Research Article A QFD-Based Evaluation Method for Business Models of Product Service Systems

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1 Hidawi Publishig Corporatio Mathematical Problems i Egieerig Volume 2016, rticle ID , 15 pages Research rticle QFD-Based Evaluatio Method for Busiess Models of Product Service Systems Tiayag Li, 1 Tig He, 2 Zhogjie Wag, 1 ad Yufeg Zhag 3 1 School of Computer Sciece ad Techology, Harbi Istitute of Techology, Harbi, Heilogjiag , Chia 2 College of Computer Sciece ad Techology, Huaqiao Uiversity, Xiame, Fujia , Chia 3 Birmigham Busiess School, Uiversity of Birmigham, Birmigham B15 2TT, UK Correspodece should be addressed to Tig He; xuatighe@hiteduc Received 2 pril 2016; Revised 6 May 2016; ccepted 15 May 2016 cademic Editor: Beoit Iug Copyright 2016 Tiayag Li et al This is a ope access article distributed uder the Creative Commos ttributio Licese, which permits urestricted use, distributio, ad reproductio i ay medium, provided the origial work is properly cited Orgaizatios have bee approachig Product Service Systems (PSS) i uoptimized busiess model fashios This is partially because there is ieffective evaluatio of PSS busiess models Therefore, a more sufficiet evaluatio method might advace the evaluatio of PSS busiess models ad assist orgaizatios that are cosiderig a servitisatio strategy I this paper, we develop a value orieted method by usig the Quality Fuctio Deploymet (QFD) techique to employ correlatios derived from the desig iformatio of PSS busiess models to evaluate these PSS busiess models We describe the method applyig steps ad its practical applicatio i a real life case study This method improves the formulatio of a evaluatio step withi a desig process of PSS busiess models based o correlatios of differet dimesios of the PSS value ad PSS busiess models; it allows a balace betwee the customer value ad orgaizatio value that are delivered by PSS busiess models to be made quatitatively Fially, it fosters the effective utilizatio of the desig iformatio accumulated i the earlier part of the desig process to quatitatively evaluate whether a PSS busiess model is optimized for providig appropriate values for customers ad orgaizatios 1 Itroductio The pressure of the customer persoalizatio ad expectatios ad the erosio of product margis ad itese competitio have forced maufacturig compaies to trasform their product-orieted busiess i the service domai ad offer budles of products ad services to secure additioal sources of reveue ad profits 1 3 This pheomeo represets that traditioal busiess models have evolved from a pure product orietatio toward a itegrated Product Service System (PSS) ad ca be called servitisatio of maufacturig 4 value-orieted method of evaluatig PSS busiess models for a evaluatio step i the desig process of PSS busiess models ca be used to effectively support this busiess model evolutio ad to respod to the challeges revealed by the servitisatio pheomeo 5, 6 Product-services (PS) offerigs cosist of combiatios of physical products, services, ad systems that have bee itegrated ad optimized from a lifecycle perspective to pursue the best value for both customers ad orgaizatios ivolved I order to realize such value, product-based maufacturers have to sigificatly redesig their orgaizatioal priciples, structures, ad processes 7 as well as their capabilities 8 ad relatioships with customers ad suppliers 9,10totrasformtoaewbusiessmodelfordeliverig PS offerigs However, this busiess model trasformatio leads to a series of bakrupt risks 11 Most compaies fail to implemet this busiess model trasformatio, fallig ito the so-called service paradox 11 The service paradox describes situatios i which compaies have ivested heavily i extedig their service busiess to icrease their service offerigs while icurrig higher costs ad without ay realized returs The curret corporate processes of desigig PSS busiess models i may maufacturig compaies have ot used a available method i a assessmet step to quatitatively evaluate whether the desiged or redesiged orgaizatio structures, processes, ad parter etwork, as well as cost arragemet i the ew busiess model for

2 2 Mathematical Problems i Egieerig PS offerig, are optimized to be implemeted for meetig customer value demads ad providig desired reveues to compaiesthemselves12,13ithissituatio,commo difficulties iclude poorly defiig the structure of PSS busiess models ad costs, vague returs ad customers satisfactios predictio, ad a dearth of relevat processes eeded to support the quatitative aalysis ad optimizatio of redesiged PSS busiess models ad may fially lead to the service paradox 12 To overcome these gaps, creatig a value-orieted evaluatio method used i the desig process of PSS busiess models must first be udertake 10, 13; this method should be available to support desigers to effectively ad quatitatively evaluate the feasibility or optimizatio of differet types of PSS busiess models accordig to establishig correlatios betwee parameters of PSS busiess models ad dimesios of customer value by usig the data of desig iformatio 14adtheevaluatigadoptimizigtheredesigedPSS busiess model with readjustig these correlatios Despite the importace of providig a value-orieted evaluatio method, the curret literature oly refers to the value-orieted methods for evaluatig PSS compoets, PS offerigs, or sigle dimesios of PSS busiess models to gai strategic, marketig, or operatioal isights Particularly,someQFDtechiquebasedmethodshavebee developed to discuss specific maagerial aspects o partial dimesios of PSS busiess models, icludig characteristics of PS offerigs 15, suppliers 16, customer requiremet 17, or maufacturig process 18, ad therefore have a arrow focus for evaluatig PSS busiess models However, providig a effective ad efficiet evaluatio method that captures all the dimesios of both the PSS value ad PSS busiess model ca assist i uderstadig the proper structureadatureofpssbusiessmodelsaditscapability of value geeratio for both customers ad orgaizatios, especially i the desig process which is importat 12, 13, 19 Curretly there is o comprehesive method that quatitatively evaluates busiess models of PSS i the literature The lack of the literature precedet raises three questios (i) What are dimesios of the PSS value ad PSS busiess models that are used i the evaluatio method? (ii) How might correlatios of these dimesios be established, verified, ad usedtoreflectadevaluatethedesigedvalueofpssbusiess models? (iii) How might evaluatio criteria ad fuctios be established i a comprehesive way? Therefore, we propose a iovative value-orieted evaluatio method that may be used i both busiess-to-busiess (B2B) ad busiess-to-cosumer (B2C) domais While usig quatitative measures ad desig iformatio, the method will evaluate the feasibility of a PSS busiess model by mappig its capability of value delivery to customer value adseeighowwellthetwofitadhowaboutthemargis of orgaizatios The method is ispired by QFD techique ad its related dimesios are derived from literature data; i additio, a case example ivolvig oe of the biggest maufacturers of Chia i the home appliace idustry is used to illustrate the applicatio of this method i a realworld cotext The remaider of this paper cotais a literature review that cosiders the theoretical liks betwee PSS, the value of PSS, the busiess model of PSS, ad the method of evaluatig PSS busiess models The QFD techique based ad exteded approach used to evaluate PSS busiess models i the desig process is subsequetly discussed The followig sectios describe its applicatio to a case compay Our coclusios, research limitatios, ad further developmets are preseted i the last sectio 2 Literature Review 21 Product Service System (PSS) The PSS relates to the result of a iovatio strategy, shiftig the busiess model focus from desigig ad sellig physical products oly to sellig a system of tagible products ad itagible services which are joitly capable of fulfillig specific cliet demads 20, 21 Its essece is to add value to products by providig services withi the life cycle of products as the fuctioal product-service for customers 22 I this cotext, the PSS is a result of strategy, desig o all relevat buildig blocks of busiess model for implemetig a itegrated value system of products, services, ad commuicatio that are coheret with the medium-log term perspective of profitability ad sustaiability 20, 22 Sice value is provided to customers through the fuctioal product-service rather tha pure product or pure service, value cocept ad its measuremet are more importat i the desig of PSS busiess models 23 The curret divisios of the PSS are ot strictly defied classic categorizatio divides the PSS ito three types: product-orieted PSS, use-orieted PSS, ad result-orieted PSS 21 The above three types of PSS are i costat evolutio iduced by improvemets i resource productivity, owership, ad service offerigs for gettig differet levels of value 20 The method or process for desigig busiess modelsofpssisusuallyrequiredforsupportigmaufacturers to realize such busiess model evolutios ad get more value ad sustaiability 23, The Busiess Model of PSS There is o doubt that a good busiess model ca eatly aswers several fudametal questiosthateverymaagermustask: whoisthecustomer? what does the customer value? ad how do we make moey i this busiess? what is the uderlyig ecoomic logic that explais how we ca deliver value to the customer at a appropriate cost? 24, 25 busiess model decreases busiess logic complexity by providig a visio of how a compay ca derive value from its resources ad implemet its strategy May researchers have tried to do lots of work o defiig what the mea of busiess models is? I this paper, we use Chader et al s defiitio preseted i their white paper The Imperative for Busiess Model Iovatio: Research ad Practice Perspective as the workig defiitio of PSS busiess models busiess model of PSS is a holistic, cotextualised patter of attributes (ad activities) represetig value propositio, value creatio, ad value capture It is a specificatio of the value a compay offers to differet customer segmets ad of the architecture

