clarifying the concept of product–service system

Journal of Cleaner Production 10 (2002) 237–245www.cleanerproduction.net

Clarifying the concept of product–service system

O.K. MontThe International Institute for Industrial Environmental Economics at Lund University, P.O. Box 196, Tegnersplatsen 4, SE-221 00 Lund,

Sweden

Received 29 January 2001; accepted 20 June 2001

Abstract

A new trend of product–service systems (PSSs) that has the potential to minimise environmental impacts of both production andconsumption is emerging. This article attempts to build a theoretical framework for PSS and serves as a background for identifyingpossible investment needs in studying them. There are three main uncertainties regarding the applicability and feasibility of PSSs:the readiness of companies to adopt them, the readiness of consumers to accept them, and their environmental implications. Themain finding is that successful PSSs will require different societal infrastructure, human structures and organisational layouts inorder to function in a sustainable manner. 2002 Elsevier Science Ltd. All rights reserved.

Keywords: Product–service systems; Sustainability; Functional economy

1. Introduction

Sustainable production and consumption is an issue ofcurrent international concern. Many different approachesand concepts have been developed over the last decadesto address environmental problems, such as cleaner pro-duction, cleaner technologies, waste minimisation andrecycling approaches, eco-design and design for sus-tainability. However, a new strategy is called for in orderto stimulate the change in current production and con-sumption patterns.

Rising levels of consumption by the rich and doublingof the world’s population over the next 40–50 yearswould require a factor 4 increase in food production, afactor 6 increase in energy use and at least a factor of8 of growth income [1]. It is estimated that by the middleof this century, resource productivity must haveimproved by a factor of 10.1 This can be done by reduc-ing the population, lowering the level of consumption orchanging technology. The first option does not seem tobe feasible in the short term. Decreasing consumptionlevels does not appear to be a simple option eitherbecause, on the one hand, people from industrialised

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1 This means reductions of 90% compared to current levels.

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countries do not show any obvious willingness to mini-mise consumption and, on the other hand, there is a needto increase consumption levels in developing countriesin order to provide basic amenities.

Recent thinking has focused on ‘dematerialising’ theeconomy — reducing the material flows in productionand consumption; creating products and services thatprovide consumers with the same level of performance,but with an inherently lower environmental burden. Sev-eral authors have proposed the concept of product–ser-vices — providing utility to consumers through the useof services rather than products — as a possible exampleof a strategy for dematerialisation and a possible answerto the sustainability challenge. However, so far, littleattention to this concept has been given at policy andoperational levels.

The goal of this article is to contribute to building atheoretical background about the concept, and to stimu-late debate about the sufficiency of existing efforts atacademic and company levels.

2. Functional economy

At the turn of the millennium we are witnessing anescalation of service economies with society experienc-ing a transition from mass-production to flexible pro-duction. A service economy is defined as one in which

238 O.K. Mont / Journal of Cleaner Production 10 (2002) 237–245

more than half of the total labour force is employed bythe service sector [2]. Approximately 70% of all workersin highly industrialised countries are employed in indus-tries commonly thought of as services: communications,transportation, health care, education, wholesale andretail redistribution, and financial services. This new,more service-oriented model of manufacturing growthhas key competitive factors such as the capability forcontinuous innovation, improved design and quality andcustomised goods, rather than the production of largevolumes of standardised products.

What are the drivers of such structural change in oursociety? Some of the shifts in composition of output andemployment depend, of course, on demographic factors.The environment itself has become a force for structuralchange. The industrial revolution, which shaped thedevelopment of the 20th century, worked by its ownrules, at odds with those of the natural world. Resourceswere viewed as inexhaustible and the ecosystem as aninfinite ‘sink’ for wastes. As the troubling symptoms ofenvironmental decline have emerged, fundamental ques-tions have been raised about the environmental profileand sustainability of existing industries. However, ser-vices have generally escaped this critical concern, beingconsidered as less environmentally harmful.

Services have an increased share within the manufac-turing industry [3]. The traditional boundary betweenmanufacturing and services is becoming increasinglyblurred. Of the employees that are working in traditionalmanufacturing industries, 65–75% perform service tasksranging from production-related activities like research,logistics (transportation), planning, and maintenance, aswell as product and process design, to the all-supportiveservices existing at any company (e.g. accounting,financing, law services and personnel functions).

