A through-life costing methodology for use in product-service-systems
journal contributionposted on 2015-03-20, 14:11 authored by Linda B. Newnes, Nils E. Thenent, Glenn Parry, Yee GohYee Goh
Availability-based contracts which provide customers with the use of assets such as machines, ships, aircraft platforms or subsystems like engines and avionics are increasingly offered as an alternative to the purchase of an asset and separate support contracts. The cost of servicing a durable product can be addressed by Through-life Costing (TLC). Providers of advanced services are now concerned with the cost of delivering outcomes that meet customer requirements using combinations of assets and activities via a Product Service System (PSS). This paper addresses the question: To what extent are the current approaches to TLC methodologically appropriate for costing the provision of advanced services, particularly availability, through a PSS? A novel methodology for TLC is outlined addressing the challenges of PSS cost assessment with regard to 'what?' (cost object), 'why/to what extent?' (scope and boundaries), and 'how?' (computations). The research provides clarity for those seeking to cost availability in a performance-orientated contractual setting and provides insight to the measures that may be associated with it. In particular, a reductionist approach that focuses on one cost object at a time is not appropriate for a PSS. Costing an advanced service delivered through a PSS is a problem of attributing the value of means to the economic activities carried out for specific ends to be achieved. Cost results from the interplay between monetary and non-monetary metrics, and uncertainties thereof. Whilst seeking to ensure generality of the findings, the application of TLC examined here is limited to a military aircraft platform and subsystems. © 2014 Elsevier B.V. All rights reserved.
The authors gratefully acknowledge the support provided by the Department of Mechanical Engineering at the University of Bath, the Innovative electronics Manufacturing Research Centre (IeMRC) and the Engineering and Physical Sciences Research Council (EPSRC) for funding the research.
- Mechanical, Electrical and Manufacturing Engineering
Published inInternational Journal of Production Economics
Pages161 - 177
CitationSETTANNI, E. ... et al, 2014. A through-life costing methodology for use in product-service-systems. International Journal of Production Economics, 153, pp.161-177.
- AM (Accepted Manuscript)
Publisher statementThis work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/
NotesThis definitive published version of this article is available from: http://dx.doi.org/10.1016/j.ijpe.2014.02.016