An evaluation method for designing a new product-service system

Expert Systems with Applications 39 (2012) 3100–3108

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An evaluation method for designing a new product-service system Byungun Yoon ⇑, Sojung Kim, Jongtae Rhee Department of Industrial & Systems Engineering, School of Engineering, Dongguk University-Seoul, 3-26, Pil-dong 3ga, Chung-gu, Seoul 100-715, Republic of Korea

a r t i c l e

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Keywords: Product-Service System (PSS) Evaluation method Service innovation Model feasibility

a b s t r a c t Although the importance of the design of a new PSS (Product-Service System) should be emphasized, it is not obvious that traditional evaluation methods of pure services are still appropriate for PSSs. Since methods to evaluate the feasibility of new businesses vary with the characteristics of businesses, the evaluation methods might need to be modified to reflect unique nature in the design of a new PSS. Therefore, this paper aims at improving the applicability of evaluation methods for designing a new PSS by proposing a new framework and performing an empirical study where a new evaluation method can be used for PSSs. To this end, first, the meanings of service innovation, PSS, and evaluation methods in service research will be investigated. Second, an evaluation method for designing a new PSS will be suggested by considering the perspectives of service providers as well as customers. Finally, the method will be applied to evaluate the feasibility of designing a car-sharing service that is a use-oriented PSS. This method will provide a good means of drawing a potentially successful PSS by applying the proposed evaluation methodology and process. Ó 2011 Elsevier Ltd. All rights reserved.

1. Introduction Recently, manufacturing industries in a global competition continue to experience considerable changes. Many traditional manufacturing firms are increasingly challenged by companies of developing countries with low-cost labor bases and the survival of many existing operations is continually in doubt. Basically, manufacturing sector directly underpins the export of a country, strengthens the service-based economy, and complements the scientific and engineering research base. Thus, the oft-repeated advice to manufacturers is that, to sustain such competitiveness, they should ‘move up the value chain’ and focus on delivering knowledge-intensive products and services (Besch, 2005). Increasing integration of products and services becomes more and more apparent in industrialized economies (Crul, Diehl, & Ryan, 2010). As a part of these efforts, a Product-Service System (PSS) is a potentially valuable concept for manufacturers in developed economies. Historically, the PSS has evolved from the product-service mix, which is an extension of the service component around a product for business activities that are traditionally product-oriented, i.e., the introduction of a new service component that is marketed as a product for business activities that usually are service-oriented (Rocchi, 1997). Hence, a PSS has been described as ‘an innovation strategy, shifting the business focus from designing (and selling) physical products only, to designing (and selling) a ⇑ Corresponding author. Tel.: +82 2 2260 8659; fax: +82 2 2260 8743. E-mail address: [email protected] (B. Yoon). 0957-4174/$ - see front matter Ó 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.eswa.2011.08.173

system of products and services which are jointly capable of fulfilling specific client demands’ (Manzini & Vezzoli, 2002). Therefore, the development of PSS becomes an increasingly important strategy in achieving social, economic, and environmental sustainability, which advocates the reduction of resource consumption while delivering better goods and services that are available more widely (Mont, 2003). Several studies have been undertaken with regard to the PSS concept (Baines et al., 2007). However, as most companies have developed knowledge and optimized organization in one specific area, such as product development, they may lack of knowledge and organization in service development (Crul et al., 2010). The several failed PSS cases which make less profit than traditional business models (Manzini & Vezzoli, 2002; Tukker & Tischner, 2006) show how important PSS design methods and developing processes are properly adopted. Nevertheless, Existing research on Product Service Systems (PSSs) does not have sophisticated knowledge on evaluation models in that it just applied current evaluation methods of traditional areas such as new service development (NSD) or new product development (NPD) (Halen, Vezzoli, & Wimmer, 2005). Further, a series of methods that are familiar from traditional product development are evidently used in practice for services with relatively low contact intensity because simultaneity and co-production must be emphasized in services unlike products. Although some research pertains to evaluation methods (Aurich, Fuchs, & Wagenknechy, 2006; Halen et al., 2005; Mont, 2000), the prevalent and diverse methods for designing and evaluating PSSs have limitations because these tools mostly use qualitative analysis which is not largely different to traditional methods