The role of services in providing value is ever moreimportant. Not long ago, most of a product’s added valuecame from the production processes that transformedraw materials into products. Now, added value is createdby technological improvements, intellectual property,product image and brand names, aesthetic design andstyling; all non-material aspects of products. These helpproducers to differentiate and diversify their products tobetter respond to customers’ demands — the so-calledmove from mass production to customised productionor mass customisation. Therefore, there is an increasedinterest among manufacturers in adding value throughthe provision of services that extend the spectrum oftheir products. Thus ‘services’ extend into every part ofthe value chain.

The concept of a service society as a means of achiev-ing sustainable development was proposed by Stahel [4].He advocated the need to distinguish between industrialeconomy and service-oriented economy. Industrial econ-omy places the central value on the exchange of the pro-ducts that are consumed. The service economy, on the

contrary, recognises the value of utilisation, a perform-ance driven orientation where the consumer pays for util-isation of the product. Therefore, the service economyis often referred to as functional economy, in which bothproduct and technology are mere modes of providingfunction. The idea of functional economy rests upon thenotion that function is the key to customers’ satisfaction,not products per se. In a functional economy, consumersare buying mobility instead of cars, cleaning servicesinstead of washing powders and movies instead of vide-ocassettes [5], [6], [7]. A functional economy has thepotential to be more environmentally benign because itaddresses current levels of material/resource consump-tion, seeking options that may provide function/serviceto consumers without minimising their level of welfare.But realisation of this potential is not automatic.

In a functional economy, the role of the manufactureris shifted towards provision of services [8]. Stahel notesthat a functional economy “optimises the use (orfunction) of goods and services and thus, the manage-ment of existing wealth (goods, knowledge, and nature).The economic objective of the functional economy is tocreate the highest possible use value for the longest poss-ible time while consuming as few material resources andenergy as possible” [9]. In the functional economy,material products are treated as capital assets rather thanas consumables, thus increasing value-added services toprolong the product’s life and minimise loss ofresources.

Present economies are mostly service economies satu-rated with products reinforced by services and someexamples of alternative systems of product use. Empiri-cal studies have indicated that even in industrialisedcountries with a high level of consumption, the pen-etration of new products and services is of more comp-lementary nature rather than substitutional [10].

3. What is a product–service system?

The term “product–service systems” (PSSs) has beendefined as “a marketable set of products and servicescapable of jointly fulfilling a user’s need. Theproduct/service ratio in this set can vary, either in termsof function fulfilment or economic value” [11]. Thus,more traditional material intensive ways of product util-isation are replaced by the possibility to fulfil con-sumers’ needs through the provision of more dematerial-ised services, which are also often associated withchanges in the ownership structure. Various approachesand trends towards the development of PSS can be out-lined:

� the sale of the use of the product instead of the pro-duct itself [12];

� the change to a ‘ leasing society’ [13];

239O.K. Mont / Journal of Cleaner Production 10 (2002) 237–245

� the substitution of goods by means of servicemachines [14];

� a repair-society instead of a throw-away society [15];� the change in consumer attitudes from sales to ser-

vice orientation.

Jansen and Vergragt have been working on the conceptof sustainable product systems that crosses companyboundaries and includes all stakeholders in the process[16]. Manzini proposes the idea of strategic design as anew approach for companies to engage in an increas-ingly ‘ turbulent’ market. Strategic design focuses thedesign process on an integrated body of products, ser-vices and communications, as a model for companies toaddress changes in technology and social and consumerattitudes [17].2

The aforementioned efforts obviously provide onlyparts of the solution. Each of these approaches is a separ-ate element of a PSS, with its own strong and weak sidesand limitations and possibilities to minimise environ-mental impact. However, when one is to integrate theminto a system, sub-optimisation might occur and overallenvironmental impact might not necessarily be reduced.Therefore, there is a need for a PSS, where the mainfocus on system solution is important. Understanding thedifference between service and product is not relevantfrom an environmental point of view, since both gener-ate environmental impacts. The challenge with the newapproach lies in developing system solutions, where bitsand pieces fit together, integrated into a system of peoplesatisfaction. Such system-based solutions should facili-tate the shift from separate systems of producing andconsuming to a system, in which products, services, sup-porting infrastructure, and necessary networks aredesigned so that to provide a certain quality of life toconsumers and, at the same time, minimise environmen-tal impacts of the system.

Thus, a PSS should be defined as a system of pro-ducts, services, supporting networks and infrastructurethat is designed to be: competitive, satisfy customerneeds and have a lower environmental impact than tra-ditional business models.

