Servitization through outcome-based contract – A systems perspective from the defence industry

Abstract

This paper provides a viable systems perspective of an outcome-based service initiative involving major manufacturers in the defence industry. The viable systems perspective allowed a coherent structuration of the complex servitization context involving provider and customer organizations. It also unveiled critical relationship mechanisms that enable synergy and facilitate the achievement of co-capability by the organizations involved. Through a case study approach, the research finds that interventions in the customer system reduce variability in the provider system as well as in the service system as a whole. The systemic interventions are implemented via key provider/customer relationships the study identifies. The relationships deal with the high level of internal variety in outcome-based service systems. A typology for the identified relationships is developed, offering a helpful basis for the purposeful planning and design of interactions aimed at developing co-capability. The paper also offers theoretical propositions defining fundamental features of outcome-based service systems. The unique characteristics of these systems addressed in this paper provide particularly useful insights concerning the implementation of this type of servitization initiative not only in the defence industry, but also in other industrial sectors where servitization initiatives involve complex configurations of provider and customer organizations.

Product-service systems business models for circular supply chains

“…PSS-related concepts include servitisation Kastalli and Van Looy 2013), service-dominant logic (Vargo and Lusch 2017), pay-per-use services (Gebauer et al 2017) and outcome-based services (Batista et al 2017;Visnjic et al 2017), etc. According to the ratio of products/services, PSS can be classified into different types (Hockerts and Weaver 2002;Tukker 2004): (a) product-oriented PSS, when manufactures sell products while providing related services, such as maintenance and consultancy; (b) use-oriented PSS, when manufactures sell the utility or accessibility of products without transferring the ownership to customers, such as leasing, renting and sharing; (c) result-oriented PSS, when manufacturers retain the ownership of products and sell the results of products, such as selling printed documents rather than printers.…”

A Systems Engineering Approach to Performance-Based Maintenance Services Design

“…It is defined as the art (technical leadership) and science (system management) of developing an operable system that meets the requirements within imposed constraints while keeping a holistic and integrative approach [52]. It seems an appropriate approach for PBC analysis [53].…”

Enterprises’ Servitization in the First Decade—Retrospective Analysis of Back-End and Front-End Challenges

“…In order to provide a valid framework to systematize barriers and challenges, we suggest a classification to consolidate related findings. Based on [34,53], who derived a basic organizational structure for servitizing companies consisting of front-end customer-facing units and back-end units separated into product-and service-units, we make a distinction of barriers and challenges according to their appearance manifested by front-end and back-end activities. Table 1 illustrates the corresponding allocation of barriers among front-end and back-end activities.…”