Differences in forecasting approaches between product firms and product-service systems (PSS)

Abstract

This paper examines the forecasting implications for Product-Service Systems (PSS) applications in manufacturing firms. The approach taken is to identify the scope of operations for PSS applications by identifying all the activities associated with the total cost of ownership (TCO). The paper then develops a revenue model for manufacturing firms providing PSS applications. The revenue model identifies three generic revenue streams that provide the basis for discussion on the differences in forecasting approaches between product firms and Product-Service Systems (PSS) in manufacturing firms. The forecasting approaches are different due to the nature of customer involvement in the service aspect of PSS applications. This necessitates an understanding of the customer service experience and the factors affecting this such as the service profit chain which links profitability, customer loyalty and service value to employee satisfaction, capability and productivity. The forecasting approaches identified raises forecasting challenges for each of the three generic revenue sources. These challenges vary from the difficulty in obtaining the service user’s viewpoint through to difficulties in determining market acceptance of PSS applications.