Increasing Value Capture by Enhancing Manufacturer Commitment—Designing a Value Cocreation System

Abstract

Designing a value co-creation system in the manufacturing industry has seen significant interest in the past two decades. The importance of a value co-creation system has increased along with the social expectations related to increasing resource efficiency and the emergence of enablers such as digitalization. In this paper I take this opportunity to disseminate some findings to industry and managers. Specifically, a review of product/service systems (PSSs) where a manufacturertaking responsibility for and control of larger ranges in a value network-integrates their products and services to co-create and capture higher value. PSS design implications and how to implement PSS design are discussed. Insights into designing a PSS in manufacturing practice are highlighted largely based on collaborative experience with large global manufacturers. Strategic management of design activities to avoid design fixation and service design trap is key to the successful design of PSSs.

Increasing Value Capture by Enhancing Manufacturer Commitment—Managing the Servitization Process

“…This paper complements the paper by Sakao (2022) which focuses on the design of the value cocreation system that is needed to deliver these advanced services offerings effectively. Interested readers are invited to read practical handbooks on specific topics in servitization-these include Business Model Blueprint for Services (Naik, 2021), Customer Segmentation for Servitization (Naik et al, 2020), Servitization Contracts and Financing (Baines et al, 2020a); and other servitizationfocused topics (ASG, 2022).…”

“…The objective of servitization is to transform organizations to go beyond these established levels of services to offer advanced services-complex value propositions whereby manufacturers focus on providing performance outcomes to customers 1 . These outcomes often include: (i) revenue payments structured around product usage; (ii) performance incentives-such as penalties for product failure when in service; (iii) long-term contractual agreements, spanning five, ten or 15 years, and cost-down commitments (Baines & Lightfoot, 2013); and (iv) lifecycle environmental improvements such as carbon footprints (Sakao, 2022).…”

“…This paper is the second of a two-paper series on product-based services. In the first paper Sakao (2022) focused on the design of the value co-creation system and the wider opportunities PSS's can provide to organizations, customers and the wider society. In this paper, we explore the organizational transformation that is required to make such product services a core focus of manufacturers' strategies.…”

Product-Services for a Resource-Efficient and Circular Economy: An Updated Review

“…Overall, the concept of PSS has remained relatively stable throughout the years. A PSS is most often defined in the literature as an integrated set of tangible products and intangible services designed and combined so that they are jointly capable of fulfilling final customer needs [1,[8][9][10][11][12][13][14][15][16]. Variations in this definition are mostly associated with the perspective from which it is analyzed.…”

Editorial

“…In the previous issue of EMR, Sakao [21] provides insights into how to design the cocreation of product and service systems by manufacturers-a critical supply chain and organizational sustainability practice. They use the theory-research literature-to refine issues and a model for this management.…”