For consumers, PSSs mean a shift from buying pro-ducts to buying services and system solutions that havea potential to minimise the environmental impacts ofconsumer needs and wants. This requires a higher levelof customer involvement and education by producers.

For producers and service providers, PSSs mean ahigher degree of responsibility for the product’s full lifecycle, the early involvement of consumers in the designof the PSS, and design of the closed-loop system.

2 See also the development of this idea in the handbook of the Mas-ters of Strategic Design, Politechnico di Milano(www.mip.polimi.it/mds).

For both consumers and producers, PSSs mightsometimes involve a change in property rights. In gen-eral, PSSs are likely to give more attention to the usephase of the product’s life cycle (consumer stage), thancurrent product systems do.

A paramount goal of product–service systems shouldbe to minimise the environmental impact of consump-tion by:

� closing material cycles;� reducing consumption through alternative scenarios

of product use;� increasing overall resource productivity and demateri-

alisation of PSSs;� providing system solutions seeking the perfection in

integrating system elements along with improvingresource and functional efficiency of each element.

The concept of a PSS in this interpretation is still theor-etical. Examples of some PSS elements can be found insome companies, mainly driven by business and econ-omic considerations, and therefore, environmental poten-tial of such PSS elements has not been yet evaluated.

4. Why a product–service system?

4.1. Benefits

The PSS concept has the potential to bring about suchchanges in production and consumption patterns thatmight accelerate the shift towards more sustainable prac-tices and societies. According to some authors, the con-cept might be promising for commercial companies,governments, and customers [18].

4.1.1. For companiesUnderstanding PSSs provides the opportunity to see

strategic new market opportunities, market trends anddevelopments and potentially to stay competitive as pat-terns of production and consumption are transformed byenvironmental limits. The concept of a PSS facilitatesinnovation at a more than incremental level and has thepotential to bring financial benefits.

Some companies are employing elements of PSSs asa natural extension of their existing offers to customers.Others see it as a survival strategy where the applicationof a PSS is seen as the centre of a new business plan.Usually such companies are forerunners and see theopportunity of being first on the market as a basis forsurvival.

There are different benefits to developing a PSS formanufacturing and service companies.

For manufacturing companies a service componentadds/allows:


� To attach additional value to a product, for example,financial schemes or refurbishing or upgrading.

� To base a growth strategy on innovation in amature industry.

� To improve relationships with consumers because ofincreased contact and flow of information about con-sumers’ preferences.

� To improve the total value for the customer becauseof increased servicing and service components, whichinclude activities and schemes that make the existingproduct last longer, extend its function (upgrading andrefurbishment), and make the product and itsmaterials useful after finishing its life cycle (recyclingand reuse of parts or entire product).

� To anticipate the implications of future take-backlegislation, and might have the potential to turn theminto a competitive advantage.

For service companies, product components:

� Extend and diversify the service.� Safeguard market share by bringing the service

component into the offer that is not so easy to copy.� Facilitate communicating product–service infor-

mation, because it is easier to convey informationabout more tangible products than about intangibleservices [19].

� Safeguard a certain level of quality that is difficult tochange (product quality).

4.1.2. For government and societyUnderstanding PSSs can therefore, help to formulate

policies that promote sustainable patterns of consump-tion and sustainable lifestyles. PSSs have the potentialto offer a new way of understanding and influencingstakeholder relationships and viewing product networks,which may facilitate development of more efficient poli-cies.

At the same time, it is expected that the promotion ofadded services or substitutes of products and alternativeschemes of product–service use can assist in the creationof new jobs. The functional economy might be more lab-our-intensive than an economy based on mass pro-duction and throwaway patterns of consumption. Morejobs per unit of material product might be createdbecause of such labour-intensive services as take backsystems, repair, refurbishment, or disassembly. Withtime, however, these services might become large-scaleoperations that will require automatisation, and whichmay decrease employment.

4.1.3. For consumersConsumers benefit from a PSS because they receive

greater diversity of choices in the market; maintenanceand repair services; various payment schemes; and the

prospect of different schemes of product use that suitthem best in terms of ownership responsibilities. Con-sumers get added value through more customised offersof a higher quality (from the product/service per se andthe delivery/provision). The service component, beingflexible by nature, induces new combinations of productsand services, better able to respond to changing needsand conditions. Consumers may be releaved from theresponsibility for a product that stays under ownershipof a producer for its entire life span. Through PSSs, con-sumers may more easily learn about environmental fea-tures of products and how they can contribute to min-imising the environmental impacts of consumption.

