Adaptable and Customizable Development Process for Product-Service Systems

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ScienceDirect Procedia CIRP 47 (2016) 317 – 322

8th Industrial Product-Service System Confererence – Product-Service Systems across Life Cycle

Adaptable and customizable development process for Product-Service Systems Claas Christian Wuttkea*, Philipp Ludihuserb, Stefan Bleiweisa a

University of Applied Science Karlsruhe, Moltkestraße 30, D-76133 Karlsruhe, Germany b Campana & Schott GmbH, Gräfstraße 99, D- 60487 Frankfurt, Germany

* Corresponding author. Tel.: +49 721 925-1952; fax: +49 721 925-1947. E-mail address: [email protected]

Abstract

Systematic development is of utmost importance for the market success of Product-Service Systems (PSSs). A multitude of methods and processes to support the development of PSS has already been published. Yet empirical studies in this context prove that the level of utilization of methods and processes is still minor. As a contribution to solve this problem the authors suggest an adaptable and customizable development process for Product-Service Systems. The solution is based on three approaches: (i) a procedure for designing development processes for PSS according to the requirements, (ii) a procedure for individualizing the development process according to specific requirements like e.g. industry, product groups, markets and (iii) the integration of a practical procedure for achieving market-adequate costs in the development process. With this application oriented approach the efficiency of the development process for PSS is increased and the application of methods is promoted. © Published by Elsevier B.V This is an open access article under the CC BY-NC-ND license © 2016 2016The TheAuthors. Authors. Published by Elsevier B.V. (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the scientific committee of the 8th Product-Service Systems across Life Cycle. Peer-review under responsibility of the scientific committee of the 8th Product-Service Systems across Life Cycle Keywords: Product-service systems,   

  

  

1. Introduction The relevance of PSS in practice keeps increasing [1]. Some manufacturers of machine tools are already achieving double digit percentage proportions of their total turnover with services related to their physical goods. However, that requires clearly defined service offers as well as methods and processes for their development [2]. A multitude of methodbased development processes has already been designed [3,2]. But in contrast, there is a limited utilization of tools for developing PSS in practice: according to a poll among German service providers [4], only 12% of the respondents use Service Blueprinting and just 19% Quality Function Deployment – two central methods for developing PSS [5]. In a similar survey [6] it was observed that organizational units for the development of services exist in only 9% of the companies – a precondition for the occurrence of specific and standardized approaches.

This corresponds to a third comparable survey [7]. It was determined here that just 10% of the enterprises have clearly defined processes for developing services. According to the authors there are two main reasons for the discrepancy between the multiplicity of existing methods and processes and their minor penetration in practice: (i) it is hard to have an overview of the approaches existing and (ii) with the manifold kinds of services it is difficult to find a methodology that covers as many cases as possible. In order to improve this situation the diverse requirements on PSS Development Processes (PDP) are derived first. Based on this the authors of this paper suggest three new approaches with the goal of improving the efficiency and the quality of the development of PSS: (i) a procedure for designing development processes for PSS according to the requirements, (ii) a procedure for individualizing the development process according to specific requirements like industry, product groups, markets and (iii) the integration of a practical

2212-8271 © 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the scientific committee of the 8th Product-Service Systems across Life Cycle doi:10.1016/j.procir.2016.03.119

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procedure for achieving market-adequate costs in the development process. The methodological approach of the presented study follows the approach of applied sciences that has its origin in problems recognized by practical experience. For their solution scientific findings are further developed in close exchange with their practical utilization so that new application oriented solutions emerge. These are then verified and modified according to new findings. The scientific relevance and hence the transferability of the solutions achieved is secured by the feedback from diversified practical use. 2. Individuality of the development of PSS Just by looking at eight different types of PSS listed in [8] their dissimilarity becomes evident: (i) product-related service, (ii) advice and consultancy, (iii) product lease, (iv) product renting and sharing, (v) product pooling, (vi) activity management, (vii) pay per unit use and (viii) functional result. When additionally taking into consideration that the standard types again have quite different forms of appearance it becomes evident how distinct PSS can be. This is going to be demonstrated by the following two use cases: 2.1. Use case I: Comprehensive Development Tasks A manufacturer of machine tools already offers a wide portfolio of IPS2 (Industrial Product Service Systems) and introduces a new product technology: in order to produce graphite electrodes for electrical discharge machining, a special graphite machining center has been developed. The three-axis-system comes with a base frame of granite and linear axle of carbon-fiber-reinforced plastic (CFRP). This allows extremely dynamic part movements with maximum positioning accuracy in milling [9]. If the development were limited to the new machine when introducing the new technology, the service components of IPS2 would remain on the same old level. On the one hand, damage from crashes is unlikely due to the robust layout of the machine and the limited strength value of the material usually processed (graphite). On the other hand, the design material CFRP has a different vulnerability compared to steel. While running the machine, the following scenarios are possible: components made of CFRP can be damaged when handled improperly by customers’ machine operators that are not specifically trained. Because the damage is hard to recognize, inexplicable scrap is produced and the damage of the machine proceeds. Without specific training the maintenance staff on site would not be able to resolve the defect because besides knowledge and experience they also lack the relevant tools. In this situation expensive CFRP-parts would have to be replaced prophylactically even after small crashes – if there is a supply of spare parts without long shutdown time at all. Further negative consequences on other typical services like process optimization, training etc. can be derived. This use case also indicates that it is reasonable to closely link the PDPs of both components when developing complex