3 Mathematical Problems i Egieerig 3 of the orgaizatioal allies for creatig, marketig, ad deliverig this value ad relatioship capital, to geerate profitable ad sustaiable reveue streams Value propositio idetifies what markets ad customer groups (or other beeficiaries) willbetargetedadwhatproductsthevaluecreatiofocuses o how products ad services will be created/provided Fially, value capture relates to the beefits that are realized Most of the literature agrees that the well-established PSS busiess models iclude several dimesios or elemets 20 to express the busiess logic of a specific firm i providig customers with differet types of PSS Typically, dimesios of customer segmets, PSS compoets, PSS characteristics, relatioships, ad chaels are icluded i the value propositio; key parters, key busiess processes, ad key resources are cotaied i the value creatio; ad costs ad risk maagemet as well as reveue streams are located i value capture Differet dimesios or differet details of the same dimesios ca lead to differet PSS busiess models Cosequetly,imostfirms,thereisotjustoebusiess model, but may, offerig differet types of PSS or budles of product ad service (with associated value propositios), with differet busiess model dimesios for deliverig these propositios ad for capturig the resultat value 24, 26 The impact of each PSS busiess model i terms of value tocustomers,theofferig,adrequiredcapabilitiesmaybe very differet, requirig a uified perspective of busiess model dimesios to aid uderstadig PSS busiess models I may PSS busiess models, relatioships ad chaels ca be substituted or represeted by specific services PSS compoets ad key resources are usually coverted to costs structures Therefore, we cosider usig PSS characteristics, PSS compoets, PSS suppliers, eriched SCOR processes (the delivery process of SCOR icludes service delivery processes), costs, risk maagemet, ad ROI (retur o ivestmet) as workable dimesios to idetify a desig process for PSS busiess models 24 ad to uderstad how to get a well-desiged PSS busiess model for gaiig the best PSS value It should be oted that the delivery process i SCOR processes is exteded to cover all service delivery processes 23 The Value of PSS ThepurposeofPSofferigsisto geerate the best value for customers ad orgaizatios ivolved However, the producer s sese of value differs from that of the user; that is, there are various forms of value for thesameitem28ipsofferigs,thecoceptofvalueis the relative worth, utility, or importace of a PSS 29 From theperspectiveofproducers,thepssvalueisorgaizatio value that cotais ecoomic value, evirometal value, ad social value However, i the desig phase of PSS busiess models, orgaizatios geerally cosider the ecoomic value Usually, it ca be represeted by ROI 19 or the ratio of fuctio to cost Here, the fuctio is the utility of the tagible products while it is the effect or performace to be achieved for the itagible service 28 From the perspective of customers, the PSS value is customer value which is costatly chagig by the tradeoff betwee the relevat gives ad gets 30Itcabemeasuredorcalculatedbyusig sacrifice or cost (same meaig as gives ) that customers paidforapssadbeefit(samemeaigas gets )that customers received based o multidimesioal idicators of service or PSS quality (hereafter quality ) Idicators of quality are becomig more complex ad subjective due to more services added i the lifecycle of products 22 The value of these idicators relies o qualitative characteristics of PSS, ad the sacrifice or cost is usually the price of a PSS 19, 28 The measuremet methods of customer value aredivideditotwotypesthefirsttypeisthefuctio of the price ad quality May fuctios ca be used to calculate the value, such as Liear, Quadratic, Logarithmic, Iverse, ad Expoetial fuctio 30 The secod type is the mappig that qualities received to costs paid 19 The firsttypeisusuallyusedtoevaluateorimprovecustomer satisfactio i the implemetatio stage, ad the secod type is usually used to assist maufacturers to uderstad customer value demad i the desig phase I this paper, both perspectives of value are itegrated i the cocept of PSS value for desigig the evaluatio method Customer value is represeted by the dimesios of prices ad quality, ad ROI deotestheorgaizatiovaluemoreover,thesecodtypeof measuremet methods for customer value is used for aidig evaluatio PSS busiess models 24 The Method of Evaluatig PSS Busiess Models Busiess models clearly play a importat role i the successful value delivery of PSS Some studies have tried to develop a workable structured busiess model framework for the PSS to ucover the busiess logic of deliverig PSS ad aid i efficietly desigig a PSS busiess model 14, 15, 19 Others have provided methods of desigig busiess models for PSS based o structured busiess model frameworks, such as Busiess Model Cavas 22, 24 However, they commoly did ot offer a quatitative approach for evaluatig PSS busiess models Some QFD techique based evaluatio method which was developed to evaluate partial dimesios of PSS busiess models for providig products or services with more value might ot be used to directly realize the evaluatio ad optimizatio of PSS busiess models 31 I additio, cosiderig that the creatio of value is the core purpose ad cetral of deliverig a PSS or Product Servitised Supply Chai (PSSC), some value-orieted methods, which focused o efficietly evaluatig whether a desiged PSS or PSSC meets customers ad firms value demads was proposed For example, QFD techique based methods were studied to evaluate ad optimize a desiged PSS compoet i light of customers value demads, customers budgets, ad PSS characteristics The e 3 value based method is provided to evaluate ad optimize the busiess processes of a PSSC 28; it ca achieve orgaizatio s profitability based o thecostarragemetofprocesses,covertigtherateofcost of orgaizatios ad e 3 value method However, these models also caot fully support the evaluatio ad optimizatio of PSS busiess models due to that they oly focus o dimesios of value propositio or some partial dimesios of value creatio holistic value-orieted method which focuses o dimesios related to the whole busiess logic of