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and has high probability of making different result. For example, the MPESS Handbook (Halen et al., 2005) offered five frameworks for develop PSSs but the frameworks use a scoring method that reflect participants’ opinion who haven’t any experience about a new PSS model. Thus, we need to use a more objective analysis that is based on quantitative methods. Moreover, the evaluate methods for existing PSS concept to implement in new environment are also important since implementing it for a new market is similar to a new PSS design process in that it must change appropriately to new environment, but many tools mainly focus on new PSS concept development. To address these issues, an evaluation method to design a new PSS of which the concept is already created but is not applied to a real market should be proposed so as to reduce the risk of failure by grasping customer needs, ascertaining technological and economical feasibility, knowing stakeholders’ requirements, and anticipating other players’ action. Therefore, this paper ultimately aims at enhancing an evaluation method for designing a new PSS that considers both customer and provider perspectives, combining quantitative as well as qualitative perspectives. Towards this end, for ascertaining the characteristics of PSSs, we referred to earlier studies in service research that were related to service innovation, PSSs, and evaluation methods. We then established an evaluation model for PSSs. Furthermore, the evaluation model was applied to a car-sharing service, which is a model of PSSs. Finally, this paper concludes by outlining some key areas for future research into potential methods for addressing such challenges.

2. Background 2.1. Service innovation Service innovation can be defined as ‘‘a new or considerably changed service concept, client interaction channel, service delivery system or technological concept that individually, but most likely in combination leads to one or more new service functions that are new to the firm and do change the service/good offered on the market and do require structurally new technological, human or organizational capabilities of the service organization,’’ (Van Ark, Broersma, & Den Hertog, 2003). Service innovation differs from product innovation in important respects. First, for labor-intensive, interactive services, the actual providers – the service delivery staff – are part of the customer experience and thus, part of the innovation. Second, services that require the physical presence of the customer necessitate ‘‘local’’ decentralized production capacity. (Customers will drive only so far to eat at a restaurant, no matter how innovative it may be.) Third, service innovators usually do not have a tangible product that carries a brand name (Berry, Shankar, Parish, Cadwallader, & Dotzel, 2006). A service innovation always includes replicable elements that can be identified and systematically reproduced in other cases or environments. The replicable element can be the service outcome or the service process as such or a part of them. A service innovation benefits both the service provider and customers and improves its developer’s competitive edge. A service innovation is a service product or process that is based on some technology or systematic method. In light of the definition of service innovation, such innovations can be classified as belonging to one of three main categories. (i) New or improved service products. (Often, this is contrasted with ‘‘technological innovation,’’ though service products certainly can have technological elements.)

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(ii) New or improved ways of designing and producing services in the service process. This may include innovation in service delivery systems, though often such innovations will be regarded as service product innovations. (iii) Organizational innovation and the management of the innovation process in service organizations (Bitner, Ostrom, & Morgan, 2008). This paper considers the first category of service innovations, i.e., the development of new service products. To succeed in business, a service provider strives for a high service productivity, which refers to the effective (and efficient) transformation of input resources by the service (production) process to outputs in the form of services and service quality because the output of service productivity is determined by service quality. Service quality is measured by the customer at the instant the service is used. If the resulting service exceeds the customer’s expectation, the service quality is high because it leads to customer satisfaction. Therefore, service innovation as a new service development commences by reflecting customer requirements. The service output is customer satisfaction. As the process of new service development progresses toward actual design and implementation, the initial service idea must be made more concrete so that it can be presented as a developed concept, or even a rough prototype, to customers and employees. The roles and responsibilities of customers and service providers must be clarified. Detailed descriptions are required of the service process with respect to equipment, quality, and cost factors. It is at this stage that opinions differ as to just how the idea should be translated into an actual service. A key for success at this point is the ability to describe service process characteristics and depict them so that employees, customers, and managers alike can know in concrete terms what the service involves and understand their respective roles in its delivery or co-creation (Bitner et al., 2008). Hence, the reduction of gaps between the customer and service provider(s) is the most important aspect in new service development.

2.2. Product-service system Increasingly, manufacturers tend to put less focus on producing products and more focus on adding value to the customer through the provision of services, as services can provide value with less environmental impact without compromising customers’ needs. Hence, manufacturers are becoming service providers. For example, services account for 85% of the sales of GE, which historically has been a manufacturer. Dell has been a computer manufacturer but nowadays realizes greater profitability from its service operations (Fitzsimmons & Fitzsimmons, 2006). In this context, the concept of PSS has been proposed for promoting a focal shift from selling just products to selling functions through a mix of products and services, while fulfilling the same consumer demands with less environmental impact (Goedkoop, Van Halen, Te Riele, & Rommens, 1999; Manzini & Vezzoli, 2002; Mont, 2002, 2003; Tomiyama, Medland, & Vergeest, 2000). Mont (2001) defined a PSS as a system of products, services, networks of actors, and supporting infrastructure that is developed to be competitive, satisfy customers, and be more environmentally sound than traditional business models. In keeping with this definition, PSSs are considered as a useful and attractive approach for sustainability as it fits well with the criteria of strategies for achieving sustainability from the perspectives of product, production, and consumption. The key idea behind PSSs is that consumers do not specifically demand products but rather are seeking the utility of these products and the accompanying services (Goedkoop et al., 1999; Mont, 2003).