IPS2. The importance of the total cost of IPS2 can easily be derived, too: The advantage of short process times and small waste must not be consumed completely by higher cost for services. The development of a PSS using new technology requires the consideration of a number of aspects. Thereto a very individualistic PSS development process is necessary. It has to support a close linking of the development of the PSS – as well as Target Costing. 2.2. Use case II: Limited Development Tasks The second use case deals with the application of the internet of things. The provider is a start-up company newly founded for this special purpose: Cold chain monitoring for multi-unit restaurant management using network-compatible temperature sensors will be offered [10]. The sensors are connected to the internet via Wi-Fi. They are offered to the companies in the context of a service-model. The data collected is stored in the cloud. It can be accessed by the users using various devices. The elements of this PSS consist of adapted network-compatible temperature sensors, a control and evaluation software as well as a financing model. The initial benefits for the customer are the savings for the manual recording and documentation of temperatures in the cold chain. But an even higher gain is the increased reliability of the automized monitoring of the cold chain. Moreover the regulations regarding industrial hygiene can be met in a more secure and traceable way. The technology of network-compatible temperature sensors is not new. But provoked by the continuous decline in prices new fields of application are rendered possible. Despite obvious advantages mobile temperature sensors are rarely applied in multi-unit restaurants. Besides the lack of specific solutions, this is also – by financial reasons – the necessarity to equip entire shops. Further preconditions are e.g. fitted sensors, specifically developed software as well as services and business models adapted to the particular industry. The producers of the sensors in turn lack specific know-how of the respective industry sector. However, as suppliers they have to be integrated in the development. Despite manageable tasks the development process is challenging. The existential economic risk due to high investments calls for a professional approach. Naturally a start-up only has very limited planning resources. An adequate solution is required for this development task that is completely different from the one described in 2.1. 2.3. Factors of Influence for the design of a PDP Both use cases demonstrate the individuality of development tasks that not only result from the task itself. Table 1 indicates the essential criteria that influence the choice of the appropriate development process. It does not seem reasonable to develop an algorithm that combines all the aspects listed in Table 1 for deriving a particular PSS development process. In turn, it is evident that complex and risky development tasks require comprehensive

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processes. The resulting costs can only be justified with high expected revenues. Table 1. Influences on the Design of Development Processes of IPSS Cluster

Determining factor

Development request

Volume, complexity, potential sales volume, technical risks, innovation, time frame

Involved parties

Network, organization, technical expertise, methodical expertise, experience, motivation

Resources

Staff, financial resources, available technologies

Market

Industrial sector, requirements, competitive environment, market risks

Organization / Corporation

Dimension, structure, strategies, management style

Society

Legal requirements, working culture, social and economic situation

2.4. Solution Statement In order to solve the dilemma of strongly varying requirements on the design of appropriate PDPs, the following solution is recommended: for complex and risky development tasks a comprehensive reference PDP based on the StageGate-Approach [11] is proposed – as reasoned in detail below. Via a procedure explained below this PDP is then scaled and individualized appropriately for the particular task and the frame conditions. For all smaller tasks a PSS-DevelopmentCanvas is offered. Fig. 1 illustrates the particular fields of application of the two standard models detailed in section 4 and 5. This figure also illustrates that the Stage-Gate reference model should definitely be applied as of a certain complexity or high expected revenues.