4 4 Mathematical Problems i Egieerig Customers value Price Quality idicators + ROI Orgaizatio value The PSS value scope Value desiged Evaluatio Value demads The PSS busiess model scope Quality idicators For example, time PSS for setup characteristics Busiess model dimesios PSS characteristics Correlatios PSS compoets Customers quality demads traslate to PSS characteristics For example, remote diagosis For example, cloud service supplier PSS suppliers PSS compoets Fially, customers quality demads traslate to costs of processes PSS suppliers SCOR processes For example, pla SCOR processes Cost of processes For example, plaig labor cost Cost of processes Risk evets Figure 1: The overall evaluatio method of PSS busiess models PSS busiess models for both customers ad orgaizatios to efficietly ad quatitatively evaluate ad optimize PSS busiess models is still lackig The absece of a comprehesive method costitutes a source of ucertaity for compaies i deliverig PS offerigs, makig it ecessary to idetify welldesiged PSS busiess models for sustaiable growth ad meetig customers value demads for maufacturig firms 31 3 Value-Orieted Evaluatio Method for PSS Busiess Models 31 The Overall Research pproach We developed a valueorieted evaluatio method for PSS busiess models to address the key gaps discussed i previous sectios threestage research approach was adopted as the existig studies i this area remaied fragmeted Our research bega with the 1st stage literature review to explore the existig methods ad techiques relevat to our research focusig maily o idetifyig the dimesios of PSS value ad PSS busiess models, a commo desig process of PSS busiess models, some QFD techique based evaluatio methods, ad e 3 value based method The 2d stage was to develop a evaluatio method with several steps to use the desig iformatio for quatitatively evaluatig PSS busiess models; ad the 3rd stage was to validate the developed method i a real-world cotext through a i-depth case study with a home applicatio maufacturig compay The theoretical developmet of our research was ot a simple liear process across these three stages There were actually a lot of iterative learig loops amog these three stages to refie the method with case data ad to update the case aalysis for some more valuable theoretical/practical implicatios We decided to structure this paper i a rather straightforward maer to make it easier for readers to follow the mai flow of research from theliteraturereviewtomethoddevelopmetadthecase study validatio The overall logic ad ratioale uderpiig our method developmet is itroduced as follow I order to effectively ad efficietly evaluate desig PSS busiess models, we first eed a comprehesive uderstadig of the key dimesios of PSS value ad PSS busiess models for capturig customers value demads ad the structure of PSS busiess models ad methods that are used i the evaluatio step Secod, we eed to establish correctios of these dimesios of PSS value ad PSS busiess model by drawig from ad extedig the QFD techique s show i Figure 1, the QFD techiqueisthebasisoftheevaluatiomethoditisusedas a multiple-phase approach 18 to establish correctios This approach cosists of six phases of extractig the kowledge of each step of PSS busiess model desig I essece, this approach gradually traslates customers quality demad ito dimesios of PSS busiess models The goal of this approach is to establish relatioship matrixes (correctios) betwee customers quality demad ad PSS characteristics, as well as amog other PSS busiess model dimesios Importace of PSS busiess model dimesios ca be calculated as establishig these matrixes The, we ca use these correctios to

5 Mathematical Problems i Egieerig 5 The desig processes of PSS busiess models Start Desig iformatio Step 1: aalysis of customers alysis of customers value demad Budget of customers ad their desired quality The evaluatio method Step 2: desig value propositio Step 3: desig value creatio Idetify PSS characteristics Desig PSS compoets Structure parter etwork Build busiess processes PSS characteristics ad their relatios with quality PSS compoets ad their relatios with characteristics PSS suppliers ad their relatios with compoets SCOR processes ad their relatios with suppliers Step 51 Collectig iformatio (matrix F) from the desig iformatio of the desig process Step 52 Determiig the objective fuctio ad evaluatio criteria Step 53 Derivig the optimized PSS busiess model Step 4: desig value capture Risk maagemet Cost ad pricig Risk evets ad their probability of occurrece Price, cost ad their relatios with SCOR processes Step 54 Feedback to redesig the PSS busiess model Step 5: busiess model evaluatio Evaluatio Ed Figure 2: The steps of the value-orieted evaluatio method reflect the desiged value of PSS busiess models ad develop a evaluatio method itegratig the evaluatio criteria ad objective fuctios The developed evaluatio method ca be used to effectively evaluate whether the desiged value of PSS busiess models is optimized for matchig with PSS value demads (customers value demads ad orgaizatios value demads) ad to optimize these PSS busiess models if the value is ot optimized 32 Value-Orieted Method for Evaluatig ad Optimizig PSSBusiessModels geeral desig process of PSS busiess models depicted by Figure 2 has bee verified i 19 but lacks a cocrete method that is used i a evaluatio step (Step 5) for evaluatig desiged PSS busiess models The desig process takes customers value demads as iputs to desig busiess model dimesios The proposed evaluatio method is used i Step 5; a optimized busiess model of PSS for providig appropriate PSS value should be derived from the viewpoits of providers ad customers i this step This meas that, based o this step, a derived PSS busiess model should provide the right quality uder the give budget of customers ad appropriate ecoomic returs for PSS providers The value-orieted evaluatio method takes the customers value demad ad six matrixes (correlatios of busiess model dimesios) as iputs Customers value demads iclude the desired quality with its relative importace ad the budget of a customer The quality ca be represeted by a vector of quality idicators: Q = (q 1,q 2,,q k )Theimportaceofqualityisavector: W q = (w q 1,wq 2,,wq k ),ad wq k = 1Thebudgetofa customer is P max Customers value demads ca be expressed as P max Qwhich expresses the mappig of a customer s budget with its desired quality Thesesixmatrixesithefollowigcabeproducedfrom the desig iformatio ad ormalized by referecig the QFD techique ll related vectors of these matrixes are row vector Defiitio 1 Matrix is the correlatio of Q T with the vector of PSS characteristics: H = (h 1,h 2,,h l ) = (a i,j ) k l,

