Intended learning outcomes: Present the industrial product-service system. Explain product-oriented, use-oriented, and result-oriented services as well as their degree of intangibility.
According to [MeRo10], an industrial product-service system IPSS (or IPS2) is characterized by the integrated and mutually determined planning, development, provision and use of product and service shares including its immanent software components in Business-to-Business applications and represents a knowledge-intensive socio-technical system.
An IPSS is thus focused on capital goods such as machinery and equipment which are produced and sold by classical industry, and which are used over a long time period. In that model, customers are businesses, rather than individuals. In addition, although the service recipient is a tangible (core or primary) product, this definition shows that in an IPSS there are no “add-on” services to this product. To create value for the customer and to sell well, the original equipment manufacturer (OEM) network and their suppliers must design the services with the customer (beneficiary) right from the start, as shown in Figure 1.1.4.1. That is the thinking behind the term value co-creation (see also [KaNi18]).
Fig. 1.1.4.2 Industrial product-service system stakeholders (copied from [MeRo10])
Industrial product-service systems have become more important particularly in classical industries, since quality and costs of the core product from many OEM have become almost indistinguishable from the customer's perspective. Offering something different in terms of additional services can be the distinguishing feature that makes what a company is offering stand out, especially in competitive markets.
Product-service systems can be categorized into product-oriented, use-oriented, and result-oriented product-service systems. Across these three categories, the degree of integration in the customer’s process is increasing. Figure 1.1.2.3 assigns possible services in an industrial product-service system for packaging machines to these categories.
Fig. 1.1.4.2 Categories of possible industrial services (cf. [Lang09])
Some product-oriented services are of a material nature. As an example, there is no real distinction between the simply supply of spare parts without any additional services and supplying and charging for some form of material goods. Other product-oriented services tend to be of an intangible nature and are usually charged for in time units, whereby (material) consumable materials or components can also be charged for. Examples of this would include commissioning the machine, maintenance and repair, retrofit, or upgrading.
Use-oriented services are generally intangible. Examples include process consulting, training, audits, monitoring, and usability of the machine. Such processes are normally charged for in time units or on the basis of a performance indicator that is measured as a percentage.
The degree of intangibility for result-oriented services can be high or low, depending on the agreed result. As an example, for cleaning services, the result could be an agreed upon level of cleanliness, which is an intangible result. Photocopier manufacturers supply the machine, paper and consumables. As a result, they can determine the number of copies produced. Whether the result counts as a tangible or intangible will depend on whether attention is focused on the photocopy that is produced, or whether the significant fact is simply that a copy has been taken. For industrial services, the focus for contract work (an external manufacturer executes just one or more operations for making a product) or the operator model (the manufacturer not only supplies but also operates the machine under contract to the customer) is on the items that are produced, which the customer assesses the quality of and pays for accordingly. Those are tangibles. In the case of the packing machines, the manufacturer of the packing machines as well produces packaging.
Conclusion: The oft-formulated distinction between “product = tangible” and “service = intangible” is becoming ever more blurred. What the customer actually perceives as value-added depends on a number of tangible and intangible elements that work together as a system and offer the customer the desired benefits. The elements and the system as a whole may be perceived to be a product or a service, depending on the customer's focus (cf. [Schö19]).
Course section 1.1: Subsections and their intended learning outcomes
1.1 Basic Definitions, Issues, and Challenges
Intended learning outcomes: Produce an overview on terms of the working environment and of business life. Explain service orientation in the classical industry, product orientation in the service industry, and the industrial product-service system. Disclose the product life cycle, the synchronization of supply and demand, and the role of inventories. Produce an overview on supply chain management, the role of planning and control as well as the SCOR model.
1.1.1 Work, Task, Process, Method, Object, etc. — Important Terms of the Working Environment
Intended learning outcomes: Produce an overview on terms of the working environment, such as work, task, function, order, procedure, process, method, object, business.
1.1.1b Value-Added, Business Process, Material, Product, etc. — Important Terms of Business Life
Intended learning outcomes: Produce an overview on terms of business life, such as value-added, business process, business method, business object, goods, item, part, component, material, product, artifact, management, etc.
1.1.2 Service and Servitization — Service Orientation in the Classical Industry
Intended learning outcomes: Present terms of the service domain such as service, customer service, service in the originary sense, servitization. Differentiate between a (primary, or core) product, a product in a broad sense, and a product in the most comprehensive sense.
1.1.3 The Service Industry and Industrialization of Service — Product Orientation in the Service Industry
Intended learning outcomes: Differentiate between service industry and classical (or conventional) industry. Produce an overview on industrialization of service.
1.1.4 The Industrial Product-Service System IPSS (or IPS2)
Intended learning outcomes: Present the industrial product-service system. Explain product-oriented, use-oriented, and result-oriented services as well as their degree of intangibility.
1.1.5 The Product Life Cycle: Design and Manufacturing, Service and Use, Recycling and Disposal
Intended learning outcomes: Differentiate between terms such as logistics, operations, logistic management, operations management, and value-added management.
1.1.5b Logistics, Operations, Logistics Management, Operations Management, and Value-Added Management
Intended learning outcomes: Differentiate between terms such as logistics, operations, logistic management, operations management, and value-added management.
1.1.6 The Customer Tolerance Time (or Demand Lead Time), and the Role of Inventories
Intended learning outcomes: Describe supply, demand, lead time, and customer tolerance time. Explain the problem of temporal synchronization between supply and demand as well as the role of various kinds of inventories in solving this problem.
1.1.7 Supply Chain, Extended Enterprise, and Supply Chain Management
Intended learning outcomes: Describe the reasons for logistics networks, production networks, procurement networks, distribution networks, and service networks. Produce an overview on the supply chain, the extended enterprise and supply chain management.
1.1.8 Circular Economy and Integral Logistics Management
Intended learning outcomes: Present circular economy and integral logistics management.
1.1.9 Supply Chain Planning and the Planning & Control System
Intended learning outcomes: Produce an overview on supply chain planning. Differentiate between production planning and control (PPC) and a PPC system.
