Risk management for product-service system operation

Abstract

Purpose

The purpose of this paper is to propose a product-service systems (PSS) risk management decision-making framework for PSS operation, which can enable global manufacturing companies to offer PSS successfully. Thus, the authors aim to contribute primarily to developing the PSS literature by integrating insights from the literatures on risk management and decision making.

Design/methodology/approach

This study is based on an exploratory, single case study with a Swedish manufacturing company that has long-term experience with providing PSS. In total, the authors conducted 25 semi-structured interviews with diverse respondents from different functional units.

Findings

The study’s main findings include identifying and proposing an interconnection between the operational risks associated with providing PSS, possible risk management responses, and decision criteria, all of which enable decision makers to select an appropriate risk management response.

Research limitations/implications

The study contributes to the literature in three ways. First, the authors classify PSS operational risks into three categories related to delivery competence risks, technical risks, and behavioural risks. Second, the authors explain conditions under which each risk can be mitigated using different risk management strategies (avoidance, reduction, sharing/transfer, and retention). Finally, the authors combine different risk categorizations, decision criteria, and risk responses into an integrated decision framework of PSS risk management.

Originality/value

The novel contribution is developing a PSS risk management decision support framework, which holds theoretical and practical value.

Citation

Reim, W., Parida, V. and Sjödin, D.R. (2016), "Risk management for product-service system operation", International Journal of Operations & Production Management, Vol. 36 No. 6, pp. 665-686. https://doi.org/10.1108/IJOPM-10-2014-0498