6 6 Mathematical Problems i Egieerig where 0 a i,j 1, 1 i kad 1 j l,ad k i=1 a i,j =1 Each a i,j deotes the relevacy of related h l Had q k Q Each h l is relevat with at least oe q k ThevectorW h is the importace vector of PSS characteristics Defiitio 2 Matrix B is the correlatio of H T with the vector of PSS compoets: O=(o 1,o 2,,o m ) B=(b i,j ) l m,where 0 b i,j 1, 1 i l ad 1 j m,ad l i=1 b i,j = 1 Eachelemetb represets relatioal stregth betwee a characteristic ad a compoet W o is the importace vector of PSS compoets Defiitio 3 Matrix C is the correlatio of O T with the vector of PSS suppliers: S=(s 1,s 2,,s ) ad S must cotai the PSS provider itself C=(c i,j ) m,where0 c i,j 1, 1 i m ad 1 j,ad m i=1 c i,j = 1Eachelemetc deotes thedegreeofresposibilitythatsuppliersshouldtakefora compoet W s is the importace vector of PSS suppliers Defiitio 4 Matrix D is the correlatio of S T with the vector of SOCR processes: SP = (sp 1, sp 2,,sp s ) D = (d i,j ) s, where 0 d i,j 1, 1 i ad 1 j s, ad i=1 d i,j = 1 Each d i,j represets relatioal relevacy betwee a supplier ad a process W sp is the importace vector of SOCR processes Defiitio 5 Matrix E is the correlatio of SP T with the vector of cost metrics of processes: COP = (cop 1, cop 2,,cop t ) E=(e i,j ) s t,where0 e i,j 1, 1 i sad 1 j t,ad s i=1 e i,j =1 Each e i,j deotes relatioal stregth betwee a process ad a cost metric W cop is the importace vector of cost metrics The cost arragemet for cost metrics of processes is a vector CM =(cm 1, cm 2,,cm t ); ad the total cost of the PSS C t = cm t The desiged price of PSS is P Defiitio 6 Matrix F is a correlatio of COP T with the vector of risk evets: R=(r 1,r 2,,r V ) F=(f i,j ) t V,where 0 f i,j 1 Each f i,j deotes the probability of occurrece ofariskevetwithiacostmetric It should be oted that the risk evets cosidered i this paperaretheiteralriskofthelifecycleofpssdelivery; they are maily related to resource plaig, productio, service delivery, supply chai maagemet, ad operatio maagemet The outside risks, such as market risk, political risks, ad techology risk, which should be cosidered before the desig of PSS busiess models are ot cosidered i the evaluatio phase of PSS busiess models The occurrece of a risk evet will cause the losig cost of orgaizatios Therefore, matrix F is established to quatify risks from the perspective of losig cost Risk prevetios are becomig the ievitable evets of operatio maagemet Cosequetly, the evet of risk prevetios turs ito a compulsory elemet i the vector R The value of its correspodig elemets f i,j i matrix F is equal to 1, if at least oe more of risk evets has a probability of occurrece with the cost metrics that are related to f i,j ;otherwisef i,j =0 Let L r =(l r 1,lr 2,,lr V ) be a correspodig vector of the vector R, which represets the set of losig costs caused by theoccurreceofriskevetsivectorr The,theloss expectatio of risk evets with each elemet of the vector CM ca be calculated by the followig formula: CM l =l r R T =(CM l j CMl j = V i=1 l r i f i,j ), i 1, V, j 1, t, where CM l isavectoroflossexpectatiosofthevectorcm; it has the same size with CM These costs caot directly be used i the value exchage of PSS but surely be used to make sure that the delivery of PSS goes smoothly Hece, the cost that will be iputted i the value exchage of PSS withi the PSSbusiessmodelcabeattaiedthroughthefollowig formula: CM = CM CM l =(CM i CM i CM l i ), i 1, t Based o the defied matrixes ad vectors, the evaluatio method (see Figure 2) is desiged to cosist of the followig four steps Step 51 (collectig kowledge from the desig iformatio) The iformatio of P max ad Q is collected from the sales fuctio ad CRM (Customer Relatioship Maagemet) system Matrixes E, vectors, price P,adtotalcostC t ca be created by the desig divisio Usually, may differet versios of a matrix or a importace vector of a busiess model dimesio may exist, because of that differet desigers may defie differet elemets for it For each matrix, a average of these differet versios used to represet a comprehesive desig of the matrix should be attaied by usig the followig formula: R ave = N =1 R (x i,j ), (3) N where R ave is a attaied matrix; R (x i,j ) are its differet versios (x i,j areelemetsofaversio);adnis the umber of these versios However, it still eeds to be verified that if a attaied matrix is accurate i reflectig the correlatio betwee its relative busiess model dimesios ad the desig cosideratios of desigers, importace vectors of its relative busiess model dimesios are used for this problem For each importace vector of a busiess model dimesio, lower ad upper boudaries for each elemet of the vector ca be idetified with its differet versios sythetical vector of importace with lower ad upper boudaries abstracted from these differet versios ca be specified as W i =((w i 1,w i + 1 ),(w i 2,w i + 2 ),,(w i,w i + )) t the same time, the importace vector of a PSS busiess model dimesio ca be produced from the relative matrix (1) (2) (4)