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equipment, development etc. are sometimes necessary in order to be able to offer a complete bundle of services. With Target Costing there exists a comprehensive cost planning, monitoring and controlling concept. It is initiated in the very early stages of the product development process [13] and is based on the determination of target prices for new bundles of services. The target prices can either be based on (i) the competitive position or on (ii) consumer demand. In order to apply (i) prices for comparable performances of other companies have to be at hand, which might be a problem due to missing comparability. In order to proceed according to (ii) the willingness of the customers to pay has to be investigated. That calls for a Conjoint Analysis [14]. Starting with the target prices the expected profit and the overhead are deducted in order to derive the target costs. These costs are broken down and assigned to individual functions and parts of the bundle of services respectively. The value that the customer attaches to the function is constitutive for the proportion assigned. Here, too, the Conjoint Analysis is a suitable tool. Finally, the target cost for each element of the PSS is compared to the current standard costs based on the up-to-date stage of development. The cost of service parts of PSS can be derived in four ways [15]: (i) estimating by analogy, (ii) activity based costing [16], (iii) parametric as a function of basic attributes of an item or process element, (iv) extrapolation. That way it is possible to detect and localize a potential cost gap based on the particular planning state in the course of development – as well as the current cost drivers. On this basis remedies are initiated in order to meet the target costs before market launch. Target prices are subjected to change during development e.g. because the bundle of services becomes more or less attractive or the competitive environment changes. Hence the variance analysis has to be carried out continuously within PDP. Target Costing is part of the philosophy of Total Cost Management [17]. That entails that employees trigger process improvements independently even after market launch [18]. 4. Stage-Gate based Reference Product Development Process

Fig. 1. Scope of application of both approaches for PSS Design Process.

3. Target Costing and Development Accompanying Product Cost Estimation With regard to the cost of physical products Cooper and Chew [12] state: “If you cannot meet the target, you cannot launch the product”. Due to the intangibility of the results this problem does not seem to be grave for services at first glance. But with PSS in particular the sale of physical goods and the related services are closely tied – especially in the capital goods’ industry. Furthermore, substantial investments in

In section 2 it was illustrated that for complex and highly risky development tasks a comprehensive reference PDP is required. There are mainly three reasons for choosing the Stage-Gate-Approach [19,11]: (i) Stage-Gate-Processes are common when developing especially physical goods associated with high investments. Thus, the development processes of physical goods and services can be linked well. (ii) PDP can easily be individualized using checklists at the gate points – especially if the content of the stages is oriented at the questions to be answered in these checklists. (iii) The checklists can very well be utilized for knowledge and experience management. Experiences from all phases of PDP and the product life cycle are included via points in the checklists. That way requests for a know-how-management [1,20,21] can be implemented quite pragmatically. Calls for the consideration of Life Cycle Management right from the

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early stages of PSS development [22,23] can be similarly responded.

appropriate utilization of methods and tools for the particular processing steps.

4.1. Reference Model A great deal of approaches has already been proposed for the development of PSS. An overview of processes described is provided in [3,24]. In [25-27] particularly comprehensive models are presented – as required for the current task. In order to enable scalability, a phase model is fundamentally required. The reference model presented in Fig. 2 is based on [28,29]. In comparison with [29] there is an additional stage of idea generation. It constitutes the basis for a Stage-GateProcess of the third generation [30], that can be applied quite flexible. Similar to [31] specific methods and tools are offered for the single stages. In order to enable the scaling and individualization of PDP described below there is no fixed assignment of stage and method as proposed in [31].

4.3. Customizing the Reference PDPs with individualized Checklists The evaluation points of the Stage-Gate-Process are implemented with individualized checklists. They allow the aggregation of information referring to the results of the PSS development process. That promotes a fact-based evaluation as well as decisions regarding the further course of the process. Furthermore, the filled checklists document the progress of PDP in a standardized way. There is a reference checklist for every processing step to support the creation of individualized checklists. It is structured in topic modules and contains typical questions as well as several suggestions for particular forms of targets. In the context of the individualization of the checklists, questions are amended, specified or also canceled. The inquiry field is supplemented by a column which documents measures with responsibilities and deadlines if necessary. Besides the questions that obviously result from the particular planning stage industry and company specific standards as well as legal requirements are important sources for further questions. By continuously recording questions that only occur in later stages of development or in operation, the checklist is going to be amended with every application and thus developed further in an evolutionary way. 5. PSS Development-Canvas

