resource productivity and its associated environmental benefits (e.g. less waste) with reuse, recycling, and the life cycle extension of products List of Articles Used Almost all the paper which discussed a topic about PSS implied its benefits. Sometimes in form of definitions, and sometime within the process of value assessment. There is an obvious overlap between this part and other subsections. In the Table 14 I just listed the name the article which directly talk about the benefits can be reach once PSS strategy and thinking is used: Publish Year Author Area of Focus 2001 Mont The Concept of Product Service System - Basics 2003 Edward Morey Potentials of PSS for Economy and Environment 2006 Arnold Tukker Reviewing Potential Research Field for PSS 2007 T S Baines Review of state-of-art work in PSS 2011 P.P. Wang Modular Design and Development of PSS 2012 Prado Consideration for Sustainable PSS in Small Medium Size Enterprises 2012 H. Allen Hu Sustainability Evaluation Model 2013 K. Xing Value Assessment Model for PSS Based on Sustainability Table 14 - Research Field in Benefits of PSS 6.5 Challenges of PSS: Beside the profit raise that can be achieved by adoption of PSS there are some limitations as well as some barriers to implement a system of product-service as the concept is at its initial stage and is still being developed. Mont (2002) in an attempt listed all the potential barrier to the PSS development, application and continuous betterment: 80

82 Developing the scenario of alternative product use needs a hard effort as several stakeholders in production side and consumption side need to be engaged in product and service design. There is a strong social system and infrastructures needed to support the idea of product-service system. A close co-operation between producer, service provider and consumers are required. Integrated Chain Management specifically addresses the issue of involving several actors in order to improve the environmental performance of products. However, problems associated with ICM are also going to be relevant for PSSs. Some of those problems are trade-offs between co-operation and internal environmental management; the problem of choosing wrong actors who do not have the power to change or influence events; information sharing and transparency and barriers from material flows crossing borders and a variety of regulatory frameworks in different countries. There are some problems arise along with ownerless consumption. Multiple use does not always guarantees a less environmental impacts as in highly depends on the state of use. For instance in the case of leasing, it can help use of old appliances as the duration of use is monitored and they are returned after the lease has run out, if the purchase option is not executed. This would make the manufacturers to focus on their own goods and leads to a closed loop economy. As in PSS the source of profit gain changes from point of sale into the point of service, the state of short term profit become a medium and long-term profit realization which leaves the firms with lack of incentive as there is not any conventional deriver for instant profit. The reorientation of companies towards PSSs requires a fundamental shift in corporate culture and market engagement, which, in turn, requires time and resources to facilitate the shift. The trace of service shift, in the new PSS-oriented format, is quite difficult as there is a significant difference in how services are reported in national and international statistics. Including the environmental considerations to the product and service design means a longer time for product to appear in the market place. There is still a lack of will for the consumer to use the products that they are not owned. Customer s behaviors with respect to the demands and purchasing are not following a specific trend and could be a little bit complicated. Hitoshi Komoto (2005) identified two main reasons why PSS is not widely applied yet. First is that the methodologies and tools for PSS designed are not fully matured so that to be capable of representing technically sound modelling. It refers to lack of systematic method to compare 81

83 alternative combination of product and service in a multi-disciplinary basis. The second reason is that it is still difficult for the firms to perceive the additional value to gain by functional services rather than traditional sale activates. This would leads to the fact that most of the producer treat the service as a secondary activity. Vezzoli (2012) also said that despite all the knowledge and experience that has been accumulated, the application of PSS approaches is still very limited. The basic reason is that sustainable PSSs are usually considered to be radical innovations, because they challenge existing customer/user habits, company organizational structures and regulatory frameworks. Therefore, a central challenge is to identify and test combinations of visions, policies, strategies, frameworks, indicators and development pathways to foster and hasten the introduction and scaling-up of such innovations. Arnodl Tukker (2006) believed that PSS does necessarily have the bonus. For example in the case of B2C product ownership contributes highly to esteem and hence intangible value. Access to the product is often more difficult, creating tangible consumer sacrifices. Costs can be higher, if the PSS has to be produced with higher priced labour or materials, or when the often more networked production systems generate high transaction costs. Some times in industries where the excellence lies in uniqueness and as a result power in value network, the switching into PSS could be factor to loose or weaken your position in the value chain. Nakajima (2005) in an effort tried to organize some comprehensive plans, based on literatures, such as selling service, product take-back, material and energy substitution, inprocess recycling etc. to match the sustainable objectives. The author interviewed with so many companies about applying those approaches and mostly were unaware about either of the plans. He believed that one of the reason for not exploiting such alternative plan in industries is lack of quantitative data in the literature to assess their impact List of Articles Used This field is not addressed extensively in the literature and most of the author referred to some specific issues regarding challenges of design and implementation of PSS. Those articles talking about this issues are listed in the Table 15: 82

