Product-Service Systems for Circular Supply Chain Management: A Functional Approach

Growing environmental concerns, as well as market competitiveness, are inciting manufacturers to optimize the performance of their products throughout their entire lifecycle. To address these objectives, manufacturing, field service engineering and customer support should be aligned and should strive towards the same end-goal. While several studies have revolved around this context, the product-service system (PSS) approach has emerged as a promising way of meeting manufacturer, customer and environmental requirements alike. Nevertheless, most of these studies revolve around the design and development of a PSS, whilst a minimal amount of research has targeted its impact from the supply chain perspective, leaving aside inventory management. Consequently, the following study utilizes functional hierarchy modeling (FHM) and the PSS concept matrix to propose solutions that make it possible to meet customer requirements and improve the environmental performance and associated costs at the same time. An application at a medical equipment manufacturer brings forward the positive effects suggested by the research and reduces the aforementioned gaps. In detail, the results show a smaller variability in the supply of spare parts combined with optimized maintenance planning, which translates into lesser costs to the manufacturer, a prolonged product life cycle and a reduced environmental impact.