4.1.4. For the environmentA PSS has the potential to decrease the total amount

of products by introducing alternative scenarios of pro-duct use, for example, sharing/renting/leasing schemesto consumers, however, not affecting design of the pro-ducts. With PSS, producers become more responsible fortheir product–services in case material cycles are closed.Producers are encouraged to take back their products,upgrade and refurbish them and use them again. In theend, less waste is incinerated or landfilled.

The PSS approach changes the price cost systems ofthe present economy because “ the costs of productionare only a very small part of the costs involved in mak-ing a product available to the customer” [20]; consumersdo not pay for material goods but for intangible services.This can amplify the technical development of demateri-alisation, which is already an on-going process [21].

4.2. Drivers

The drivers for the development of PSS have largelybeen canvassed in previous sections. PSSs more appro-priately respond to the demands of today than existingsystems of mass production. This is an evolution of theeconomic transition away from standardised and massproduction towards flexibility, mass-customisation andmarkets driven by quality and added value rather thancost. Core competencies, rather than physical assets,increasingly define leadership of companies on the mar-ket.

Improved competitiveness through improved environ-mental performance is also named among the drivers ofthe shift from selling products to provision of services.Others include legislative threats, particularly relating toextended producer responsibilities (EPR), and con-sumers behaviour/demands [22].

There are certain conditions under which developmentand application of PSS might be profitable [18]. First ofall, PSS will be profitable if the costs of use and disposalphases (and the collection of end-of-life products) areinternalised. The development of a proper PSS with anefficient take back system could stimulate consumers to


return products. The second condition is if the product,at the disposal stage, has a high market value. The thirdcondition of a profitable PSS is when an alternative scen-ario of product use generates additional profit (or reducesa current cost). For example, the legislation requires thata producer of a chemical takes care of her/his chemicalsafter they are sold. In this case, product ‘maintenance’ ,becomes an additional cost. If the producer, instead ofselling the chemical, provides its function, it becomes aprofit generator and a stimulus to minimise the consump-tion of the chemical, which is beneficial for the consumeras well. Thus, it appears that one of the most importantexternal drivers for a company is supplier development.

5. Product–service system elements

The study of literature on product–services and eco-efficient services, and communication with experts andresearchers working with PSS revealed a clear lack ofcommon understanding of PSS elements. The followingfigure provides a list of the main PSS elements, whichmay provide a common term of reference for studyingand designing PSSs (Fig. 1).

1. A PSS may consist of products, services, or variouscombinations of them. Products substituted by ser-vices are largely an ideal category without many prac-tical or consistent examples, because any service,even nonmaterial per se, requires material or energyinputs.

2. Services, at the point of sale, comprise personalassistance in shops, financial schemes provided tocustomers, explanations about product use and, ofcourse, marketing.

3. Different concepts of product use consist of two cat-egories: use oriented, where product utility isextracted by the user, and result oriented, where pro-duct utility is extracted by the utility provider forthe user.

4. Maintenance services include servicing of products

Fig. 1. Classification of a product–service system.

with the goal of prolonging product life cycle, com-prising maintenance and upgrading.

5. Revalorisation services include offers that aim at clos-ing the product material cycle by taking productsback, secondary utilisation of usable parts in new pro-ducts and recycling of materials if reuse is not feas-ible.

Thus, PSSs consist of a combination of eco-designedproducts, reinforced by designed services at differentstages of a product’s life cycle, and comprising differentconcepts of the product use (both use and result oriented,depending on the logistics and ultimately environmentalprofile of the PSS), closely involving final consumersand actors in the chain and beyond.

6. Characteristics of product–service systems

6.1. The role of producers

The successful development of a PSS requires thatmanufacturers and service providers extend theirinvolvement and responsibility to phases in the lifecycle, which are usually outside the traditional buyer–seller relationship, such as take back, recovery, reuse andrefurbishment and remanufacturing. Usual responsi-bilities for products are extended through the additionalor deepened responsibility for service, including theresponsibility for proper organisation of take backarrangements and systems for reuse, remanufacturingand recycling and for educating consumers aboutefficient product use. Reduced material flow alsorequires a stronger co-operation with suppliers. Infor-mation and economic benefits from the service provisionstage (consumer stage) can be easily transferred to themanufacturing, development/design stage, thus the entiresystem becomes more responsive to changing marketparameters and is probably inherently more likely tostimulate innovation.


