Service-oriented manufacturing: A literature review and future research directions

Abstract

This study presents a systematic review of the literature on service-oriented manufacturing (SOM). Specifically, we focus on the impact of SOM on firm operating decisions, which distinguishes this work from previous reviews. This study proposes a classification framework for SOM research based on product flow, from its design to its final disposal. Although SOM has been studied for many years, most related research remains conceptual. Our criterion for choosing papers is that they must be relevant to practical problems. This review aims to provide readers a guide that will facilitate their search for papers in their field of interest. More importantly, we hope that this review can provide insightful managerial implications for SOM.

Graphical abstract

Keywords

service-oriented manufacturing / product– service systems / servitization / servicing / operations mana- gement

References

[1] Agrawal V V, Atasu A, van Wassenhove L N (2019). New opportunities for operations management research in sustainability. Manufacturing & Service Operations Management, 21(1): 1–12

[2] Agrawal V V, Bellos I (2017). The potential of servicizing as a green business model. Management Science, 63(5): 1545–1562

[3] Agrawal V V, Ferguson M, Toktay B, Thomas V (2012). Is leasing greener than selling? Management Science, 58(3): 523–533

[4] Agrawal V V, Kavadias S, Toktay B (2016). The limits of planned obsolescence for conspicuous durable products. Manufacturing & Service Operations Management, 18(2): 216–226

[5] Alev I, Agrawal V V, Atasu A (2020). Extended producer responsibility for durable products. Manufacturing & Service Operations Management, 22(2): 364–382

[6] Alexander A, Li Y, Plante R (2017). Sustaining system coordination in outsourcing the maintenance function of a process having a linear failure rate. IISE Transactions, 49(5): 544–552

[7] Atasu A, Sarvary M, van Wassenhove L N (2008). Remanufacturing as a marketing strategy. Management Science, 54(10): 1731–1746

[8] Atasu A, Souza G (2013). How does product recovery affect quality choice? Production and Operations Management, 22(4): 991–1010

[9] Atasu A, Subramanian R (2012). Extended producer responsibility for e-waste: Individual or collective producer responsibility? Production and Operations Management, 21(6): 1042–1059

[10] Atasu A, van Wassenhove L N (2012). An operations perspective on product take-back legislation for E-Waste: Theory, practice, and research needs. Production and Operations Management, 21(3): 407–422

[11] Atasu A, van Wassenhove L N, Sarvary M (2009). Efficient take-back legislation. Production and Operations Management, 18(3): 243–258

[12] Avci B, Girotra K, Netessine S (2015). Electric vehicles with a battery switching station: Adoption and environmental impact. Management Science, 61(4): 772–794

[13] Axsäter S (1990). Modeling emergency lateral transhipments in inventory systems. Management Science, 36(11): 1329–1338

[14] Baines T, Lightfoot H, Peppard J, Johnson M, Tiwari A, Shehab E, Swink M (2009). Towards an operations strategy for product-centric servitization. International Journal of Operations & Production Management, 29(5): 494–519

[15] Bardhi F, Eckhardt G M (2012). Access-based consumption: The case of car sharing. Journal of Consumer Research, 39(4): 881–898

[16] Barquet A P B, de Oliveira M G, Amigo C R, Cunha V P, Rozenfeld H (2013). Employing the business model concept to support the adoption of product–service systems (PSS). Industrial Marketing Management, 42(5): 693–704

[17] Bellos I, Ferguson M, Toktay L B (2017). The car sharing economy: Interaction of business model choice and product line design. Manufacturing & Service Operations Management, 19(2): 185–201

[18] Benedettini O, Neely A, Swink M (2015). Why do servitized firms fail? A risk-based explanation. International Journal of Operations & Production Management, 35(6): 946–979

[19] Benjaafar S, Hu M (2020). Operations management in the age of the sharing economy: What is old and what is new? Manufacturing & Service Operations Management, 22(1): 93–101

[20] Benyoussef Zghidi A, Zaiem I (2017). Service orientation as a strategic marketing tool: The moderating effect of business sector. Competitiveness Review, 27(1): 40–61

[21] Bertoni A, Larsson T (2017). Data mining in product service systems design: Literature review and research questions. Procedia CIRP, 64: 306–311

