Summary of Research Method Cycles

The research approach adopted for each work package has been to examine the objective to be addressed by the particular work package and then use O’Leary’s Research Cycles. The first stage “observe” has been achieved by literature reviews and analysis of current industries. In the second stage the RE has “reflected” on the findings from stage 1 and in particular has identified gaps in understanding and major problem areas that have been reported. The third stage of O’Leary Research Cycles is to “plan” and the RE had therefore determined what data must be collected, how experiments should be carried out, and what other tasks are required and how these should executed. When plans are fully in place the fourth and final stage in O’Leary Research Cycles is to “Act” by carrying out the planned activities. A summary of the particular steps for each work package is presented below in Table 2-2.

WP1 WP2 WP3 WP4

Observe Literature review and identify all

Reflect Data are largely

qualitative without the Dynamic data was

identified, but not Despite 70% - 90% of

hydraulic system There is a need to support a fleet of

of telemetry data. analytical process. to hydraulic

Plan Prioritise the work to address the lack of

Act Create and implement new customer satisfaction data analysis process.

Conduct experimental work to assess the PSS capability of the

Table 2-2: O’Leary’s cycles of research for each work packages

Further details regarding the actual methods, procedures, and mechanisms used in this thesis can be found in section 4, as well as publications within the appendices V, W, X and Y.

3 LITERATURE REVIEW

This chapter provides the literature review conducted at various stages throughout the EngD project in order to gather the vital knowledge and identify the research gaps from both industry and academic publications within the selected scope. The chapter is split into five parts, each focused on a specific topic related to PSS. These topics are also related to the context of the research demanded by the sponsor, which is to utilize and develop its JCB telemetry system to increase the responsiveness of JCB’s PSS. Initial findings from the literature review on PSS, indicate that PSS is often seen as a form of maintenance or service agreement between the service providers and the customer, and there is a strong correlation between the ability to perform certain maintenance approaches and the type of PSS implementation. Real time data is the key to providing the critical usage information to drive a more advanced PSS type. Due to the nature of the thesis’ close proximity to the industry, it is very unlikely that the sponsor will alter the existing agreement with the current telemetry supplier, nor alter the architecture of their CAN bus network data and hydraulic system, that are key areas for the telemetry system to extract real time data. Therefore the literature reviews for this thesis are mainly focused on PSS, maintenance, customer satisfaction, measuring productivity on excavators and hydraulic oil contaminations rather than on a detailed comparison of telemetry systems. Product Service System (PSS)

In recent decades, there is a growing number of companies shifting their business model from selling products to providing and selling a service related to the initial product (Oliva, Kallenberg 2003). A PSS integrates product and service into a single package at the point of sale. It can be defined as a marketable set of products and services capable of jointly fulfilling a user’s need (Mont 2002a). It can also be described as an innovative strategy, that shifts business focus from the design and retail of physical products, to the design and retail of

systems of products as well as services, that are jointly capable of fulfilling specific client demands (Manzini, Vezzoli 2003). Goedkoop explained that the balance between the product and service in a PSS can vary, in terms of function fulfilment and economic value (Goedkoop, Van Halen et al. 1999). Nowadays customers tend to demand more supplier involvement to prolong and maintain the life of products they have purchased and keep them functioning at maximum performance levels (Mont 2002b). Furthermore, there is also a significant shift in commerce transactions to Business-to-Business (B2B) from Business-to-Customers (B2C) (Mont 2001). This shift provides incentives for OEMs to incorporate PPS into their business model, increasing competitiveness within the market. PSS is traditionally used for high valued products such as Rolls Royce engines or Alstom trains, where OEMs have either an extensive understanding in the product usage by their customers or have sophisticated sensor systems installed on their product (Akmal, Batres et al. 2013).

There are several different classifications of PSS that can be split into three main categories;

Product-oriented, Use-oriented and Result-oriented (Weber, Steinbach et al. 2004). Each of these categories is defined based on the split between of product and service content within the PSS, as shown in Figure 3-1. Each PSS type also can be categorized by their differences in terms of creating, delivering and capturing value (Reim, Parida et al. 2015). Within PSS, a product is a tangible commodity manufactured to be sold. A service is an activity conducted on a product to increase its intangible economic value on a commercial basis (Goedkoop, Van Halen et al. 1999).

