RQ3: What are the benefits of a Product-service system (PSS) to the PSS providers and consumers?

Answer RQ3:

Potential benefits of PSS (Theoretical research)

According to the literature review, many researchers mentioned that PSS is a procurement strategy that could directly contribute to a circular economy. PSS not only brings about economic and environmental benefits but also provides various additional benefits to PSS providers and consumers (CRE). Environmental sustainability is a major benefit to PSS implementation that is mentioned the most besides economic benefits in PSS-related literature. Since most of the PSS product ownerships remain at the PSS providers, products are treated more properly and efficiently throughout their life cycle (including after the end of their life). This allows the PSS providers to optimize resource utilization and resource extraction and material leakage are reduced within the PSS product life cycle, which could contribute to a circular economy. The improvement of PSS product circularity benefits PSS providers, consumers, and the environment. There is the less environmental impact from PSS implementation as the product becomes more circular. The resource extraction for manufacturing a product and material leakage during and after the product life cycle is limited since the resource utilization is optimized by PSS providers. Optimizing resource utilization benefits PSS providers in improving their product portfolio circularity as well as their monetary returns. The greater resource optimization in providing PSS, the more benefits the PSS providers received (as the required capital for a resource is reduced), as well as an improvement in consumer satisfaction since the providers still delivered the agreed product functionality to consumers. Furthermore, consumers could get an incentive for being environmentally sustainable by using a circular economy procurement strategy (and product). This might improve a consumer asset value since a greater level of building environmental rating could increase the consumer’s real estate value. For instant, tenants and investors may be willing to pay more for a LEEDS-certificated rating building. Another major benefit to consumers when using PSS is the financial advantage. PSS could help satisfy consumers' demands, for example, by having a high-quality lighting system, with less or without using their own capital. By spending OPEX instead of CAPEX in using or possessing products, the consumer can utilize the remaining capital on their main business or other investment opportunities. Besides, using PSS could also allow consumers to access a highquality product with cost-effective fees since the provided PSS is often supported by the productrelated facilities and knowledge of the PSS providers, therefore the consumer can benefit from proper support and an economy of scale from the PSS provider manufacture size. Since most of PSS product ownership remains to the PSS providers, PSS product responsibility and risk are mostly allocated to the PSS providers. This results in lessening consumers’ burden on the product during and after the end of the product life cycle. For instant, the maintenance, repair, and disposal or recycling of the product are usually done by PSS providers. This is considered a great benefit to consumers who use certain types of products that require specialized repair and maintenance services such as servers or hi-tech devices.

PSS could enable more flexibility and adaptability in product use. The consumers can change or return the products to the PSS providers once the products are no longer wanted after a certain period of the PSS contract. Furthermore, the guarantee of upgrades and performance of the product could ensure that the consumers can fully utilize the product throughout the contract period. Several researchers define PSS as a co-creation procurement strategy between PSS providers and consumers which means the provided product functionality is usually best aligned with the consumers’ demand. This improves consumers’ satisfaction and consumers-providers relationship development. Furthermore, PSS providers could gain more market share as the offered PSS benefits could attract a number of consumers.

Real practice PSS implementation benefits (Empirical research)

8 cases were conducted to understand what is considered the main benefits or drivers in providing and using PSS from real PSS providers' and consumers' perspectives. According to the PSS providers' case studies (3 cases), the primary objective in providing PSS is to enhance their business opportunities to gain more company profit. Resource optimization (material leakage minimization) and product circularity improvement are considered the second prioritized benefit by PSS providers. Optimizing resources could help PSS providers to get higher incentives in providing PSS and reduce environmental pressure. The relationship development between consumer and PSS providers are considered a third prioritized benefit of PSS providers. With a better relationship between PSS providers and consumers, consumers are more likely to continue using PSS products from the PSS providers which could also contribute to PSS providers’ income. From the case study, the benefit of PSS that is mentioned the most as the first priority from the consumers’ perspective is “financial advantage in using PSS” and “outsourcing risk and uncertainty”. Meanwhile, “access to the high quality or guaranteed performance product” and “increased flexibility in using a product” are considered second and third prioritized benefits respectively by several PSS consumers. The improvement of portfolio circularity and material leakage minimization by using PSS are not considered the first three PSS benefits from PSS consumers' point of view. However, all of the PSS stakeholders (from 8 cases) are aware that material leakage minimization is a consequence of PSS implementation Regarding material leakage minimization, from the case study, it is not the primary objective of most PSS-related parties in implementing PSS. Consumers often choose PSS that best facilitates their businesses. Drivers such as financial advantages, outsourcing risk and uncertainty, and flexibility in using PSS are considered more attractive benefits in using PSS compared to material leakage minimization.

Even though material leakage reduction is not the key factor for consumers to use PSS, it is the consequence of implementing PSS (in all studied cases according to the case studies). All interviewees from 8 cases are aware that using PSS could reduce material leakage. The findings of the theoretical and empirical research are aligned in that material leakage minimization seems to be a consequence of PSS implementation, but is often disregarded (has not yet been seen as a priority benefit) by PSS consumers.

Figure 34: Benefits of PSS implementation to PSS providers and consumers (own illustration)