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As was described in Section 1, a PSS has four elements (Mont, 2004). The first element in a PSS is products. The possibility of replacing products with services, usually in the form of switching from owning a product to leasing–renting–sharing, depends on the product type, usage intensity, and values that are associated with product ownership. The second element of a PSS is services. In a PSS, the point-ofsale becomes the point-of-service. This entails changes in the design of the ‘‘sale’’ stage that should include different techniques and stimulation mechanisms for selling product usage, not product volume. The third element of a PSS is infrastructure and comprises the existing collective and private systems that provide the backbone of society, viz., roads, communication lines, waste collection systems, etc. The fourth element in a PSS is networks of actors that need to be created among sometimes – unexpected actors in order to provide product-service systems. According to Manzini, Vezzoli, and Clark (2001), Baines et al. (2007), and Tukker (2004), a PSS can be classified as belonging to one of three main categories as shown in Table 1: (i) a product-oriented PSS, where the business model still is largely associated with the sale of products to consumers with some additional services (e.g., maintenance contract, a financing scheme, and the supply of consumables); (ii) a use-oriented PSS, where products remain central but are owned by service providers and made available to users in different forms (e.g., product leasing or sharing); and (iii) a result-oriented PSS, where customers and service providers agree on the desired outcome(s) (e.g., the companies who offer to deliver a specified ‘pleasant climate’ in offices rather than gas or cooling equipment, or companies who promise farmers a maximum harvest loss rather than selling pesticides) without specifying the product involved. All three types of PSS solution satisfy customer needs through a combination of products and services that is systemized for delivering the desired utility or function. However, PSS is not always a panacea to solve business issues as well as manufacturing issues. Compared to a product, some PSS models such as renting, sharing, and pooling, imply that an access to a service becomes more difficult because it’s not always available when wanted or not available on site. In practice, much trade-offs are at stake, that determine how activities should be distributed over the companies and users in a system to realize the lowest cost. Moreover, the risk of investment and capability is larger than traditional business models (Manzini & Vezzoli, 2002; Tukker & Tischner, 2006). These problems show how important PSS design methods and development processes of the PSS are properly adopted. Therefore, we should perform PSS design more carefully. 2.3. Evaluation methods in product-service system research Since the concept of PSS is a focal shift from selling just products to selling functions through a mix of products and services, evaluation methods are should consider various aspects of PSS’s factors. In this point of view, we investigate design methods in

Table 1 Three categories of PSS. Components

Description

Product-oriented PSS

Highlighting the role of products with the support of additional service Focusing on valuable use of existing products in different ways Concerning the agreement of the desired outcomes without the involvement of specific products

