Competing in business-to-business sectors through pay-per-use services

Abstract

Purpose Despite the opportunities provided by pay-per-use (PPU) services, product companies in business-to-business sectors often fail to compete systematically by using them. The purpose of this paper is to explain how companies can avoid failures when it comes to PPU services. The paper describes the “seizing” capabilities needed to achieve the strategic objectives of PPU services. Design/methodology/approach The research process is divided into a pilot and an in-depth study. Altogether, 17 companies participated in the study. Findings The findings reveal that the seizing capabilities depend on the strategic objectives of PPU services. To expand the market share with PPU services, companies need to broaden the customer portfolio for PPU services, to align individual services within the entire service portfolio and to balance profits made by PPU services and other business lines. For strategic objectives such as rapid sales growth early in the market development and new market creation other seizing capabilities are required. Research limitations/implications The findings are not generalizable, due to the use of a qualitative study. The study is restricted to product companies in the business-to-business sector. Practical implications Managers often believe that extending and modularizing the service portfolio is beneficial. When achieving sales growth during the market development phase, these capabilities are in fact sometimes counterproductive. Practitioners have to look into the costs and benefits of setting-up their own financing company and working with banks. Social implications PPU services contribute to a more sustainable consumption and make product design more resource-efficient. Originality/value The study is original by virtue of systematically studying PPU services, providing a microfoundation for seizing capabilities and developing testable propositions for future research.

Uncertainty profiles in engineering-service development: exploring supplier co-creation

“…Although the specific uncertainty instances varied across the cases, they generally reflected existing examples discussed in the service management literature. For environmental uncertainty, these included uncertainty instances involving the customer (Kristensson et al, 2008;Smith et al, 2014) as well as broader instances related to the competitive setting (Fischer et al, 2010;Gebauer et al, 2017) and vulnerability towards larger macro-economic or legal developments (Kindström and Kowalkowski, 2009;Kreye, 2017a). For organizational uncertainty, these instances included organizational change (O'Connor and Rice, 2013), the definition of novel functions and processes (Nudurupati et al, 2016), and the establishment of a service culture (Ng et al, 2012).…”

“…ESs typically evolve when a service is added to an existing product (Kastalli and Van Looy, 2013) and are often also described as product–service systems (PSS), functional sales, integrated product–service offerings or solutions (Gebauer et al , 2017). ESs are predominant in the manufacturing industry, and engagement of them offers manufacturers the advantages of enhanced global competitiveness, stable income and increased profits (Zhang et al , 2016; Gebauer et al , 2017).…”

“…It, thus, includes the provider's responsibility for the product's long life cycles (Kindström and Kowalkowski, 2009) and has been predominantly used in the context of ES (Cheng and Krumwiede, 2017). Moreover, the shift toward ES has a disruptive effect on the market and changes the competitive landscape (Gebauer et al , 2017).…”

“…For example, uncertainty in ES development can arise from its strong difference from traditional product development (Nordin et al, 2011). In ES development, manufacturers encounter high process complexity, which causes a lack of understanding because of the need to integrate product and service elements (Gebauer et al, 2017). Moreover, uncertainty can arise because ES development requires manufacturers to manage the intricacy of two differing business logics (product and service) in parallel (Ng et al, 2012).…”

Manufacturing service order allocation in the context of social manufacturing based on Stackelberg game

“…Activity-based costing has become a popular cost-accounting system that identifies activities in production and assigns the cost of each activity which consumes human and product resources. 14 In the service field, performance-based contracting, 15 pay-for-performance 16 and pay-per-service use 17,18 are proposed to achieve measurable performance outcomes for service. From the perspective of classification of cost, Benjaafar et al 19 divide service cost into demand-dependent cost, which varies with the order allocated to the SMEs and demand-independent cost which is not affected by the amount of allocated orders.…”