[22] Bhattacharya S, Gaba V, Hasija S (2015). A comparison of milestone-based and buyout options contracts for coordinating R&D partnerships. Management Science, 61(5): 963–978

[23] Bhattacharya S, Gupta A, Hasija S (2014). Joint product improvement by client and customer support center: The role of gain-share contracts in coordination. Information Systems Research, 25(1): 137–151

[24] Bhattacharyya S, Lafontaine F (1995). Double-sided moral hazard and the nature of share contracts. RAND Journal of Economics, 26(4): 761–781

[25] Boehmer J, Shukla M, Kapletia D, Tiwari M (2020). The impact of the Internet of Things (IoT) on servitization: An exploration of changing supply relationships. Production Planning and Control, 31(2–3): 203–219

[26] Brandstotter M, Knoth R, Kopacek B, Kopacek P (2003). Checklist for optimized design for re-use of printed wire boards and components. In: IEEE International Symposium on Electronics and the Environment. Boston, MA, 165–168

[27] Brax S (2005). A manufacturer becoming service provider-challenges and a paradox. Managing Service Quality, 15(2): 142–155

[28] Buyukkaramikli N C, van Ooijen H P G, Bertrand J W M (2015). Integrating inventory control and capacity management at a maintenance service provider. Annals of Operations Research, 231(1): 185–206

[29] Buzacott J A, Zhang R Q (2004). Inventory management with asset-based financing. Management Science, 50(9): 1274–1292

[30] Calabrese A, Levialdi Ghiron N, Tiburzi L, Baines T, Ziaee Bigdeli A (2019). The measurement of degree of servitization: Literature review and recommendations. Production Planning and Control, 30(13): 1118–1135

[31] Chan T H, de Véricourt F, Besbes O (2014). Contracting in medical equipment maintenance services: An empirical investigation. Management Science, 65(3): 1136–1150

[32] Condea C J, Thiesse F, Fleisch E (2010). Assessing the impact of RFID and sensor technologies on the returns management of time-sensitive products. Business Process Management Journal, 16(6): 954–971

[33] Corbett C J, DeCroix G A (2001). Shared-savings contracts for indirect materials in supply chains: Channel profits and environmental impacts. Management Science, 47(7): 881–893

[34] Corbett C J, DeCroix G A, Ha A Y (2005). Optimal shared-savings contracts in supply chains: Linear contracts and double moral hazard. European Journal of Operational Research, 163(3): 653–667

[35] Da Silveira G, Borenstein D, Fogliatto F S (2001). Mass customization: Literature review and research directions. International Journal of Production Economics, 72(1): 1–13

[36] Davies A (2004). Moving base into high-value integrated solutions: A value stream approach. Industrial and Corporate Change, 13(5): 727–756

[37] Demyttenaere K, Dewit I, Jacoby A (2016). The influence of ownership on the sustainable use of product-service systems: A literature review. Procedia CIRP, 47: 180–185

[38] Deng S, Gu C, Cai G, Li Y (2018). Financing multiple heterogeneous suppliers in assembly systems: Buyer Finance vs. Bank Finance. Manufacturing & Service Operations Management, 20(1): 53–69

[39] Desai P, Purohit D (1998). Leasing and selling: Optimal marketing strategies for a durable goods firm. Management Science, 44(11): S19–S34

[40] Desai P, Purohit D (1999). Competition in durable goods markets: The strategic consequences of leasing and selling. Marketing Science, 18(1): 42–58

[41] Deshpande V, Iyer A V, Cho R (2006). Efficient supply chain management at the US Coast Guard using part-age dependent supply replenishment policies. Operations Research, 54(6): 1028–1040

[42] Dong L, Tang S, Tomlin B (2018). Production chain disruptions: Inventory, preparedness, and insurance. Production and Operations Management, 27(7): 1251–1270

[43] Dong L, Tomlin B (2012). Managing disruption risk: The interplay between operations and insurance. Management Science, 58(10): 1898–1915

[44] Fang E, Palmatier R W, Steenkamp J (2008). Effect of service transition strategies on firm value. Journal of Marketing, 72(5): 1–14

[45] Ferguson M E, Toktay L B (2006). The effect of competition on recovery strategies. Production and Operations Management, 15(3): 351–368