84 Publish Year Author Area of Focus 2001 Mont The Concept of Product Service System - Basics 2005 Hitoshi Komoto Life Cycle Simulation for Analysis of PSS 2005 Nakajima Environmental Sustainability 2006 Arnold Tukker Reviewing Potential Research Field for PSS 2007 T S Baines Review of state-of-art work in PSS 2012 Prado Consideration for Sustainable PSS in Small Medium Size Enterprises 2012 H. Allen Hu Sustainability Evaluation Model 2012 Carlo Vezzoli Guidelines for Research about Why PSS is not Widely Implemented Table 15 - Research Fields in Challenges of Design and Implementation of PSS 6.6 Approaches and Best Practices: In the last section of the literature I collected some parts in the literature which offered some approaches for implementing PSS, like product take-back, product re-use etc. I also picked some sample companies which adopted the concept of PSS and reach to the consequent economic, social and environmental sustainability. Looking at those examples would help to recognize how they contribute to environmental sustainability, how they carry out systematic innovation within organization and how they can efficiently use the resources etc. Nakajima (2005) in an effort tried to organize some comprehensive plans, or called preventive approaches, which companies could follow and exploit them to achieve environmental benefits. According to the literature the hierarchy is sorted according to greatest to least expected environmental benefits as follows: Approach 1: Selling services instead of products. Services rather than products are designed using this most comprehensive approach. Instead of selling products (e.g., a photocopier), the company sells services (e.g., the leasing of a machine licensed to produce a certain number of copies), which shifts the goal from maximizing the amount of product sold to rendering the service with the lowest material and energy intensity throughout the entire life cycle. This approach includes design for remanufacturing and recycling and thereby ensures a supply of components and materials that can be less costly than a new supply made of virgin materials. Approach 2: Product take back. The company accepts responsibility for its products after consumers are finished with them instead of relinquishing responsibility after the products leave the plant gate. As with selling services, this approach includes design for remanufacturing and recycling. However, the company does not have control over minimizing environmental burdens during the use phase of the product. Approach 3: Basic design for environment (DFE). DFE promotes design decisions that result in reduced harm to the environment for the entire life cycle. However, the responsibility 83

85 for the product does not rest with the company once it leaves the plant gate. Regardless of which of the first three approaches are employed, the following approaches should be used to help implement DFE. Approach 4: Material and energy substitution. Recognizing that alternative material inputs can have significantly different environmental impacts, designers choose materials that are less harmful. Less harmful substances include materials that are recycled, less toxic, less resource intensive, lower in ozone depletion potential, or in other ways less damaging to the environment. Designers are provided with ratings of various materials environmental impacts so that they can make more informed material choices. Energy substitution is also considered to identify the forms of energy and energy transformations that are most appropriate for rendering the required services. Approach 5: In-process recycling. Instead of disposing of scraps and unused materials, they are collected and fed back into the process to become part of a finished product, thereby reducing the need for virgin resources. For example, unreacted inputs to a chemical reactor are separated from the products and fed back into the reactor. This approach is standard procedure in many industries. Tsai Chi Kuo (2011) construct a renting system on the basis of PSS theory which includes complete management of product examination, maintenance, upgrading, products recycling, and final waste disposal. Reviewing this study also would help understand how a system of product service can be constructed, evaluated and how work out towards sustainability objectives. The author later implemented and verified the model in the form of a case study on a home/office electronic. After an extensive literature review on various types of renting system model the author came up with a simulation system comprising reverse logistics, i.e., it involves (1) customers, (2) retailers, and (3) a customer service/remanufacturing center depicted in Figure 37: 84

86 Figure 37 - Rental/procurement simulation Model in the PSS (Tsai Chi Kuo 2010) The actors in the system work as follows: Customers. A customer finds that the product is defective and sends it back to the retailer for remanufacturing. Retailers. A retailer informs the customer service/remanufacturing center to remanufacture the defective product. Customer service/remanufacturing center. Once the defective product is received, it is inspected. The product is diagnosed by the center to evaluate the malfunction level and to evaluate the maintenance or remanufacturing time. Waste processing center. Products with serious damages that cannot be repaired are recycled or disposed. The author is his model introduced two types of product sale to compare; procurement and rental that are represented in Figure 38. It offers remanufacturing, for the defective products sent to the customer service, as a tool to reduce the product waste and level up the service amount. The variables were defined for the system analysis; product damage rate, successful maintenance product rate, and maintenance time and shopping rules which described as follows: 1. Product damage rate. Since the internal damage of products cannot be effectively controlled, it significantly affects maintenance. This study considered low, middle, and high levels of damage to products. 2. Successful maintenance product rate. Because of unknown situations after the product is damaged, product repair and component replacements cannot be controlled. This study considered low, middle, and high levels of maintenance success rates. 85

87 3. Maintenance time. When the customers products break down, the uncertainty of damage or maintenance success leads to the technical personnel having different levels of control over the maintenance time. This study considered low, middle, and high levels of maintenance time. 4. Shop dispatching rules. Scheduling and dispatching are critical for repairing products within the time demanded by the customers. Thus, this study considered three dispatching rules: FCFS, EDD, and SPT (with their relevant definition that de don t going through them here) Figure 38 - Simulation model for Rental and Procurment in the context of PSS (Tsai Chi Kuo 2010) Then the performance indices are defined which reflect the sustainability performance and cost and waste amounts. Maintenance cycle time for customers. This is the time from receipt of the customer s demand to reporting the maintenance completion to customer service center. It is improved as long as it become shorter. 1. Total maintenance time. The total maintenance time should be as short as possible. 2. Total maintenance cost. This refers to the maintenance finished in the planned simulation time and the total maintenance cost of maintenance units and maintenance. 3. Total component cost. This refers to the components and costs needed by maintenance personnel. The average component cost should be low. 4. Total waste amount. This refers to the amount of waste stored which should be short as well 86

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