What Is Product-Service Supply Chain

With regard to the product providers, especially the equipment providers, the PSSC providing the service related to product is always exiting and described as supply chain for after-sales service (Jalil et al. 2010; Cohn 2006); supply chain for maintenance, repair, and operations (MacInnes and Pearce 2003; Driessen et al. 2010); and supply chain for PSS providing in literature (Erkoyuncu et al. 2010; Johnson and Mena 2008; Wang and Fu 2010). Erkoyuncu et al. (2010) defined the PSSC as “the network of suppliers, service providers, consumers and other supporting units that performs the functions of transaction of resources required to produce services; transformation of these resources into supporting and core services; and the delivery of these services to customers.” However, the motivation mechanism for the traditional SC has changed to the new value instead of customer demand (Baltacioglu et al. 2007). Customer value is the trigger of the SC for PSS. Porter and Millar (1985) define the customer value as a product or service that the customers are willing to pay for. In industrial applications, the things that customers are willing to pay for can be described as productivity, which is able to create added value for them in the productions. Given this, the chapter primarily proposes that:
With the purpose of offering productivity to customers, the PSSC is a network which consists of manufacturers, service providers, customers, and other supporting units and performs the functions of service demand forecast, service resource allocation, and service delivery management, as well as supportive activity management.

Structure of Product-Service Supply Chain

Prior to proceeding with the design of PSSC, it is necessary to identify the role of the SC members. In the product-service providing, the customers, main provider, other providers, and suppliers constitute the network for PSS delivery. The PSSC structure is drawn up in Fig. 1 to illustrate the role of the members. One of the distinguishing features of the PSSC is the flat structure of the service network, which determines that all the partners have the chance to provide service to customers directly.

The customers, who pay for the service and help to realize its value, are the receivers of the product service in the first layer. The customers include not only the end users but also the product owners. An example is the energy saving service provided by Siemens Group, who offers the energy saving equipment for energy saving company. Meanwhile, the company provides energy saving service to factory or community. Therefore, the customers of Siemens Group include the energy saving company, factory, or community. In the complicated process of service delivery, the customers, who cooperate with other units on training, information sharing, and other aspects, play an active role but not just a passive receiver.
The second layer of the PSSC is the providers including the main provider and other providers. The providers offer product service directly to customers. The main provider is the product manufacturer and also is the service strategy developer. The customer’s requirement and feedback are gained and applied to the life-cycle management of the service strategy for the continuous improvement. The other providers undertake the service outsourced by the main provider, such as warehouse service, logistics service, technical support, and other supporting activities.
The third layer is the suppliers who engage in the service strategy development and offer support to providers. Some of them offer support to customers directly and then they are transformed to be providers. As an example, the GE Aviation sells the aircraft engines to aircraft manufacturers and renders innovative service to the airlines. The GE Aviation acts as the supplier and the service provider in air service delivery.

Features of Product-Service Supply Chain

With the adoption of the innovative service strategies, such as product-service systems (PSS) (Wang et al. 2011) and servitization (Johnson and Mena 2008), the PSSC demonstrates new features. A thorough investigation into the characteristics of the PSSC is helpful to deliver the service efficiently and effectively. The prominent features can be summarized as:

1. Value co-creation. The innovative service strategies act as a solution for customers on the basis that the value proposition for customers, providers, suppliers, and other stakeholders are identified and realized. The value chain will be more clear and reconfigured under new business models. Value co-creation requires that benefits and risk should be shared exhaustively between the members.
2. Activeness. The feature is manifested not only in active service offered by the providers but also in the active participation of the customer. Providing service actively will benefit both the providers and customers mutually. The customer value creation is more active rather than responsive. Moreover, the outsourced service supplier selection is subject to the customers.
3. Uncertainty. It involves managing resource availability, capacity, and capability along the service network (Erkoyuncu et al. 2010). The uncertainty is due to the following reasons: (1) the interaction between the providers and the customers in a variety of ways, (2) the service complexity and the delivery urgency (Erkoyuncu et al. 2010), (3) the resource availability owing to the perishability of service, and (4) the customer’s participation because the resource of the customer makes contribution to the service delivery.
4. Dynamic. The value chain reconfiguration and optimization will lead to changes in PSSC organization. The reusability of some resource, such as expert or skilled worker, leads to dynamic service resource management.