7 Mathematical Problems i Egieerig 7 of the dimesio ad the importace vector of its correlative PSS busiess model dimesio The calculatio formula is show as follows: W i =W j R ave, w i = w i N =1 wi w i Wi, where W i is the ormalized importace vector of a PSS busiess model dimesio; W j is a importace vector of the correlative PSS busiess model dimesio with the previous busiess model dimesio; ad R ave is their correlatio matrix For example, the istatiatio formula W h =W q cabeusedtocalculatetheimportacevectorofpss characteristics However, each elemet of ormalized vector W i has deviatios with its correspodig elemet of the sythetical vector W i dthedeviatioscabecalculated as Δ i =wi wi, Δ i+ =wi + w i w i Wi (w i,w i + ) W i, where Δ i is the deviatios of wi from the lower boudary w i ; ad Δ i+ is the deviatios of wi + from the upper boudary w i + The, a vector of deviatios of W i ca be derived as Δ i =(( Δi 1, Δi+ 1 ),( Δi 2, Δi+ 2 ),,( Δi, Δi+ )) (7) d the, a ormalized deviatios vector ca be calculated by usig the followig formula: Δ i = Δ i + = Δ i max ( Δi, Δi+ ), Δ i+ max ( Δi, Δi+ ) The ormalized deviatios vector is show i the followig: Δ i =(( Δi 1 ( Δi (5) (6) (8), Δi + 1 ),( Δi 2, Δi + 2 ),, (9), Δi + )) Based o the differet desig cosideratios of differet desigers, μ which represets the desigers preferece i lower deviatios of elemets is itroduced to trasform deviatios of oe elemet to a specific umerical value Δ i The formula for calculatig Δ i i for each elemet is show as follows: Δ i =μ Δ i +(1 μ) Δ i +, (10) where 1 μrepresets the preferece of desigers i upper deviatios ccordig to formulas (8) ad (10), if desigers set up differet values of μ, Δ i ca have differet umerical value ad ca be classified ito three categories: > (wi + +w i (i) If w i if desigers prefer that w i smaller Δ i the better (ii) If w i <(wi + +w i if desigers prefer that w i smaller Δ i the better (iii) If w i =(wi + +w i prefer that w i Δ i )/2, theμ<δ i is close to wi + )/2, the1 μ<δ i )/2,theΔ i is close to wi is i the middle of wi should be close to 1 < 1;ad, the the <1;ad, the the =1; ad if desigers ad w i +,the Therefore, a trasformative deviatio vector ca be derived ad expressed as Δ i =(Δ 1,Δ 2,,Δ ) (11) The total deviatio of a produced importace vector ca be calculated by the followig formula: Δ i = N =1 Δi, (12) where Δ i is the total deviatio of a produced importace vector If the desiger prefers that more elemets of a produced importace vector lie i the first category, the Δ i should be close to μ If the desiger prefers that more elemets of a produced importace vector lie i the secod category, the Δ i should be close to 1 μ If the desiger prefers that more elemets of a produced importace vector lieithethirdcategory,theδ i should be close to 1 Cosequetly, if the umerical value of Δ i is ot fit with the desig cosideratios of desigers, which represets that its relative matrix R ave may be ot accurate i reflectig the correlatio betwee its relative busiess model dimesios, this relative matrix R ave should be readjusted util a appropriate value of Δ i isattaiedformulas(3),(6),(8),(12),(14), ad (16) are used to abstract available matrixes E that are the useful kowledge of the desig iformatio for evaluatig PSS busiess models Step 52 (determiig evaluatio criteria ad evaluatig PSS busiess models) ccordig to the cocept of customer value, the realizatio of a customer s desired quality with a lower price tha the customer s budget or a higher quality realizatio tha a customer s desired quality uder its budget ca be see as a evidece for iferrig that the customer s value demad is well met However, without holdig the eough iformatio about the quality realizatio through implemetig the PSS busiess model i the desig phase, ew evaluatio criteria are eeded I this situatio, based o the mappig of the customer s budget to its desired quality: P max Q, a vector of budget distributios o desired quality

8 8 Mathematical Problems i Egieerig that ca be produced from the budget ad importace of quality: f p =P max W q, (13) where f p deotes a desired cost distributio of a customer forallqualityidicatorsitcabeusedtoassesswhether a customer s value demad is met If the output value of a PSS busiess model which is expressed by a vector of cost distributios of orgaizatios o quality vector Q derived from matrixes E ad cost arragemet approximates to the f p adthedesigedpricep is lower tha P max or equal to P max, we ca ifer that this PSS busiess model properly coverts the cost of orgaizatios to the realizatio of a customer s desired quality ad the evaluated PSS busiess modelisfeasibleadcabefurtheroptimized However, there are still two issues that eed to be solved First, P max is bigger tha the total cost C t lthoughf p ad the vector of output value have the same size, they caot be compared because each elemet of the vector of output value must be smaller tha the correspodig elemet of f p The reaso for this situatio is that the value-added mechaism is igored by usig these ormalized matrixes ccordig to the value-i-chage theory, value-added pheomeo happes i the exchage of PSS compoets betwee a supplier ad a customer 28 I this exchage process, a supplier coverts its cost to more value durig the value creatio of deliverig PSS compoets to customers Each supplier has a capability of cost coversio that is the ratio of the output to iput durig the value creatio; ad it is ormally greater tha 1 ad ca be determied by the desiger The valueadded mechaism based o the rate of cost coversio of supplier should be characterized as the cost coversio i these matrixes to represet the capital growth Cosequetly, matrix C which represets the correlatio of suppliers ad PSScompoetsmaybeadjustedbasedothecapability of cost coversio of suppliers to highlight the value-added mechaism The adjusted matrix C is expressed as C,Where C = (c i,j ) m, 0 c i,j, 1 i m,ad1 j,ad m i=1 c i,j 1 d the average rate of cost coversio for all providers ca be expressed by δ It ca be determied by the desiger It also determies the capability of capital growth of PSS busiess models ad ca be desiged to make f p ad thevectorofoutputvalueatthesameleveltobecompared Wecagetthevectorofoutputvalueaccordigtomatrixes by usig the followig formula: f o = CM E T D T C T B T T, (14) where f o is the vector of output value which expresses the trasformatio of cost to quality through the evaluated PSS busiessmodelitshouldhavethesamesizewithf p The secod issue is how to compare f p ad f o for uderstadig how well they match Cosiderig that f p ad f o havethesamesizeadwefocusotheumericalvalue characteristics of these two vectors, the Euclidea Distace was cosidered as the criteria for gettig the way of similarity of f p ad f o The, the Euclidea Distace betwee f p ad f o is calculated by d= ( (f p i f o i )2 ), (15) where d is the Euclidea Distace; f p i ad f o i are elemets of f p ad f o Thevalued ca be further used to calculate the similarity of f p ad f o by usig the followig formula: 1 s= (1+d), (16) where s is the similarity that higher umbers would idicate greater realizatio of quality ad the higher degree of satisfactio However, there are two situatios with a umerical value of similarity s Oe is that most elemets of f o may be smaller tha their correspodig elemets of f p ad may approximate them The other is opposite that most elemets of f o may be bigger tha their correspodig elemets of f p ad may also approximate them Obviously, the latter situatio is the target of a well-desiged PSS busiess model I order to distiguish these two differet situatios ad get the right, the followig formula is used: r= N b L, (17) where L is the legth of f p or f o ; N b is the umber of elemets of f o that are bigger tha their correspodig elemets of f p, 0 N b L; r istherateofn b to L, 0 r 1 Of course, desigers wat r, the bigger the better, i order to expad the satisfactio withi a specific umerical value s Formulas(14)to(17)areusedtoevaluatePSSbusiess models If bigger s ad bigger r are derived from the evaluatio uder coditios of the fact that a give price P is o more tha customers budgets ad a acceptable ROI returs to orgaizatios, the these evaluated PSS busiess models are cosidered to be feasible for beig implemeted ad optimizedtheseformulascabeusedtofurtheroptimize them i the ext step Step 53 (derivig the optimized PSS busiess models) ccordig to formula (14), the realizatio of both customer value ad firm value is determied by the cost arragemet, matrixes, ad pricig s the sayig goes, use the best material at the key poit ; with the situatio of specific matrixes, the ratioal cost arragemet ca lead to a good quality Whe a ratioal cost arragemet ad the capability of capital growth are idetified, reasoable pricig ca result i good values for both customers ad firms Therefore, the evaluatio method should help to make such a balace to get a proper PSS busiess model by redesigig the cost arragemet, matrixes, ad pricig The target of PSS busiess models optimizatio is maximum customer value uder a acceptable ROI for orgaizatio This optimizatio problem may be expressed as max st s+r C t δ P max

