Combining Product Innovation With Service Innovation to Increase Value Created With a System

The focus in the businesses of manufacturing and selling technological devices has been increasingly shifting from USA and Europe towards Asiatic countries due to cost-effectiveness and lower costs of resources. In the areas where costs are inevitably higher, new measures have to be considered in order to be able to compete in the global economy. In this article, we study how can we utilize combined benefits of technological and service innovations in competing against the traditional product-oriented offerings. Product-service systems are integrated systems of products and services that create value through use for customers; the hypothesis in this article is that the efficiency of the business network can be increased by designing an integrated product-service system in comparison to the product-oriented approach. The hypothesis is studied via a real-life product-service system design case study of an automated recycling system, and system dynamics simulation is used to analyze the value created with the system in the related business network. In theory, product-service systems have many potential benefits in comparison to product-oriented offerings; identifying the benefits in practice in a case study increases the understanding of product-service systems design and facilitate their application in the industry.