[46] Gebauer H, Fleisch E, Friedli T (2005). Overcoming the service paradox in manufacturing companies. European Management Journal, 23(1): 14–26

[47] Ghosh D, Shah J (2012). A comparative analysis of greening policies across supply chain structures. International Journal of Production Economics, 135(2): 568–583

[48] Ghosh D, Shah J (2015). Supply chain analysis under green sensitive consumer demand and cost sharing contract. International Journal of Production Economics, 164: 319–329

[49] Gosling J, Naim M M (2009). Engineer-to-order supply chain management: A literature review and research agenda. International Journal of Production Economics, 122(2): 741–754

[50] Graves S (1985). A multi-echelon inventory model for a repairable item with one-for-one replenishment. Management Science, 31(10): 1247–1256

[51] Grubic T (2014). Servitization and remote monitoring technology: A literature review and research agenda. Journal of Manufacturing Technology Management, 25(1): 100–124

[52] Grubic T (2018). Remote monitoring technology and servitization: Exploring the relationship. Computers in Industry, 100: 148–158

[53] Gu W, Chhajed D, Petruzzi N, Yalabik B (2015). Quality design and environmental implications of green consumerism in remanufacturing. International Journal of Production Economics, 162(4): 55–69

[54] Guajardo J A, Cohen M A, Kim S, Netessine S (2012). Impact of performance-based contracting on product reliability: An empirical analysis. Management Science, 58(5): 961–979

[55] Guide Jr V D R, van Wassenhove L N (2009). The evolution of closed-loop supply chain research. Operations Research, 57(1): 10–18

[56] Gunasekaran A, Ngai E W (2005). Build-to-order supply chain management: A literature review and framework for development. Journal of Operations Management, 23(5): 423–451

[57] Haase R P, Pigosso D C A, McAloone T C (2017). Product/Service-system origins and trajectories: A systematic literature review of PSS definitions and their characteristics. Procedia CIRP, 64: 157–162

[58] Hamari J, Sjoklint M, Ukkonen A (2016). The sharing economy: Why people participate in collaborative consumption. Journal of the Association for Information Science and Technology, 67(9): 2047–2059

[59] Hasija S, Pinker E J, Shumsky R A (2008). Call center outsourcing contracts under information asymmetry. Management Science, 54(4): 793–807

[60] Hawken P (1993). The Ecology of Commerce: A Declaration of Sustainability. New York: Harper Collins Publisher

[61] He Z, Sun L, He Z, Li G (2008). Trend of service-manufacturing and differences between service-manufacturing network and SCM. Soft Science, 22(4): 77–81 (in Chinese)

[62] Holmstrom B (1982). Moral hazard in teams. Bell Journal of Economics, 13(2): 324–340

[63] Howe J (2006). The rise of crowdsourcing. Wired Magazine, 14(6): 1–4

[64] Huang X, Atasu A, Toktay L B (2019). Design implications of extended producer responsibility for durable products. Management Science, 65(6): 2573–2590

[65] Jain N, Hasija S, Popescu D (2013). Optimal contracts for outsourcing of repair and restoration services. Operations Research, 61(6): 1295–1311

[66] Jiang Z Z, Feng G, Yi Z (2021). How should a capital-constrained servicizing manufacturer search for financing? The impact of supply chain leadership. Transportation Research Part E: Logistics and Transportation Review, 145: 102162

[67] Jiang Z Z, He N, Qin X, Sun M, Wang P (2020). Optimizing production and maintenance for the service-oriented manufacturing supply chain. Annals of Operations Research, in press, doi: 10.1007/s10479-020-03758-7

[68] Jin T, Tian Y (2012). Optimizing reliability and service parts logistics for a time-varying installed base. European Journal of Operational Research, 218(1): 152–162

[69] Jin T, Wang P (2012). Planning performance-based contracts considering reliability and uncertain system usage. Journal of the Operational Research Society, 63(10): 1467–1478

[70] Jun H B, Shin J H, Kim Y S, Kiritsis D, Xirouchakis P (2009). A framework for RFID applications in product lifecycle management. International Journal of Computer Integrated Manufacturing, 22(7): 595–615

