An Integrated Product Service Engineering Methodology for Small Businesses in the Manufacturing Industry
Editor: Ekströmer, Philip; Schütte, Simon and Ölvander, Johan
Author: Johansen, Kerstin; Rönnbäck, Anna Öhrwall; Tynnhammar, Marcus
Institution: Linköping University, Luleå University of Technology
Manufacturing processes constantly improve with automation solutions, in order to enhance production efficiency, effectiveness, and improved ergonomic solutions. The aim of this paper is to explore the transition of small automation suppliers or integrators into offering product service systems (PSS) through guidance by the Integrated Product Service Engineering (IPSE) methodology. It reports results from a longitudinal investigation of small companies providing solutions for industrial automation and digitalization, in an industrial cluster, where the IPSE methodology was applied. As the era of digitalization and smart industry emphasizes automation and robotisation of the manufacturing industry, the importance of such automation suppliers or integrators increases. There is for example a risk that small manufacturers are left behind due to the high investments needed; the studied small automation suppliers or integrators then can tailor “right automation”. Their customers are both large and small manufacturers. They are known to develop cost-efficient and innovative solutions, in close dialogue with customers. These solutions, developed and tested in the small firms’ workshop facilities with build-and-test laboratories, are rooted in their deep knowledge of manufacturing processes, mechatronics, robotics, control systems, and interface programming. By articulating value-added business offerings as PSS, the small automation suppliers or integrators could develop agreements ensuring increased win-win opportunities for both customers and automation providers, i.e. also their partners and suppliers. The paper presents how the IPSE methodology can facilitate the transition from traditional product or service selling to PSS offerings for the small automation suppliers or integrators studied. The common denominating challenge for the firms in this niche was based on classical business limitations due to smallness. Being a small supplier towards larger customers, negotiation for price and payment dates are difficult; towards small manufacturing firms, the challenge instead being to be able to address the customer company’s lack of investment possibilities. State of practice for the focal firms at the setting out of the study was an unclear business position, with unclear value proposition and fluctuating financial results. The applied IPSE method includes integrated business and technology development and, in the adapted version presented in this paper, addresses especially the liability of smallness that the automation suppliers were suffering from, such as contractual issues, and the articulation of value for the larger market towards their customers, which may be both small and larger manufacturers. The result was a transition from being regarded as stand-alone automation supplier companies towards becoming automation service providers (ASPs).