Fig. 2. Stage-Gate-Reference Model for the Development of PSS

4.2. Scaling In order to design the development process for new, enhanced or altered PSS most effectively, it is reasonable to adapt the very comprehensive reference PDP. There are three possibilities to do so that can also be combined if necessary: Table 2. Options to scale the Reference-PDP Situation

Action

The purchaser orders a precise PSS

Omission of early project phases and concentration on conceptual design and implementation

There is only a request for a first prototype or feasibility study to show it on an exhibition

Omission of late project phases and concentration on idea generation, scoping as well as requirements analysis and business case

New PSS of low complexity, risk or sales expectancy

Pooling of project phases

The specific design of processing steps results from the determination of the content of the checklists that are assigned to the gates. Thus an iterative procedure emerges because checklists can only be designed after the scaling described in Table 2. Only on this basis, topics can be determined with the

As shown in 2.2 there is also a demand for methodological support for limited development tasks and constricted human resources or time frames. For concretion of business ideas, business models have proved their worth. They constitute a simple description how companies intend to take advantage of business opportunities. Thereby core aspects like Value Proposition, Architecture of the Value Creation and Benefit model are described. A business model canvas and an approach to develop business models by the use of nine dimensions are presented in [32]. The particular benefit exists in the clear visualization of the nine dimensions on a huge canvas in order to support the cooperative workshop character of the method. There is an essential difference between the Business Model Canvas described above and the PSS Development Canvas explained below: the principle of a compact representation is adopted because it is excellently qualified for the cooperation in workshops. However the aspects elaborated with the PSS Development Canvas are completely different from the ones acquired with the Business Model Canvas [32]. While in [26] a template (in terms of a standardized table) is used for the presentation of specific PSS configurations, it is demonstrated in [25] how business models can be developed for remanufacturing by means of nine specific dimensions. The standardized presentation of business models is especially suited for communicating and cooperating with partners, investors and customers. But especially at PSS with

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focus on investments, business models are limited if used as the exclusive development tool. Especially if technical investments in material assets account for a significant basis of the business idea, business models alone are no longer sufficient for their implementation. In this case technical

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issues are also in focus, e.g. the selection and adaption of devices and software including their smooth interaction. In order to feature a specific support for the development of technically oriented and price sensitive PSS the canvas exhibited in Fig. 3 is proposed and illustrated in the following.

Fig. 3. Application of the PSS Development Canvas

The starting point for working with the PSS development canvas can be a business model – e.g. in the form of a business model canvas. Then the PSS-canvas ties in with the business model canvas – step 1 – and documents the technical – step 2 – and explicitly also the economic – step 3 – structure of the service. Specifications are determined for hardware, software and processes with the ongoing course of the planning – step 4. The preparation of a Service Blueprint [32,33] is recommended for documentation and as a prototype of the service processes – step 5. Based on the PSS now completely specified for the first time target prices and hence costs are calculated for all major elements of the PSS – step 6. Utilizing prototypes – step 7 – the PSS is developed further and the particular planning stage is documented – step 8 – and current target costs derived – step 9. Not only, but especially for maintenance [5] expenses have to be considered for the entire life cycle of PSS. Besides the fields of PSS canvas exemplary filled, it is reasonable to provide further fields for specific issues. These result from the specific development task. The findings from [24] regarding the elements of PSS as well as the influencing values for the marketability of PSS derived in [34] were integrated. Based on a comprehensive literature research there is a structured and commented

compilation of the most relevant design elements of PSS in [35]. This survey can as well be utilized for the selection of appropriate dimensions of the PSS-canvas. 6. Conclusion and future work The Stage-Gate Reference Model for the Development of PSS and the PSS Development Canvas are two complementary approaches for the development of PSS. Together with the procedure for the selection, adaption and individualization of the PDP on specific development tasks and their general requirements, a framework for the effective and efficient development of product-service systems is proposed. The Reference Model for the Development of PSS is applied inter alia for the development of e-mobility concepts. These concepts can feature different designs: In one case an urban administration just wants to have a feasibility study as a basis for discussion and the provision of budgets for further planning. In contrast a public transportation system, that wants to operate an e-mobility concept, needs comprehensive support: amongst others this includes e.g. a potential analysis for e-mobility, alternative operator concepts, a multimodal mobility concept and the planning of charging infrastructure.

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