9 Mathematical Problems i Egieerig 9 r k P P max P C t R d Δ i Δi j, (18) where R d, k, ad Δ i j are desiged values as the desig divisio s preferece The, vectors CM, H, O, S, SP, adcop, as well as matrixes, B, C, D,adE, ca be readjusted to get the optimized PSS busiess model Step 54 (feedback to the desig process of PSS busiess models) Four types of useful iformatio are fed back to desig divisio First, a series of dimesios as a ope, ad thus promisig, busiess model of PSS for PS offerigs ca be brought back to such a quatitative evaluatio method Secod, such desiged PSS characteristics as havig o correlatio with ay compoet ca be discovered ad be see as iteral parameters of compoets Similarly, impertiet compoets, providers ad processes, ad cost metrics ca be revealed ad readjusted ccordig to the related iformatio, the desig busiess model ca be uderstood i a ew way Third, the importace vector of dimesios ca be derived s similar to the importace vector of PSS characteristics W h that is produced from W q ad matrix,theimportace vector of other dimesios ca be calculated Fially, a ratioal cost arragemet of cost metrics of processes ad pricig of PS offerigs ca be obtaied 4 Case Study 41 Case Compay The case compay is oe of the biggest electroics ad home applicatio maufacturers Nowadays, it is tryig to desig a PSS busiess model to provide a solutio of electroics ad home applicatio with a doze of services for real estate compaies to build itelliget or smart commuities The devices icluded i this solutio ca be characterized as ivestmet machies, such as big size LCD (Liquid Crystal Display), itelliget etrace guard, realtime moitorig equipmet, ad smart home applicatios It has also established efficiet service orgaizatios ad used Iformatio ad Commuicatio Techologies (ICT) based platform to supply customized services i combiatio with devicestoofferoptimalpsssolutiosforcustomersthese service activities rage from maiteace ad supplyig spare parts to full service cotracts, as well as olie services usigictyet,itlackedasystematicmethodtoevaluatethe desiged PSS busiess model at a early stage of PSS busiess models developmet 42 Results of pplicatio Step 51 (collectig kowledge from the desig iformatio) RelatedavailablekowledgeabstractedfromtheCRMsystem ad the desig iformatio was collected Vector Q was obtaied through the CRM system with a questioaire module about quality idicators Participats were asked to review 15 differet quality idicators ad rate some of them o a five-poit scale for how importat they cosidered them to be 8 quality idicators which were selected together by 95 percet of participats were cosidered as the most represetative idicators to be icluded i vector Q Its relative importace W q was idetified through the formula W qi = S qi / 8 i=1 Sqi forcalculatigtheproportioofthe average score of a quality idicator to the sum average score of all quality idicators, where S qi are the average score of each quality idicator The kowledge abstracted from the CRM system ad the desig iformatio was brieflyshowifigure3vectorq icluded quality of the fial product, PSS flexibility, physical characteristics of product (size, colour), fuctio practicality, available operatio time, service availability, service reliability, ad service respose speed vector of PSS characteristics which icluded 15 elemets was foud (Vector H) (eg, time to set up ad respose rate of logistics ) s the Vector O, 28 PSS compoets were described i Step 2 of the desig process Followig with these compoets, 41 suppliers (Vector S) were recogized 162 level 3 processes of SOCR, 25 cost metrics, ad 16 risk evets were idetified I this applicatio, differet budgets P max, 24000, 28000, ad (all i a moetary uit), were set to derive optimal PSS busiess models Vectors CM ad L r were also extracted We show the results of applyig the PSS busiess model with budget ccordig to formula (3), the iitial matrix of this evaluated PSS busiess model was built d all relative importace vectors were sythetized Matrix, W q,adw h areshowithefollowig: ,15 =

10 10 Mathematical Problems i Egieerig W q = (015, 015, 005, 005, 010, 025, 010, 015) W h = ((00600, 06500), (00750, 00800), (00850, 00950), (00550, 00650), (00600, 00700), (00400, 00450), (00700, 00750), (00500, 05500), (00600, 00650), (00750, 00800), (00750, 00850), (00400, 00500), (00750, 00800), (00500, 00600), (00700, 00750)) (19) Basedotheformula(5),W h cabeproducedfromw q ad matrix : W h = (00622, 00767, 00899, 00608, 00661, 00423, 00741, 00529, 00635, 00767, 00794, 00476, 00767, 00569, 00741) (20) The,ilightofformulas(6)ad(8),aormalized deviatios vector of W h is attaied: (085, 1), (1, 022), (1, 072), (1, 043), (051, 1), (079, 1), (1, 032), (051, 1), (1, 045), (1, 022)) (21) Δ h = ((079, 1), (051, 1), (096, 1), (1, 072), (1, 064), With a desiged value μ = 05 by desigers, a trasformative deviatio vector is acquired accordig to formula (10): Δ h = (0895, 0755, 098, 086, 082, 0925, 061, 086, 0715, 0755, 0895, 066, 0755, 0725, 061) (22) Fially, the value of Δ h (12), where Δ h is calculated by usig formula = 0788, ad it is bigger tha 0750 which is (it is set up by desigers) thesmallestacceptablevalueofδ h Therefore, matrix is verified ad ca be further used to evaluate this PSS busiess model Similarly, verified matrixes B, C, D, ade are obtaied ad show i the followig ccordig to the iitial matrix C ad vector CM, δ =13015 ad C t =19800: B 15,28 =