Figure 3-1: PSS Classfications

Product-oriented PSS usually focuses on maintenance support of the product after it is sold to the customers and usually in a context where there is a complete transfer of product ownership from OEMs to the customers, when both parties agree on the terms and conditions regarding to the product and service agreements. The contract will include the total price of the product and the service agreement for the product (Meier, Roy et al. 2010). These service agreements are likely to be delivered in the form of preventive maintenance, carried out by dedicated dealers or service operators at fixed intervals based on product’s usage level (Endrenyi, Allan et al. 2001). Andy Wilhelm, senior product manager of Equipment Data Associates (EDA) stated that the sales of service provide the highest gross margin area of the dealerships’ business of 54.6% (Wilhelm 2013).

The main difference between a product-oriented PSS with the other two PSS categories is the transfer of ownership. A product-oriented PSS allows customers to enjoy the sense of ownership of the product, whilst taking advantage of experts, [usually the OEMs of the product] to maintain and upgrade the product through warranty and maintenance contracts (Cook, Bhamra et al. 2006). Furthermore, the customers can choose whether to take the

.

Product

Oriented Use

Oriented Result

Oriented Pure

Service Pure

Product

Product Content (Tangible)

Service Content (Intangible)

Product Service System Company’s Business Strategy 100%

50%

100%

50%

considered to be an upgrade from an old business model in which OEMs (often from heavy manufacturing) can gain extra revenue from the service market, without the need for capital investment and major reorganisation of the company structure.

Use-oriented PSS usually refers to the leasing or sharing of products to customers without the transfer of ownership from the dealer or OEMs (Neely 2008). The dealers or OEMs will be responsible to carry out regular service maintenance to ensure the availability of the product to the customer, within the leasing period. Depending on the complexity or value of the product, some OEMs will invest technology to enable remote collection of real time data to determine the time of the next required service and the maintenance work that should be carried out. This approach is also known as condition based maintenance (CBM) (Yam, Tse et al. 2001). If the product fails unexpectedly, the OEMs will often guarantee a minimal period of disturbance before the product is repaired or replaced and the customers can resume their daily routine. Therefore a successful use-oriented PSS often requires the OEMs to have an in-depth understanding of their products, such as failure modes under various usage patterns, as well as the ability to monitor the product’s real time condition (Yang, Moore et al.

2009). Without these prerequisites, it is difficult for OEMs to determine whether this type of PSS is achievable, let alone whether it can operate profitably.

A result-oriented PSS usually refers to the sale of product functions to customers without either the transfer of ownership of the product, or the physical existence of the products (Lujing Yang, Ke Xing et al. 2010). It has the highest level of servicing content among the three PSS types, hence the majority of revenue will come from servicing (Tukker 2004). The OEMs have full responsibility for the product and any maintenance that is required for the product. Customers pay a set price to receive a pre-agreed amount of results (end products)

service (Yang, Xing et al. 2010). One example of a result-oriented PSS would be a supplier sign an agreement with the occupants of a building to supply certain pre-agreed level of warmth comfort for a fixed period. The supplier will also be responsible in controlling any relevant factors to provide the agreed thermal outcome (Ostaeyen 2014). The heavy focus on service content makes this solution popular for companies who wish to outsource part of their activities to a third party, who tends to be an expert in a particular activity.

The true strength of PSS lies within the shift of focus on the final need, demand, or function that needs to be fulfilled, by moving away from traditional product concepts (Tukker, Tischner 2006). Baines suggests one of the key barriers to adoption and implementation of PSS is the lack of well-developed tools and methodologies for OEMs (Baines, Lightfoot et al.

2007). Mont urged the research community to explore the needs for PSS design, and to develop a methodological basis for their development, practical implementation and evaluation based on economic, environmental and social consequences (Mont 2002a). Sofia suggests that companies have problems providing a PSS due to their internal inability to successfully design implement such business model (Päivärinne, Lindahl 2016).