Hybrid products in logistics – part 1
Hybrid products in logistics – part 2
Hybrid products in logistics – part 3
The German Fraunhofer Institut für System und Innovationsforschung (ISI) has been analyzing the implementation of the “Pay on Production” model in the economy for several years. Analysts see its application as an opportunity to increase the competitiveness of companies that are suppliers of capital goods. In particular, automotive concerns are putting pressure on some of their equipment suppliers to replace the purchase of technological lines with a usage-based fee. For example, KUKA SYSTEMS implemented such a model in 2008 for the production of Jeep Wrangler bodies at Chrysler’s plants in Toledo, Ohio, and took over the financing of the technological line.
One of the most well-known specialists and an expert on contemporary production logistics problems, H. Wildemann, claims that by 2020 this system will become more popular, especially in less stable markets with high product diversity, because it can reduce the complexity of the entire value chain. Furthermore, it is worth noting the trend among large enterprises to encourage key suppliers to settle in industrial parks in the immediate vicinity of their locations and to transfer value-creation processes there in the form of “Pay on Production” models. Also in smaller enterprises, with the use of increasingly complex production equipment, there is an overstaffing of highly paid specialists, which encourages them to revise their business models. According to current information presented by the economic self-government in Germany, about 16% of manufacturing companies in the construction machinery industry are also ready to develop this type of service.
In their study, D. Spath and L. Demuss present an interesting concept that seems to be an interesting contribution to explaining the phenomenon of hybrid products in the economy. In their opinion, the development of this group of services is the result of a paradigm shift in the field of product and service development. They believe that we are witnessing a second paradigm shift in the sphere of product design. The first paradigm shift emphasized the integrated nature of product development, when integration processes covered Mechanical Engineering, Electrical Engineering, and Software Engineering. The first stage of the integrated product and service development process is characterized by the fact that “the technical product and the services accompanying the product are developed in parallel and in a harmonized manner as an independent service package”. In this context, hybrid product development is indeed a new stage for “manufacturer-service providers”. Since it is necessary to integrate an external factor into the service provision processes, new requirements arise for the (hybrid) product creation process. “Hybrid product development represents an integrated-with-customers, higher level of development of integrated product design and integrated process design, which are extended by a new methodological construction called Service Engineering (cf. Figure 5). Hybrid development processes represent an organizational challenge for a company that strives to effectively implement such solutions in order to gain lasting competitive advantages through hybrid products”.
D. Ruland pointed out important organizational stages when presenting hybrid products by providers. He distinguishes 3 overlapping classes of product and service integration (cf. Figure 6). He includes simple services related to the product (e.g., software with training) in the first class. He includes services that increase product efficiency in the second class. These are integrated, product-focused solutions (e.g., maintaining operational efficiency for aircraft engines along with warranty services). In the third class, services are offered that allow for process optimization, which is specifically “tailor-made” business problem solving (e.g., the manufacturer takes over full operation plus planning and design and expansion of the mobile network). Moving to a higher class of service therefore requires fundamental changes in the organization of the enterprise, in process design, and in relation to the necessary technical and personnel resources. At the first stage, knowledge of the product is decisive. The probability of conflicts between the product and services is limited because responsibility for the product is decisive. At the second stage, responsibility for the product links the two development areas of both entities. However, there are diverse cultures, incentive systems, and metrics describing services. The focus of attention, however, still concerns the product design line.
The article comes from the magazine “Logistyka” 5/2011.