On the Relation Between Industrial Product-Service Systems and Business Models

Summary Companies especially in B-to-B markets increasingly focus on the value generated for customers through innovative business models instead of merely selling products. Following such customer-oriented strategies dissolves the boundary of products and services. Most companies‘ offerings can at best be characterized as bundles of products and services, which we refer to as Industrial Product-Service Systems (IPSS) in this paper. IPSS are problem solutions for B-to-B markets, which consist of customized configurations of product and service parts tailor-made to meet individual customer needs. These product and service parts of IPSS exert a mutual inuence on each other, owing to an integrated development and operation. The possibility of adjusting an original configuration along the IPSS-life-cycle by partially substituting product and service parts (IPSS-exibility) is of special importance with regard to IPSS. Integrating services into the core product, however, triggers a transition from a transaction- to a relationship-based (long-term) business connection [4], which is encompassed by challenges for the business parties involved. As a consequence the contractual and implicit relations need to be re-designed, striving at reallocating risks and incentives. In this context, business models which are based on the dynamic bundles describe the design of the customer-supplier-relationship in the form of performance schemes and responsibilities. With business models concentrating on use orientation, the utilizability of the manufacturing assets is ensured. By doing so, the supplier executes business processes of the customer for the first time. Facing a result-oriented business model, the supplier is fully responsible for the output value. Thus, for both business models it is distinctive that the supplier participates in the customer‘s risks, which is due to connection of the supplier‘s compensation with the output value of the manufacturing asset.