[71] Khorasani S T, Cross J, Maghazei O (2020). Lean supply chain management in healthcare: A systematic review and meta-study. International Journal of Lean Six Sigma, 11(1): 1–34

[72] Kim S H, Cohen M A, Netessine S (2007). Performance contracting in after sales service supply chains. Management Science, 53(12): 1843–1858

[73] Kim S H, Cohen M A, Netessine S (2017). Reliability or inventory? An analysis of performance-based contracts for product support services. In: Ha A, Tang C, eds. Handbook of Information Exchange in Supply Chain Management, vol. 5. Cham: Springer, 65–88

[74] Kim S H, Cohen M A, Netessine S, Veeraraghavan S (2010). Contracting for infrequent restoration and recovery of mission-critical systems. Management Science, 56(9): 1551–1567

[75] Kim S H, Wang S (1998). Linear contracts and the double moral-hazard. Journal of Economic Theory, 82(2): 342–378

[76] Kleindorfer P R, Saad G H (2005). Managing disruption risks in supply chains. Production and Operations Management, 14(1): 53–68

[77] Kohtamaki M, Hakala H, Partanen J, Parida V, Wincent J (2015). The performance impact of industrial services and service orientation on manufacturing companies. Journal of Service Theory and Practice, 25(4): 463–485

[78] Kowalkowski C, Gebauer H, Oliva R (2017). Service growth in product firms: Past, present, and future. Industrial Marketing Management, 60: 82–88

[79] Lafontaine F (1992). Agency theory and franchising: Some empirical results. RAND Journal of Economics, 23(2): 263–283

[80] Larsen M, Andersen A L, Nielsen K, Brunoe T D (2018). Modularity in product-service systems: Literature review and future research directions. IFIP Advances in Information and Communication Technology, 535: 150–158

[81] Li G, Sun L, Li J (2009). Origin, conception and value creation of service-embedded manufacturing. Science & Technology Progress and Policy, 26(13): 68–72 (in Chinese)

[82] Li M, Zhang H, Li Z, Tong L (2010). Economy-wide material input/output and dematerialization analysis of Jilin Province (China). Environmental Monitoring and Assessment, 165(1–4): 263–274

[83] Lightfoot H, Baines T, Smart P (2013). The servitization of manufacturing: A systematic literature review of interdependent trends. International Journal of Operations Production Research, 33(11/12): 1408–1434

[84] Lim M, Mak H, Rong Y (2015). Toward mass adoption of electric vehicles: Impacts of the range and resale anxieties. Manufacturing & Service Operations Management, 17(1): 101–119

[85] Lu Y (2017). Industry 4.0: A survey on technologies, applications and open research issues. Journal of Industrial Information Integration, 6(1): 1–10

[86] Mahut F, Daaboul J, Bricogne M, Eynard B (2017). Product-service systems for servitization of the automotive industry: A literature review. International Journal of Production Research, 55(7): 2102–2120

[87] Martínez A, Pascual R, Maturana S (2016). A methodology for integrated critical spare parts and insurance management. Applied Stochastic Models in Business and Industry, 32(1): 90–98

[88] Martínez V, Bastl M, Kingston J, Evans S (2010). Challenges in transforming manufacturing organizations into product-service providers. Journal of Manufacturing Technology Management, 21(4): 449–469

[89] Mastrogiacomo L, Barravecchia F, Franceschini F (2019). A worldwide survey on manufacturing servitization. International Journal of Advanced Manufacturing Technology, 103(9–12): 3927–3942

[90] Michalik A, Besenfelder C, Henke M (2019). Servitization of small- and medium-sized manufacturing enterprises: Facing barriers through the Dortmund Management Model. IFAC-Papers OnLine, 52(13): 2326–2331

[91] Muckstadt J A (1973). A model for a multi-item, multi-echelon multi-indenture inventory system. Management Science, 20(4): 472–481

[92] Neely A, Benedettini O, Visnjic I (2011). The servitization of manufacturing: Further evidence. In: 18th European Operations Management Association Conference. Cambridge: SERV3

[93] Nowicki D, Kumar U D, Steudel H J, Verma D (2008). Spares provisioning under performance-based logistics contract: Profit-centric approach. Journal of the Operational Research Society, 59(3): 342–352