6.2. The role of consumers

The relationship between the company and a customerplays a key role if the PSSs are to be designed and runeffectively. Some proactive companies have startedworking more closely with their customers, who thenhave depended on them for many types of information,including environmental. In turn, these companies oftenhave early insights into consumer tastes, preferences andregional buying habits. Thus, such companies play acritical role in both satisfying and creating consumerpreferences for goods and services, including theirenvironmental dimensions.

6.3. Organisational basis for product–service systems

Companies that are pursuing the concept of PSSs willneed to change traditional structures, regardless ofwhether they are manufacturing or service organisations.Close co-operation with consumers extends the role ofthe marketing division. Information management willplay an increasing role in improving organisationalefficiency and customer communication. As product–service development occurs during interaction with theconsumer, the structure of decision making is likely tobe more decentralised.

The extended involvement of the organisation withother companies leads to intra-organisational changesthat include performance indicators and the demand forhuman capital. These intra-organisational changes mod-ify the relationships between the business functionswithin the company. Inter-organisational changes, suchas a closer interaction with other actors in the product–service chain and outsourcing, may create the demandfor intermediates.

New networks may need to be established in order todevelop PSSs. These can be research networks that caninvestigate market changes and consumer preferences;information-sharing networks developed to share infor-mation that is relevant for entire product chains or theindustry sector; or regional or sectoral networks thatbring together industries located in the same region orrepresenting the same sector to exchange the best prac-tices, set levels of performance or exchange by-productsor wastes.

6.4. Design particularities

There are few examples of design projects/attemptswhere an entire PSS is re-designed. The design method-ology of the entire PSS will probably differ from theproduct design methodology due to a following numberof reasons:

� Designing a PSS requires close integration of allactors within the life cycle of a product–service. Tight

integration, especially between the service and manu-facturing organisations, is more likely to permit theclear ‘ transmission’ of the economic incentives,allowing service activities to drive manufacturing ordesign changes.

� Schemes for taking back products at the end of theirlife, as well as all necessary arrangements with busi-ness partners, should be focused on ensuringmaximum closing of the product flow and reductionof transport distances.

� Alternative scenarios of product use could be ana-lysed and the range of these scenarios may bepresented to the consumer, providing information oneconomic and environmental features of the PSS.

� Marketing strategies could be developed in ways thatteach and promote an environmentally and sociallymore acceptable way of function fulfilment. Theycould include communication campaigns duringwhich the producer would provide consumers withinformation and presentations about utilising her/hisproducts most efficiently.

� Alternative scenarios of servicing the products couldalso be given at the point of sale to ensure the properproduct exploitation during the use phase.

6.5. Environmental profile

Services are not necessarily less environmentallyproblematic than manufacturing industries, but in aneconomy in which they dominate and serve as some ofthe most dynamic drivers of change, it is important toexamine them directly in search for opportunities to haltenvironmental degradation and to improve their environ-mental quality. PSSs are focused on addressing the usephase to reduce the total environmental burden of con-sumption. However, there is a need to consider carefullythe impact of other phases such as production and post-production activities.

What are the possibilities to reduce environmentalburdens with a PSS? The following can be deduced fromthe discussion so far:

� The environmental impacts of the use phase comefrom the efficiency of each unit of function deliveredand the total amount of a delivered service. Thedesign of PSSs can provide an incentive to manufac-turers to design products that are more efficient intheir use phase only when the producer will be payingfor the environmental effects and resource consump-tion during this phase, that is, when the conditionsinternalise use-related environmental costs.

� A number of ecological advantages can arise from thesale of services. For instance, it may encourage theproducers’ interest in the reuse and increase of therecyclability rate of products. The services could


include new, used and refurbished products. Ideally,this could lead to completely closed product cyclesunder the responsibility of the manufacturers.

� The substitution of energy and materials with efficientservices may influence overall resource consumption.Increasing the intensity of use, if products are sharedor used jointly, may potentially minimise the totalnumber of products and the capacity for use can bemore fully realised resulting in greater resourceefficiency and less impact on the environment.

� If the operation of the product–service is a cost forthe company that has internalised it, the producermight be interested in providing maintenance thathelps to extend product life and thus reduce the quan-tity of the product required for delivering the servicethat is less product per unit of services and thus lessenvironmental burden.