Use-oriented PSS Result-oriented PSS

new service design (NSD), new product design (NPD), and PSS design areas. In service area, many different methods have existed for designing services (Fähnrich et al., 1999), and developing a deeper understanding of the way customers experience and evaluate service processes is but one of many challenges faced by service providers that undertake the design, delivery, and documentation of a service offering. Johnson, Menor, Roth, and Chase (2000) suggested the NSD process cycle, which is used widely when a new service is developed. The NSD process cycle represents a progression of planning, analysis, and execution activities. The cyclic nature is meant to suggest the highly iterative and non-linear processes that are typically employed in most NSD efforts. Additionally, this conceptual framework deserves detailed scrutiny especially given the dramatic changes in the service concept for technology-mediated services. In the NSD process, evaluation methods are included in the development step. A series of methods that are familiar from traditional NPD area are evidently used in practice for services. For example, QFD (Quality Function Deployment) is used for the matching process between service factors and customer requirements (Fitzsimmons & Fitzsimmons, 2006). The SADT modeling process results in a set of interrelated diagrams that collectively describe a system and are applied for easily describing a service process (Congram & Epelman, 1995; Marca & McGowan, 1988). Also, the FMEA tool is applied to prioritize the critical modes of potential failure of the service system and take necessary actions to ensure performance in service design (Chuang, 2007; Shostak, 1984). However, unlike NPD which focuses on product specification, NSD has fewer development steps than NPD because NSD focuses on service process and simultaneity of service. NSD has various fundamental differences that might invalidate the applicability of the NPD methods, e.g., simultaneous innovation in the product and the procedure, absence of separation between product innovation and organizational innovation, and lack of distinction between the creation of the offer and the activities of production and commercialization (Callon, Laredo, & Rabeharisoa, 1997). At this juncture, service blueprinting is a flexible approach that helps managers with the challenges of service process design and analysis. It is a powerful technique that can be used to depict a service at multiple levels of analysis. That is, service blueprinting can facilitate the detailed refinement of a single step in the customer process as well as the creation of a comprehensive, visual overview of an entire service process (Bitner et al., 2008). However, service blueprinting also has a problem in that it considers only service design that is not appropriate for PSS. Although service design is important process in new service development, the new PSS design method is different because PSSs consider other factors when applied to the real-world such as business viability, customer satisfaction, environmental soundness, regulatory institution, and normative institution. Following the Mont (2004), the three criteria for PSS feasibility include business viability, customer satisfaction, and environmental soundness. Business viability evaluates whether the PSS is competitive in the market, can maintain market share, and be profitable. Customer satisfaction with a PSS is vital and should include customer involvement in system design and customer education, besides traditional parameters. Environmental soundness evaluates whether the PSS is superior to traditional business models from an environmental perspective. Additionally, regulatory and normative institutions will be analyzed for each business. There is a variety of tools and methodologies for a new PSS design are outlined already in the literature (Tukker & Tischner, 2006). For example, Halen et al. (2005) offered MPESS, which is a methodology and toolkit for developing a PSS model; Aurich et al. (2006) developed a process for the systematic design of technical services that

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support a product; Goedkoop et al. (1999) offered a four-axis model for auditing a PSS; Manzini, Collina, and Evans (2004) suggested HiCS which considered a network of firm by finding the right partners and organizing the new co-operations; and Mont (2004) proposed a framework for analyzing the likes of PSSs. These tools cover the complete development process until the market launch or concentrate on specific process phases of the development process. But tools and methods to finding the right partners and organizing the new co-operations efficiently are still largely missing. Only the HiCS project paid some attention to this, and there seems still room for improvement (Tukker et al., 2006). In addition, we need more objective analysis that concentrates on quantitative methods because the existing frameworks largely depend on participants who haven’t any experience about a new PSS model. Moreover, the evaluate methods for existing PSS concept to implement in new environment are also important since implementing for the new market is similar to a new PSS design process in that it has high risk of model adoption and must changed properly. However, many tools mainly focus on new PSS concept development. Accordingly, we will propose new evaluation method for designing a new PSS in Section 3.

3. Methodology 3.1. Characteristics of product-service systems A product is a tangible object that is produced to fulfill consumer’s needs. However, a service is heterogeneous and mainly is an immaterial and perishable activity or process that is offered by a company or institution and consumed at the same time as it is produced (Mont, 1999). Therefore, service systems are organizational structures that are designed to deliver services that satisfy the needs and wants of the parent organization’s customers. Considerations of marketing, operations, and the global environment have significant implications for the design of a service system. Three criteria that are used to classify service systems include: customer contact; capital intensity; and the level of customer involvement (Cook, Goh, & Chung, 1999). As noted in Section 2, a PSS is designed by four elements, namely, products, services, networks of actors, and the supporting infrastructure that are designed to be competitive (Mont, 2001). Those elements reflect service packages that exist in the business environment, as shown in Fig. 1. Traditionally, business model is included by five forces such as competitive, political–legal, economic, technological, and social-culture. And firms which are service providers have four marketing mix elements and the target market (Boone & Kurtz, 2006). These forces provide the frame of reference within which all marketing decisions and PSS packages are made. The number of parties involved becomes a critical question. The more the actors that are involved in the delivery function, the higher is the transaction cost and the more difficult it is to ensure the quality of provided services. Hence, the service provider should choose a proper partner, and network where it is combined with partners for offering a good. Lastly, infrastructure represents existing structures and systems within society, such as (recycling) technologies, waste collection points, and incinerating plants, the existence and suitability of which should be considered when products and services are developed. In order to make use of such infrastructure or find new alternatives for efficiently utilizing products, their components or materials, networks or alliances of companies need to be created in order to support products in the market and ensure that they are effectively reused, refurbished, and remanufactured or safely disposed of.