11 Mathematical Problems i Egieerig 11 C 28,41 = D 41,162 = E 162,25 = F 25,16 = (23) Step 52 (determiig evaluatio criteria ad evaluatig PSS busiess models) ad Step 53 (derivig optimized PSS busiess models) s ad r were utilized as criteria Based o formulas (13) to (17) ad these obtaied matrixes, the evaluatio was implemeted by usig a spreadsheet program ad the simplex algorithm However, the evaluatio result was usatisfactory ccordig to formula (18), R d, k, adδ i j are istatiated with R d = 3000, k = 06,adΔ i j = 075 The, two times optimizatio was coducted by the desig divisio for optimizig the tested PSS busiess model The optimizatio results were obtaied quickly The umerical

12 12 Mathematical Problems i Egieerig Dimesios of customer value ad PSS busiess models Relative importace vectors of dimesios P = (24000, 28000, 40000) O 8 = (quality of fial product,,service respose speed) W q = ((006, 009),, (013, 017)) H 15 = (time for setup,,frequecy of prevetive maiteace) O 28 = (Olie persoalized desig,, remote diagosis service) S 41 = (olie desig service suppliers,, logistics suppliers) SP 162 = (pla supply chai,,receive material process) COP 25 = (cost to pla,,order maagemet costs) W h = ((0012, 0019),,(0023, 0037)) W o = ((0022, 0025),,(0020, 0020)) W s = ((0032, 0032),,(0052, 0067)) W sp = ((0032, 0032),,(0052, 0067)) W cop = ((0003, 00032),, (00012, 00013)) R 16 = (labor risk,,risk prevetio) Figure 3: The collected kowledge from the desig iformatio value of vector CM ad the size of vector SP were ameded at the first time More cost was assiged to service delivery ad some maagemet processes were deleted Subsequetly, matrixes D ad E were chaged The result of first optimizatio was better tha the iitial evaluatio result Next, based o the first optimizatio, the size of vector O ad S was chaged Some PSS compoets, such as equipmet itercoectio ad mutual moitorig, remote diagosis, ad o-lie maiteace services, were added ccordigly, service suppliers were chaged; ad matrixes B, C,adD were chaged as well The result of this optimizatio was eve better ll results of evaluatio ad optimizatios are show i Table 1 Step 54 (feedback to the process of PSS busiess model desig) s the first type iformatio, several vectors of dimesios ad their correlatios were fed back as a promisig PSS busiess model example of the secod type was the speed of fault discovery which is removed from the iitial desiged PSS characteristics, because the faults are discovered immediately based o the equipmet itercoectio ad mutual moitorig service It caot be a characteristic that iflueces the quality Each importace of vectors was calculated ad ormalized as the third type of feedback iformatio Fially, the result of adjustmets at the first time cabeseeasaexampleofthiskidofiformatio 43 Verificatio sshowisectio42,theewlyproposedmethodworkedtoevaluateadesigedpssbusiess model ad get a optimized oe The iput from outside of the firm was Vector W q of 8 quality demotios, which was feasible to ask a umber of customers through a questioaireotheriputsofthismethodcabecollectedby desig divisio However, the creatio of these matrixes may be ot perceived as a problem, sice this iformatio was aturally cotaied i the desig process It should be oted thattheeffortstocreatematrixeswillevedecreaseifollowup studies Thus, the less effort for creatig matrixes would be eeded for this method withi the comprehesive PSS busiess model desig The vector W q,aswellasthesematrixes, was also foud effective to produce meaigful outcomes For example, the importace vector of PSS characteristics that derived from the productio of W q ad is useful to uderstad PSS characteristics ad aid i redesigig them 5 Discussio Sectio 4 showed that the proposed method ca support evaluatio of differet type of PSS busiess models ad idetificatio of appropriate oe i practice oce the ecessary iformatio is available To a certai extet, this method is capable of substitutig a PSS busiess model aalysis ad may help overcome the service paradox 12 lteratively, itcabeusedtoverifyresultsfromsuchaalysisortohelp uderstad the ature of PSS busiess models It should be emphasized that the iformatio created for this purpose was oly the correlatios (matrixes) ad cost arragemet which is eeded ayway for this ecoomic evaluatio i the early stage The other iformatio was imported from desig iformatio about the desig process of PSS busiess models I additio, that iformatio utilized from the precedig steps is ot peculiar to this evaluatio method