In order to assess the environmental performance ofPSSs, there is a need to develop criteria that could reflectthe life span of a product, efficiency of resource con-sumption, closed cycle efficiency and potential forimprovement.

7. Barriers for product–service systems

The concept of PSSs is still being developed, but hasalready been suggested as a possible scenario of movingtowards more sustainable production and consumptionsystems. It, therefore, is important to examine all con-ceivable barriers to its development, application and con-tinuous betterment.

� It may be difficult to develop scenarios of alternativeproduct use because they often include elements thatare situated between production and consumption(sales) and several stakeholders may need to beinvolved in designing both the product and the ser-vice system.

� A social system or infrastructure that would accept orsupport the suggested product–service scenarioshould be found. If such a system does not exist, acompletely new infrastructure or network might needto be designed that can support the environmentallybenign performance of the new product.

� PSSs, require from their producer, close co-operationwith suppliers and service producers or final con-sumers. While relationships with suppliers areaddressed by ISO 14000-series standards andenvironmentally conscious purchasing practices,downstream practices are addressed by EPR and Pro-duct Stewardship concepts. Integrated Chain Manage-ment specifically addresses the issue of involving sev-eral actors in order to improve the environmentalperformance of products. However, problems associa-

ted with ICM are also going to be relevant for PSSsdue to similar value chain basis, that is extended inPSSs into a value network. These problems includetrade-offs between co-operation and internal environ-mental management; the problem of choosing wrongactors who do not have the power to change or influ-ence events; information sharing and transparencyand barriers from material flows crossing borders anda variety of regulatory frameworks in different coun-tries.

� Although, ideally, ownerless consumption offersmany advantages and hopes, it has its own problems.For instance, studies conducted reveal that the mul-tiple use does not automatically lead to less impacton the environment [23]. The environmental impactdepends, to a large extent, on the circumstances,schemes and conditions of use. Leasing, for example,can promote use of products which otherwise wouldnot be affordable for customers. Without the optionof leasing, the purchase could have to be postponedto a later date. On the other hand, leasing can facilitatethe return of old appliances since the duration of useis monitored and they are returned after the lease hasrun out, if the purchase option is not executed. Thiscould strengthen the manufacturers’ interest in theirown products and could improve the economic con-ditions for a closed cycle economy.

� Changing systems and sources of gaining profit coulddeter producers from employing this concept. Wherepoint-of-sale becomes a point-of-service that operatesover an extended period of time, traditional incentivescan fail to reflect the real drivers of profit for the firm.A particular problem is the changeover from short-term profit realisation at the point-of-sale to medium-and long-term amortisation periods at the point-of-service. Moreover, another characteristic of PSSs thataffects the usual ways of gaining profits is the possi-bility of raising revenue and getting profit not throughsales but through efficiency provision (energy ser-vices; Demand Side Management and Chemical Man-agement Services).

� The resistance of companies to extend involvementwith a product beyond point-of-sale and historicalpractice has been identified as a major barrier toincreased manufacturer responsibility for environ-mental impacts of products [24]. The extendedinvolvement leads to intra-organisational and inter-organisational changes, such as closer interaction withother actors in the product–service chain. This hap-pens partially due to inertia and fear of innovations.

� The reorientation of companies towards PSSs requiresa fundamental shift in corporate culture and marketengagement, which, in turn, requires time andresources to facilitate the shift. Changing the orien-tation of the company from product to service salemeans also changing the traditional marketing con-


cepts. This is often met with psychological barriersin companies.

� It is quite difficult to trace the shift in service ormanufacturing industries because of differences inhow services are reported in national and internationalstatistics.3 For example, in manufacturing companies,human resources, canteens and medical care centresfor workers may be included as services or as manu-facturing departments.

� Adding environmental considerations to the productdevelopment cycle is often seen as lengthening thetime to market. This is even more so if the entire PSSshould be designed with criteria of environmentalefficiency in mind.

� Consumers might not be very enthusiastic about own-erless consumption. Numerous examples of practicalapplications of product–service ideas in the commer-cial sector did not facilitate operationalisation in theprivate market [9]. The successful models such as carsharing are still limited to small market niches.

� Customers’ demands and purchasing behaviourappears to be potentially more complicated thanexpected. The assumptions that the customer is moreinterested in use rather than the ownership [25] or islooking for the use rather than the product itself doesnot represent current reality.