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Fig. 1. The business environment of product-service system package.

In a point of view in PSS, a service encounter which means agreement points between customers’ needs and service providers’ interests is important for successful service provision. In addition, for designing an effective service model, all elements of PSSs should be reflected. Therefore, an evaluation model for PSSs should consider the differential expectations of customers and service providers. 3.2. An evaluation model for product-service systems 3.2.1. Conceptual Since the PSS encounter is a critical factor in PSS success, PSS evaluation must consider two angles, viz., those of customers and PSS providers. First, evaluation from the viewpoint of PSS providers refers to finding the potential risk in the designed PSS model when it is applied in the market and confirming a high probability of success. Second, evaluation from the viewpoint of customers refers to ascertaining in advance the responses and thoughts of prospective customers. In addition, since a new PSS model is affected by many elements, an evaluation model of PSS should consider various aspects. In particular, business environment elements are the most important factor to successfully implement the concept of PSS. In a PSSprovider side which has 4P models such as PSS package, Price, Promotion, and Place, the evaluation methods should include a competitive element, a political–legal element, a economic element, and a technological element. In a customer side, the investigation of customers’ responses and thoughts let designers reflect the characteristics of social and culture. Thus, PSS model will be evaluated various aspects that have different levels in each target market by these two sides analysis. However, in a PSS-provider side, technological elements and competitive elements are hard to evaluate because we don’t know exactly about how PSS operate well and competitors’ action is followed by customers’ response. Nevertheless, existing PSS tools have used general techniques such as scoring checklist and interview on people who haven’t guiltless of a new PSS model. Therefore, technological evaluation should conduct a field test combined with infrastructure, and competitor action should be analyzed by a simulation method which is used usually in order to expect a new situation when the relationship among systems is too complex to analyze or a test cost in a realworld is too expensive (Law & Kelton, 2000). 3.2.2. Process Fig. 2 shows an evaluation model for PSSs that considers both customer and PSS provider perspectives. When the evaluation

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In simulation model, first, we choose one area which is considered as implementing place. Second, we conduct simulation modeling (used Rockwell Software Arena 9.0) to reflect the real environment. Also we are modeling other service providers. Third, after the modeling, we verify and check the validation of simulation model. Fourth, we executed simulation and got a result of two cases before and after the PSS model were adopted. Finally, we compared these results. If the result at each step is not satisfactory in terms of feasibility analysis, the feedback process should redesign the service model for reducing the risk. Customer-side evaluation categories are the expected value, intention to accept, and preferred usage of service. First, the expectation of the service effect refers to changes in the environment, lifestyle, etc. It refers to how prospective customers conceive that the PSS might affect their social lives. Second, the intention to accept denotes the prospective customer’s opinion of the use of the service. Third, the preferred usage of service refers to how often prospective customers intend to avail the service in their daily lives. To analyze the above elements, we have to conduct either a survey or interviews. If a customer seeks another requirement or the result of analysis is not satisfactory, a feedback process should be also undertaken to redesign the service model. The Contents of Analysis for Evaluation in the framework is described in Table 2. 4. Illustration 4.1. Car-sharing service model

Fig. 2. Evaluation model for product-service systems.

results in each step are insufficient to our expectations, we undertake a feedback process, which entails the redesign of the PSS model. The positive environment that all results of the analyses are feasible allows us to implement the PSS. The results of analysis reflect the requirements of customer and PSS providers, leading to the reduction of the potential risk. Thus, we obtain a high probability of success in the business market. The evaluation factors with regard to the two angles are described in Table 1. Evaluation on the PSS-provider side considers the macro effect, economic feasibility, technological feasibility, political–legal feasibility, and relationship to other service providers. First, the service effect is the environmental effect when a new PSS model is applied. Second, economical feasibility is undertaken by location, investment cost, market size, and growth analysis in order to find the designed service model that yields a benefit. Third, technological feasibility is measured by a field test to solve operational problems. Forth, political–legal feasibility is evaluated by trend searching of related regulation. Lastly, the relationship to other service providers is evaluated through simulation for ascertaining how much the service affects other service providers.

