Servitisation, Productisation, PSS: What is it all about?

by NIck Frank on April 26, 2010

Servitisation of Products is the trend to create value by adding services to products or even replacement by a service. Selling maintenance contracts for capital goods would be an example of a service being added to a product. Selling tyres by the kilometre to haulage companies is a service replacing a product.

The Insitute for Manufacturing of Cambridge University proposes the following working definition: “Servitization is a change process wherein manufacturing companies embrace service orientation and/or develop more and better services, with the aim to satisfy customer’s needs, achieve competitive advantages and enhance firm performance.”

Productisation of Services is the evolution of services to include a product or a new service marketed as a product.  For example in the logistics sector, transport contracts are so well defined they are a service that is effectively sold as a product.

Product Service Systems or PSS for short is the integration of products and services to deliver value to the customer. An example of an integrated approach is guaranteeing a level of performance of a product, if an OEM maintenance contract is also purchased.

Further reading:

Vandermerwe & Rada (1988) ‘ Servitization of business: adding value by adding services’ European management Journal Vol 6 No 4. • Original definition of the term servitisation

Baines, Tim et.al.  (2009) The Servitisation of Manufacturing – A review of Literature and Reflections on Future Challenges, (2009) Journal of Manufacturing Technology Management, Vol 20 No 5 2009 • A extensive overview of the current literature on the subject

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