[94] Nudurupati S, Lascelles D, Wright G, Yip N (2016). Eight challenges of servitization for the configuration, measurement and management of organizations. Journal of Service Theory and Practice, 26(6): 745–763

[95] Núñez-Merino M, Maqueira-Marín J M, Moyano-Fuentes J, Martínez-Jurado P J (2020). Information and digital technologies of Industry 4.0 and Lean supply chain management: A systematic literature review. International Journal of Production Research, 58(16): 5034–5061

[96] Ondemir O, Gupta S M (2014). Quality management in product recovery using the Internet of Things: An optimization approach. Computers in Industry, 65(3): 491–504

[97] Ondemir O, Ilgin M A, Gupta S M (2012). Optimal end-of-life management in closed-loop supply chains using RFID and sensors. IEEE Transactions on Industrial Informatics, 8(3): 719–728

[98] Öner K B, Kiesmuller G P, van Houtum G J (2010). Optimization of component reliability in the design phase of capital goods. European Journal of Operational Research, 205(3): 615–624

[99] Örsdemir A, Deshpande V, Parlaktürk A K (2019). Is servicization a win-win strategy? Profitability and environmental implications of servicization. Manufacturing & Service Operations Management, 21(3): 674–691

[100] Pierce L (2012). Organizational structure and the limits of knowledge sharing: Incentive conflict and agency in car leasing. Management Science, 58(6): 1106–1121

[101] Plambeck E, Wang Q (2009). Effects of e-waste regulation on new product introduction. Management Science, 55(3): 333–347

[102] Qian Y (2014). New industrial revolution and environmental protection. Frontiers of Engineering Management, 1(1): 71–75

[103] Qin X, Jiang Z Z, Ip W H, Sheng Y, Wu C H (2018). Analyzing manufacturer and the insurance-based risk mitigation policy with equipment service contracting. Enterprise Information Systems, 12(10): 1359–1381

[104] Qin X, Shao L S, Jiang Z Z (2020). Contract design for equipment after-sales service with business interruption insurance. European Journal of Operational Research, 284(1): 176–187

[105] Roels G, Karmarkar U, Carr S (2010). Contracting for collaborative services. Management Science, 56(5): 849–863

[106] Romano R (1994). Double moral hazard and resale price maintenance. RAND Journal of Economics, 25(3): 455–466

[107] Savaskan R, Bhattacharya S, van Wassenhove L N (2004). Closed-loop supply chain models with product remanufacturing. Management Science, 50(2): 239–252

[108] Schaltegger S, Hansen E G, Lüdeke-Freund F (2016). Business models for sustainability: Origins, present research, and future avenues. Organization & Environment, 29(1): 3–10

[109] Schifferstein H N J, Mugge R, Hekkert P P M (2004). Designing consumer-product attachment. In: Proceedings of the 3rd International Conference on Design and Emotion. London: Taylor & Francis, 327–331

[110] Schifferstein H N J, Zwartkruis-Pelgrim E P H (2008). Consumer-product attachment: Measurement and design implications. International Journal of Design, 2(3): 1–13

[111] Selviaridis K, Wynstra F (2015). Performance-based contracting: A literature review and future research directions. International Journal of Production Research, 53(12): 3505–3540

[112] Serpa J C, Krishnan H (2017). The strategic role of business insurance. Management Science, 63(2): 384–404

[113] Shafer S M, Smith H J, Linder J C (2005). The power of business models. Business Horizons, 48(3): 199–207

[114] Sheehan P J, Tegart G (1998). Working for the Future: Technology and Employment in the Global Knowledge Economy. Melbourne: Victoria University Press for the Centre for Strategic Economic Studies

[115] Sherbrooke C (1968). Metric: A multi-echelon technique for recoverable item control. Operations Research, 16(1): 122–141

[116] Shui C S, Szeto W Y (2020). A review of bicycle-sharing service planning problems. Transportation Research Part C: Emerging Technologies, 117: 102648

[117] Sleptchenko A, van der Heijden M C, van Harten A (2003). Trade-off between inventory and repair capacity in spare part networks. Journal of the Operational Research Society, 54(3): 263–272