Car-sharing is a typical use-oriented PSS, where users can reserve cars when they need them and pay automotive expenses on a variable basis (e.g., per kilometer or per unit of time). Carsharing promotes a sustainable consumption pattern that beckons a shift away from private ownership to a managed provision of utility through a mix of products and services. Typically, a user reserves a vehicle for a specific trip and at the time of the trip, they obtain the vehicle from a car-sharing station. They then use the vehicle for a short period of time, after which they return the vehicle, recording their driving information (Yang, Moore, Pu, & Wong, 2009). To reduce the cost of personal cars, car-sharing services were begun by students in Switzerland in 1987. Following worldwide expansion, Car-Sharing Operations (CSOs) now encompass more than 200 car-sharing companies. The car-sharing service has the potential to make metropolitan regions much more livable by reducing the number of vehicles within a community, thereby relieving congestion and the associated air pollution and fuel consumption (Britton, 2000). Car-sharing services are used widely in Europe and North America but scarcely in Asia. Specifically, South Korea has experienced considerable adverse economic consequences due to fuel costs and expenses that are related to the increased number of registered cars (more than 17 million in 2009). The ensuring traffic snarls are estimated to account for 2.9% of GDP, 40% of air pollu-

Table 2 Contents of analysis for evaluation. Subjects

Analysis/methods

Provider Side

Macro effects Economic Feasibility Technological Feasibility Political–legal feasibility Relationship to current competitive providers

Environment effect (e.g., CO2 emission reduction) Service location, scale of investment, market size, market growth Field test (devices, systems, processes and so on) Trend survey of government regulation, related ordinance, and funding opportunity Simulation

Customer Side

Expected value Intention to adoption Preferred use of service

Intensive survey of potential customers Intensive survey of potential customers Intensive survey of potential customers

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tion, and the unavailability of parking areas. Therefore, the design of a new car-sharing service model is applicable to South Korea because such a service will foster sustainable development for reducing traffic problems and air pollution. The Korean car-sharing service model is related to the public transport system for increasing mobility. It serves people who are not sufficiently mobile. Therefore, car-sharing stations need to be installed at transport interchanges and/or areas of low access to public transportation. For the successful introduction of a carsharing service model, we evaluate a car-sharing service model through the method proposed in Section 3. 4.2. Data To evaluate the car-sharing service model, we collected data on both the customer and PSS-provider sides. First, customer-side data were collected through a survey in February 2009. Survey participants, who were prospective car-sharing customers, consisted of 113 individuals and 14 organizations. Before the survey, we announced to the participants the car-sharing service model that was designed and then collected data about customers’ thoughts and needs with regard to the car-sharing service model. Second, provider-side data were gathered from various databases such as several transport-associate databases, the Korea National Statistical Office database, other transport service-provider information, etc. To evaluate technological feasibility, a field test was performed for evaluating the feasibility at the operational side. Data were collected through an onboard system in a shared car. The system recorded driving information with regard to the position, distance, and time. To measure the relationship to other modes of transport (for example, taxi, bus, and private car), we collected transport information on the sample region. Any evaluation of the model hasn’t to consider the general transport environment. Therefore, we chose one region that was regarded as a standard transport region (Hwajeong-dong, Deogyang-gu, Goyang-si, Gyeonggi-do, Korea) and conduct simulation modeling other service providers such as buses, taxis, private cars, and subway. Also, we used transport information to input simulation model such as the traffic per day, road environment, traffic signals, etc. Table 3 shows the input data for simulation (except data on the traffic environment). In simulation, 18,083 peoples (daily average) use 5925 transportations. Through the survey of transportations’ user, we found each demand of transportations. 4.3. Analysis At the customer side, the survey of the car-sharing service ascertained the expectation of the service effect, intention to accept, and preferred usage of service. Hence, we selected prospective customers (individuals and organizations) and then conducted a survey that was related to the above three dimensions. Before performing the survey, we explained the car-sharing model to participants. The survey used a 5-point Likert scale (‘will never use’-1, ‘will slightly use’-2, neutral-3, ‘will use’-4, and ‘have to use’-5).

Table 3 Input data for simulation.