13 Mathematical Problems i Egieerig 13 Table 1: The results of evaluatio ad optimizatios Busiess model dimesios ad optimizatio Evaluatio ad optimizatios results Iitial evaluatio First optimizatio Secod optimizatio PSS characteristics PSS compoets PSS suppliers SCOR processes Cost to processes Risk evets verage rate of cost coversio δ The total cost C t Similarity s Rate r Price of a PS offerig P Profit level of a PS offerig (for all suppliers) ROI (rate of ivestmet) 01010% 01326% 01600% I other words, the quality idicators ad its importace are fudametal to ay PSS busiess model desig, ad some correlatios may be aturally available if QFD techique is coducted to desig PSS busiess models 17 This easy-to-lear ad easily implemeted method is useful servig as a systematic approach to evaluate various PSSbusiessmodelsItsadvatagesmaybeitssimplicityad quickess; it ca be performed with spreadsheet software or bymauallycalculatigwithapeadpapertomakeit eve more practical, further attempt is to create a spreadsheet based tool that supports the etire evaluatio step, for example, calculatios as well as documetatio of the results Some highlighted features are also i lie with the geeral priciples that a desig support method should fulfil i order to become utilized i idustry 16: (i) be easy to adopt ad implemet; (ii) facilitate desigers to fulfil specified aalysis o value requiremets with the presumptive coditio of PSS busiess models; (iii) reduce the risk that importat elemets of PSS busiess model are forgotte i the desig process; ad (iv) reduce the total caledar time (from start to ed) to solve the evaluatio task Oe of the scietific advaces of this method exists i that it builds quality idicators provided without questioig the customers o the specific quality of idividual PS offerigs 20 This is especially a advatage whe the PSS busiess model still exists i the desig stage, which makes it virtually impossible i practice to get quality iformatio This method ca address a large umber of busiess model dimesios; i such a case, it ca provide more iformatio as its results, such as importace of other dimesios 15, 19 To improve the preciseess of the estimated utility level, ivestigatio of the possibility to adopt a parameter other tha the vector of cost distributio of the customer desired quality f o will be a future subject of research other i-depth questio about this measuremet is that if the rate of cost coversio is sufficiet to express the value added mechaism of PSS busiess models This questio is motivated as there might be positive (or egative ) syergy that iflueces the value added mechaism by orgaizig multiple suppliers i the implemetatio of PSS busiess models Fially, the curret proposed method focuses o the viewpoit of customer value ad orgaizatio value It does ot cover the provider s pricig mechaism for feedig back the desig of PSS busiess models or the method of realizig the tradeoff betwee customer value ad orgaizatio value as aforemetioed discussio; the future versio will maage that I other words, the ew method will support decisios, for example, whether to implemet the desig busiess model or to cotract a supplier with higher capability of cost coversio or to price a lower price tha customers budgets 6 Coclusio The servitisatio literature stresses the role of PSS busiess models as a cetral elemet of ay servitisatio strategy DespitetheimportaceofthesePSSbusiessmodels,there has ot yet bee a uified method for evaluatig ad optimizig them The existig models focus o a few dimesios (such as dimesios of PS offerigs) to evaluate the value delivery of PSS busiess models ad therefore do ot reflect or capture the richer picture derived from theory ad practice 19, 32 To fill this gap, we have proposed a value-orieted evaluatio method that utilizes dimesios of PSS value ad multiple dimesios of PSS busiess model available i the literature It is importat for the followig reasos: (i) The more comprehesive method eables practitioers ot oly to idetify where their curret PSS busiess models lie, but also to uderstad the wide rage of optimized optios We believe that this method will expad the horizos of the maagers,

14 14 Mathematical Problems i Egieerig eablig them to make better choices as they develop their PSS busiess models (ii) Because our method idetifies the dimesios of both customer value ad orgaizatio value, it provides practitioers with kowledge ad guidace regardig what eeds to be chaged to move from oe PSS busiess model to aother to get more value (iii) Fially, this method may highlight opportuities to quatitatively assess the feasibility of PSS busiess models ad optimize them i the early stage of the desig process by usig the desig iformatio This method bleds the values of customers ad orgaizatios ad PSS busiess models; therefore, it helps decisio-makers uderstad the choices ad optios available Thisewmethodhasformulatiosthatcalculatewhether thevaluesdeliveredbypssbusiessmodelsmeetcustomers value demads ad orgaizatios value desires by drawig lessos from the QFD techique Correlatios (matrixes) of dimesios of the PSS value ad PSS busiess models are used to covert customer requiremets about the quality of the PS offerigs to the quality cotrol attributes that are the dimesios of PSS busiess models; ad these dimesios exist throughout the PSS busiess model desig, implemetatio, ad operatio lik, i order to provide more value as much as possible I this ovel method, the umber ad size of correlatios may vary accordig to differet types of PSS busiess models ad differet legth of dimesios This approach has some advatages ad might be used i both B2B ad B2C cotexts to (i) be effective to evaluate PSS busiess model by usig the desig iformatio; (ii) bechmark differet PSS busiess models withi the same idustry or differet markets; ad (iii) reduce the risk of elemets forgotte ad caledar time for evaluatio Fially, we believe that this method may help maagers uderstad ad compare PSS busiess models, while iterpretig ad evaluatig their differeces We believe this method will eable better desig or redesig of PSS busiess models withi various compaies, particularly durig the desig of a busiess model of PSS; creatig this PSS busiess model is the first fudametal step toward developig formal PS offerig able to improve service quality levels, as well as reducig operatig costs ad ivestmets This uderstadigofpssbusiessmodelsisacetralchallegethat fosters the itroductio of such busiess model iovatios with limited applicatios This aspect may be relevat to the sustaiability ad competitiveess debate because PSS approaches are a promisig way to address market ad competitive challeges This research has some limitatios First of all, it is focusedoemployigthecostdistributioofcustomers quality demads ad customers budgets to express customers value demads, excludig other dimesios To make the method clear ad usable, we decided to limit the dimesios to customers value demads that are simply provided by a PSS provider to customers Specifically, we decided to exclude the subjective dimesios that PSS providers may itroduce to ivestigate their PSS busiess models with customers value demad, such as customers satisfactio dditioally, it was decided to create a mode able to capture temporal expasio of dimesios of PSS busiess models This type of expasio occurs whe compaies provide ew services that employ ew ICT ad cover differet stages of a product s life cycle (presale, sale, postsale, ad dismatlig), modifyig the type of PSS busiess models 33 We excluded the spatial dimesio of a PSS busiess model from our method; this parameter may be importat whe describig what a compay provides whe movig ito a ew type of PSS busiess models to create a ew market Moreover the proposed method was a theory buildig iitiative that itroduce the QFD techique based method i the evaluatio of PSS busiess models Further work is eeded to test the method empirically, particularly to evaluate the followig: (i) the precisio of the elemets of each correlatio, (ii) the coceptual idepedece of the dimesios of customers value demads ad PSS busiess models, ad (iii) the multiple-dimesioal ature of PSS busiess models Furthermore, we observed while studyig the real life case that the rate of cost coversio may be ot sufficiet to express the value-added mechaism of PSS busiess models Therefore, as we have cosidered this poit of view i our discussio, i-depth case studies focusig o this mechaism should be udertake to exted ad erich this approach Fially, this model provides a geeral picture of PSS busiess models To a certai extet, this method is capable of helpig maufacturers to overcome the servitisatio paradox accordig to discoverig icosistecies i PSS busiess models ad optimizig them i the early stage Future works iclude perfectig this method further with more cases ad developig a geeral utility tool Competig Iterests The authors declare that there are o competig iterests regardig the publicatio of this paper ckowledgmets Research works i this paper are supported by the Natioal Natural Sciece Foudatio of Chia (NSFC) (o ), the Natioal Key Techology R&D Program of Chia (o 2015BF04B01-4), ad the research projects of the Seveth Framework Programme of the Europea Uio PIRSES-G Refereces 1 Neely, Explorig the fiacial cosequeces of the servitizatio of maufacturig, Operatios Maagemet Research, vol 1,o2,pp , J-CTu,Y-CHuag,C-YHsu,adY-WCheg, alyzig lifestyle ad cosumptio patter of hire groups uder product service systems i Taiwa, Mathematical Problems i Egieerig, vol 2013, rticle ID , 15 pages, 2013

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