A product-service system is a business model that bundles a physical product together with related services into a single integrated offering, rather than selling the product and any services around it separately, with the aim of meeting a customer's underlying need more completely. The concept emerged in the 1990s as manufacturers facing saturated product markets looked to services bundled with their goods for a competitive edge, and it is generally divided into function-based systems that add new capability to a product (such as General Motors' OnStar), value-added systems that enhance a product's existing features (such as Otis Elevator's remote monitoring), and result-oriented systems that substitute a service outcome for outright ownership of the product itself, such as Xerox's pay-per-copy printing and Michelin's per-kilometer tire leasing for vehicle fleets.
Facts
Core MechanismA product-service system bundles a product with the services needed to deliver its value, rather than selling the physical product alone, so a company can retain ownership of the underlying good and sell customers access to the function it performs. It coordinates design, manufacturing, distribution and after-sale service as one offering instead of managing them as separate functions. 1 Origin YearDeveloped at the Politecnico di Milano between 1993 and 1996 by Francesco Mauri and Gianluca Brugnoli; 1993 is used as the earliest documented year of that development window. Cross-Tradition Connections
Associated With
Rolls-Royce's Power-by-the-Hour program, selling engine thrust hours rather than engines outright, is a widely cited product-service system.
Sources
1. Wikipedia, Product-Service System
WikipediaWikipedia: Product-service system, lead paragraphQuote, Wikipedia: Product-service system, lead paragraph
Product-service systems (PSS) are business models that provide for cohesive delivery of products and services.
1. Wikipedia, Product-Service System
WikipediaWikipedia: Product-service system, description section, origin sentenceQuote, Wikipedia: Product-service system, description section, origin sentence
The Product-Service System (PSS) concept was first developed at the Politecnico di Milano between 1993 and 1996 by Francesco Mauri and Gianluca Brugnoli while they were studying how Design integrates with business strategy.
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