8. Conclusions

An important conclusion is that there are manyexamples that illustrate parts of the solution (eco-design,optimisation of distribution, product customisation,added services, take-back systems, remanufacturing, andrecycling), but there are few examples of complete PSSsthat are being designed on a life cycle basis in compa-nies. The companies often lack a system approach.Another reason for such a limited application of PSSsin companies is the fact that the PSS is a new area andeven at the academic level PSSs have not yet been stud-ied and shaped for practical applications. Therefore, anumber of uncertainties concerning the characteristics ofthe PSSs can be highlighted. These uncertainties can becombined into three main categories:

� Readiness to adopt the PSSs into a company’s stra-tegic decisions. The shift from selling products to pro-viding PSS entails substantial changes in the compa-nies’ structure and organisational frameworks,production and marketing strategies, as well as their

3 This problem was recognised and discussed at the World ServiceCongress’99 with Ms Gunnel Mohme, the Head of the Service Busi-ness Unit at Svenska Industriforbundet.

relationships with stakeholders. Few studies haveevaluated the profitability of PSSs for companies,although present economic difficulties within somecompanies serve as a counter-argument to the out-come of the evaluation.

� Readiness to accept the PSSs by consumers. Littleresearch has been conducted on evaluating the com-petitiveness of PSSs and their profitability for con-sumers.

� Environmental characteristics of PSSs are also not yetstudied. A number of studies evaluated the environ-mental features of particular stages and activities,such as remanufacturing and take back as favourable.On the other hand, other studies showed that environ-mental characteristics of, for example, eco-servicesshould be accounted for carefully, because they arenot always preferable in comparison to products.

The results of the study provide a background for settingfuture research directions. There is a need to furtherexplore the design side of PSSs and to develop a metho-dological basis for their development, practicalimplementation and evaluation of economic, environ-mental and social consequences.

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[13] Braungart M. Die Leasinggeselschaft — unverkaufliche Pro-dukte, Gebrauchsguter, Verbrauchsguter. In: B.A.U.M., editor.Mit Umweltschutz zum Gewinn fur die Wirtschaft und dieUmwelt. Kongreß Reader. Hamburg, 1991. p. 109–22.

[14] Schmidt-Bleek F. Wieviel Umwelt braucht der Mensch?‘MIPS — Das Mass fur okologisches Wirtschaften’ . Boston: Bir-khauser Verlag, 1994.

[15] Blau E, Wei N, Wenisch A. Die Reparaturgesellschaft — dasEnde der Wegwerfkultur. Wien, 1997.

[16] Jansen L, Vergragt P. Sustainable technology development vision(Key to sustainable prosperity). The Hague, 1997.

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[18] White, AL, Stoughton, M, Feng L. Servicizing: the quiet tran-sition to extended product responsibility. Report Submitted to USEnvironmental Protection Agency, Office of Solid Waste, 1999.

[19] This was shown in Schneider A. Environmental declarations asa communication tool for IT-services: the case of Telia. Mastersthesis. IIIEE, Lund (Sweden), 1999.

[20] Giarini O, Liedtke P. The employment dilemma and the futureof work. Alternative title: working in the new (service) economy.The final draft of the report to The Club of Rome, 1998:140.

[21] Hinterberger F, Luks F. Demateralization, employment and com-petitiveness in a globalized economy. Wuppertal Institute for Cli-mate, Environment and Energy. Paper prepared for the plenarysession of the Fifth Biennial Conference of the InternationalSociety for Ecological Economics (ISEE) ‘Beyond Growth: Poli-cies and Institutions for Sustainability’ , 1999:9.

[22] Goedkoop MJ, van Halen CJG, te Riele HRM, Rommens PJM.Product service systems, ecological and economic basis. TheReport No. 1999/36 submitted to Ministerje van Volkshuisvest-ing, Ruimtelijke Ordening en Milieubeheer, 1999:22–5.

[23] Krutwagen B. for van Kampen M. Eco-services for sustainabledevelopment. Paper presented at the IIIEE Network — The FirstGlobal Experience Sharing Conference, 1999 Sept 24–26.

[24] Stoughton M, Shapiro K, Feng L, Reiskin E. The business casefor EPR: a feasibility study for developing a decision-supporttool. Boston (MA): Tellus Institute, 1998.

[25] Braungart M, Engelfried J. The intelligent product system. BullEPEA, Hamburg 1993:36.

clarifying the concept of product–service system

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