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At the PSS-provider side, the effect of the car-sharing service and economical feasibility were ascertained through a literature review. The car-sharing service will result in a cleaner environment through the reduction of CO2 emissions. For instance, the forecast reduction of CO2 is the annual amount of air pollution by a car times the reduction in the number of cars when the carsharing service is used. In addition, the reduction of driving also reduces CO2 because car-sharing service users just use a car when they exactly need to drive. Although Greenhouse effect is not the only environmental problem, we focus on CO2 because it is the most critical factor of Greenhouse effect (IPCC: Intergovermental Panel on Climate Change, 1995) and CO2 emission from cars is a serious problem. For example, In Seoul which is the capital of Korea, CO2 emission from cars is liable for about 67% of the city air pollution. Following a process proposed by related literature with carsharing service, first, we found out the reduction in the number of cars when the car-sharing service is deployed to a market. Then, this number is multiplied with annual CO2 emission quantity by a car which is determined by annual driving distance. Finally, we can approximately forecast reduced quantity of CO2 from the total annual amount of air pollution. Economic feasibility was performed with reference to location, cost of investment, market size, and growth analysis. Location analysis was performed through a literature review that evaluated the transport environment, the number of customers who do not possess a private car and the transport-usage patterns of customers for finding the proper location for the application of the carsharing model. Following this result, we evaluated the cost of parking facilities, vehicles, and operating systems. Lastly, in order to analyze the market size and growth prospects, we calculated the number of target customers who were expected using a car-sharing when service implement in the future and their frequency of using the service. The technological feasibility was examined through a field test for ascertaining the interaction between the on-board system and external devices. The on-board system is able to calculate fees, record driving distances, get GPS data from satellites, check IC (Integrated Circuit) cards, etc. The test was performed for two different cars (small and medium) and the result was satisfactory. The political–legal feasibility was performed through the trend survey of related acts. Because Korea government carries forward the Green Growth Korea policy that support sustainability businesses, car-sharing service is very attractive business model in Korea. But, it has to solve Restricting regulation (e.g., Transportation industry, Parking area, Station, and so on). Simulation was performed to find the relationship to other service providers. Prior to the simulation, we gathered local traffic data with regard to transportation. Then, we performed simulation modeling and undertook a verification that reflected transport theory. After verification, we measured the car-sharing effect in relation to other transport service providers, such as taxis, buses, and private cars. Fig. 3 presents the conceptual model of simulation evaluation. When customer entities are generated in simulation, they select vehicle such as bus, taxi, private car, car-sharing service. Then, following the transport environment and characteristics of each vehicle, they drive and return or system out. 4.4. Results

Subject

Value

Date type

Total traffic (per day) Bus demand Taxi demand Private-car demand Car-sharing demand

N(5925, 483) 0.53 0.15 0.31 0.01

Probability Probability Probability Probability Probability

distribution value value value value

Following the results of the survey, the average score on the effect of the car-sharing service was 3.0 with regard to the reduction of the cost of car maintenance, traffic jams, and air pollution, indicating that customers assume a positive stance towards the carsharing service. However, most customers did not believe that car-sharing would reduce the number of private cars because sur-

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vey result of ‘own car disposal or not buy a new car’ category was 2.3. Therefore, we have to try to change customer perceptions about car-sharing. When it comes to the level of adoption intention for the service, the result was quite ‘neutral’, because the average score over all responses was 2.8. In addition, as one would expect, the average intention to use was 2.4 for those who possessed a private car. The price of the service was less than half the taxi fare and the station was located less than 10 minutes by walk from the customer’s home, considering that the mean value on station location was 1.59(Likert scale ‘1’ for 5 minutes, ‘2’ for 10 minutes and ‘5’ means 1 hour). One-way trip(4.04) was preferred over round trips(2.78). Table 4 shows the results of survey on the illustrated car-sharing service. In terms of the service effect, car-sharing could reduce fossil–fuel consumption by 54% by reducing the car usage rate. The amount of CO2 emission reduction per capita by the car-sharing service is estimated to be approximately 0.38 ton for small size of cars and 0.77 ton for big size of cars. If we assume that the market size of the car-sharing service account for 10% (1,679,429 cars) of whole market of private cars, the amount of CO2 emission reduction will be 638138.02 ton. Thus, this service can contribute to the ‘green industry’ policy of governments. In the evaluation of economic feasibility, the rate of usage of other transport services was expected to increase from 3% to 21%. Therefore, the market size also would increase from 19 billion dollars to 38 billion dollars. This size is estimated from the usage frequency that was ascertained from the survey of prospective customers when 5 dollars were assumed per usage. The result of the political–legal feasibility was positive because car-sharing service can contribute to the ‘green industry’ policy that is one of the most important policies in Korea. As other changed regulations, the government releases the restrict regulation such as Transportation industry, Parking area, and Station, if good for environment. The result of the evaluation of technological feasibility was positive in terms of car access procedure for users, the process of recording and collecting travelling data through the onboard system, and calculating the cost with respect to the travel distance and hours used, and operation of RFID and Smart card. All results in evaluating the car-sharing service are presented in Table 5. The evaluation of the environmental effect through simulation is shown in Fig. 4. The result of simulation showed that an increase in the number of customers of the car-sharing service reduced the number of private cars. Further, the reduction of private cars increased taxi and bus usage, which was regarded as a competitor to the car-sharing service. That is, the car-sharing service lowers the possession of private cars and therefore, most people use other vehicles when they do not use a car-sharing service. The results for all evaluation categories conformed to our framework. Hence, we conclude that the service model was feasible.