[118] Srivastava S K (2007). Green supply-chain management: A state-of-the-art literature review. International Journal of Management Reviews, 9(1): 53–80

[119] Subramanian R, Gupta S, Talbot B (2009). Product design and supply coordination under extended producer responsibility. Production and Operations Management, 18(3): 259–277

[120] Sun L, Li G, Jiang Z, Zheng L, He Z (2007). Service-embedded manufacturing: Advanced manufacturing paradigm in 21st Century. China Mechanical Engineering, 18(19): 2307–2312 (in Chinese)

[121] Tang C S, Yang S A, Wu J (2018). Sourcing from suppliers with financial constraints and performance risk. Manufacturing & Service Operations Management, 20(1): 70–84

[122] Tarakci H, Tang K, Moskowitz H, Plante R (2006a). Incentive maintenance outsourcing contracts for channel coordination and improvement. IIE Transactions, 38(8): 671–684

[123] Tarakci H, Tang K, Moskowitz H, Plante R (2006b). Maintenance outsourcing of a multi-process manufacturing system with multiple contractors. IIE Transactions, 38(1): 67–78

[124] Tian L, Jiang B, Xu Y (2021). Manufacturer’s entry in the product-sharing market. Manufacturing & Service Operations Management, 23(3): 553–568

[125] Tranfield D, Denyer D, Smart P (2003). Towards a methodology for developing evidence-informed management knowledge by means of systematic review. British Journal of Management, 14(3): 207–222

[126] Tukker A (2004). Eight types of product-service system: Eight ways to sustainability? Experiences from SusProNet. Business Strategy and the Environment, 13(4): 246–260

[127] US Department of Commerce (2013). Advance Gross Domestic Product by Industry, 2012. Available at: bea.gov/news/2013/advance-gross-domestic-product-industry-2012

[128] Vandermerwe S, Rada J (1988). Servitization of business: Adding value by adding services. European Management Journal, 6(4): 314–324

[129] Wang H (2002). A survey of maintenance policies of deteriorating systems. European Journal of Operational Research, 139(3): 469–489

[130] Wang K, Jiang Z, Peng B, Jing H (2021). Servitization of manufacturing in the new ICTs era: A survey on operations management. Frontiers of Engineering Management, 8(2): 223–235

[131] Windahl C, Andersson P, Berggren C, Nehler C (2004). Manufacturing firms and integrated solutions: Characteristics and implications. European Journal of Innovation Management, 7(3): 218–228

[132] Wu X, Yang M, Gao X, Ba L (2011). Research on service-oriented manufacturing mode and operational framework. Industrial Engineering and Management, 16(2): 82–86, 91 (in Chinese)

[133] Xin Y, Ojanen V, Huiskonen J (2017). Empirical studies on product-service systems: A systematic literature review. Procedia CIRP, 64: 399–404

[134] Zhang W, Banerji S (2017). Challenges of servitization: A systematic literature review. Industrial Marketing Management, 65: 217–227

[135] Zheng P, Wang Z, Chen C H, Pheng Khoo L (2019). A survey of smart product-service systems: Key aspects, challenges and future perspectives. Advanced Engineering Informatics, 42: 100973

[136] Zhou D, Yan T, Zhao L, Guo J (2020). Performance implications of servitization: Does a manufacturer’s service supply network matter? International Journal of Production Economics, 219: 31–42

[137] Zhou G, Wang Y (2009). Research on service-oriented manufacturing model. Journal of Technology Economics, 28(2): 37–40, 128 (in Chinese)

[138] Zhou Z F, Liu J H, Zeng H, Xu M M, Li S (2021). Carbon performance evaluation model from the perspective of circular economy: The case of Chinese thermal power enterprise. Frontiers of Engineering Management, in press, doi: 10.1007/s42524-020-0143-z

[139] Zhu H, Djurjagina K, Leker J (2014). Innovative behavior types and their influence on individual crowdsourcing performances. International Journal of Innovation Management, 18(6): 1440015

[140] Zhu J, Li Y, Andrews M (2017). Ideator expertise and cocreator inputs in crowdsourcing-based new product development. Journal of Product Innovation Management, 34(5): 598–616

RIGHTS & PERMISSIONS

2021 Higher Education Press