Table 4 Results of the survey on car-sharing service. Category

Mean value

SD

Adoption intention Frequency of usage Service price Station location Ride type (round-trip) Ride type (one-way)

2.8 2.1 3.6 1.59 2.78 4.04

0.96 1.17 0.77 0.79 0.96 0.89

4.5. Discussion According to the definition of car-sharing services, car-sharing refers to the design of sustainable urban transportation that is different from – and not conflictive with – existing modes of transportation. To attain this objective, a car-sharing service model was evaluated by our proposed model for evaluating PSSs. PSS encounters must be established by feedback process between two aspects of evaluation, viz., the customer side and the PSS-provider side. The feedback process reduced the difference between the customer and PSS-provider perspectives. Following an evaluation model for PSSs, we can develop the PSS encounter and increase the probability of success in the current competitive environment. However, the design of car-sharing services faces several obstacles, such as the position of other transport service providers, i.e., modes of transport. Although the design reflects the requirements of customers and PSS-providers, other service providers who exist in the transport sector have a differing view of the results of our evaluation. Their attitude about a new PSS model largely reflects our PSS model. They can easily assume a negative viewpoint owing to their concern about the reduction in their profits in the wake of such a service. Therefore, we need to control their attitude about our new PSS model to reflect their opinions through interviews. The proposed model for evaluation about a new PSS model in this paper considers not only the factors of existing tools but also a more accurate method in technological and competitive environment. A field test with installed infrastructure prevents operation failure, and simulation about relationship among current competitive providers which reflects customers’ attitude can forecast effects on a target market more accurately. Thus, a provider of PSS prepares for the act of competitors, enabling to increase the success probability of a new PSS model. 5. Conclusion The design of a new PSS is one of the most challenging tasks because it does not already exist in the market. Therefore, the evaluation process carefully considers those methods that well reflect the character of the PSS. Since a service entails interaction between

Fig. 3. Conceptual model of car-sharing service simulation.

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Table 5 Evaluation results of car-sharing service. Subjects

Evaluation results

Provider side

Macro effects Economic feasibility Technological feasibility Political–legal feasibility Relationship to current competitive providers

Customer side

Expected value Intention to adoption Preferred use of service

638138.02 ton CO2 emission reduction 38 billion dollars Perfectly working (RFID, Smart Card, On-board system, and so on) Restricting regulation (Transportation industry, Parking area, Station, and so on) Supporting policy (The Green Growth Korea) Positive influence to other transport modes Low fare (for a medium-distance trip), high level of convenience to use Neutral but possibly positive Near parking lots, one-way trip (more than round trip)

References

10 3

4.0

Taxi Bus Private Car

3.5

Number of trips

3.0 2.5 2.0 1.5 1.0 0.5

0

1

2

3

4

5

6

7

8

9

10

Number of Sharing Car Fig. 4. Result of simulation for car-sharing.

the customer and the service provider, we proposed an evaluation model that embodied the two perspectives and applied it to a carsharing service that is a use-oriented PSS. The result of the evaluation was positive; hence, we conclude that such a PSS is feasible. By evaluating the PSS, we can increase the likelihood of success and reduce risk. This paper suggests a new evaluation model for PSSs. However, the study has several limitations. First, the survey data are not enough for verifying the applicability of the proposed model because the number of respondents for the survey is quite small and the respondents are not representative of the population. Second, the simulation process for evaluation has a lot of constraints such as a limited road length, small number of cars, and so on. Third, this research introduces only one case, and more various PSS cases are needed to have external validity. Fourth, the introduction of a new PSS is subject to a high level of critical conflict. For instance, the taxi and rental-car associations will obviously tend to strongly object to car-sharing services. However, the proposed evaluation model does not contain a process for addressing such conflicts. Thus, research can be conducted in future to tackle the aforementioned issues. Acknowledgment This work is supported by basic science research program through the National Research Foundation of Korea (NRF) funded the Ministry of Education, Science and Technology (NO. 20090089674).

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