Case Study Research to Foster the Optimization of Supply Chain Management through the PSS Approach

Abstract

The optimization of a product’s whole life cycle has become a mandatory task for manufacturers seeking to deal with circular economy requirements while gaining competitiveness in the market. In order to achieve such a sustainability goal, alignment of production, distribution, and field service activities is needed. In the literature, numerous studies indicate the product–service system (PSS) approach as one of the most promising business models to combine the needs of manufacturers and customers in an efficient and effective manner. However, PSS solutions aimed at practically optimizing supply chain management have scarcely been addressed. In order to reduce this gap, the current study proposes a procedure based on the PSS Functional Matrix, the Screening Life Cycle Modelling (SLCM) method, and stock management theory to optimize aftermarket services based on market demand. A case study in the medical equipment sector, where market demand can fluctuate during the contract period, is presented. The analytical results show beneficial effects in terms of both costs and environmental impact, suggesting the need for further research to augment knowledge on PSS and supply chain management. In particular, the PSS allowed the company to customize the manufacturer’s business model, adapting the supply of aftermarket services to varying customer needs.

1. Introduction

1.1. Background Analysis

A Product–Service System (PSS) can be considered as a combination of customer life cycle-oriented products and services that are provided by means of an extended value creation network [1]. Such a business model fosters the transition from a tangible goods-dominant logic to an intangible goods-dominant one [2,3] and accomplishes Circular Economy (CE) principles [4]. In fact, the services interwoven with a product’s life cycle, especially those related to its use and End-Of-Life (EOL) phases, play a crucial role in the optimization of the environmental performances of a product through its whole life cycle [5]. In particular, following the differentiation proposed by Tukker [6], it is deemed that use-oriented and result-oriented PSS models are considered to have the highest potential for CE because the manufacturer retains product ownership and is responsible for the product over its life cycle [7]. In other words, the more a manufacturer shifts from product business models (PBMs) to outcome business models (OBMs), the higher the possibility of achieving sustainability goals. This is in line with recent addressing of sustainable development goals (SDG) in the production sector [8,9], as well as with current environmental legislation affecting most industrial products [10]. When implementing a PSS business model, the provision of utilities to consumers through the use of services rather than products can reduce the consumption of resources, improving the environmental performances of a product life cycle and the achievement of manufacturers’ economic targets, which rely on the efficiency of the services being provided rather than on the number of products sold [11]. PSS providers can increase their productivity while reducing costs by means of value-added services; in order to achieve such a goal, they must increase both the value of the physical goods they offer and the level of services related to these products [12].

At the same time, it has to be stressed that there is substantial potential for PSS to provide customized solutions based on current and varying customer needs [13]. The latter issue is related to the augmented link between the PSS provider and the receivers, as well as to the higher possibility of customizing PSS solutions depending on the specific needs of customers [14]. This aspect is stressed by Visnjic et al. [15], who observed that shifting to OBM allows manufacturers to strengthen relationships with customers while growing revenue and profit.

Along with its expansion, a large number of studies regarding PSS have emerged [16,17]; usually, its implementation processes are described at a high level of design structure [18], while the interwoven steps involved in each stage of the practical implementation processes remain undetailed [19,20,21].

In such a context, it should be noted that PSS solutions aimed at optimizing stock management in the supply chain are scarcely addressed. As noted by Kühl et al. [22], although supply chains play a critical role in enabling competitiveness, there is a gap between the theory and practice of green supply chain management and PSS implementation. In particular, as noted by Cavalcante and Gzara [23], there is a lack of research on details considering the aftermarket services aspects of PSS implementation compared to manufacturing issues. This type of activity, as remarked by Durugbo [24], usually includes both the product recovery processes and after-sale services such as:

• Customer care (e.g., information and remote technical support);
• Field technical assistance (e.g., maintenance operations); and
• Spare parts distribution, which requires specific management of both inventory and spare parts flow.

1.2. Research Motivations

Based on the above considerations these issues can be very critical, especially when considering specific components that are considered “user-specific parts”, which require the user’s safety stock as well as a specific partnership with the supplier to shorten lead times and increase dependability [25]. Additionally, inefficient management of these parts and inventory in general would counter the benefits that a PSS was conceived for by risking prolonged equipment downtime and customer dissatisfaction [26,27]. The need to further investigate the after-sale services provided in the context of a PSS business model is stressed by Szwejczewski et al. [28], according to whom most studies on PSS have overlooked after-sales services, providing only a general guidance. In other words, the Research Questions (RQs) that emerge are:

• RQ1: How to effectively manage the supply of spare parts based on customer demand?
• RQ2: How to provide aftermarket services in an ecologically and economically efficient manner?

To reduce this gap and to augment knowledge on the practical implementation of PSS business models taking into account after-sales services, the current study proposes a procedure for the PSS implementation based on:

• The PSS Functional Matrix, to define the PSS model [29];
• The Screening Life Cycle Modelling (SLCM) method [30] and stock management theory, to optimize maintenance operations and the supply of critical parts based on market demand.

Such an approach follows the methodology suggested by Salazar et al. (2015) [31] according to which the optimization of a PSS business model in terms of both customer satisfaction and environmental impact can be achieved using a negotiating iterative process aimed at defining the functional characteristics of the PSS and refining them through life cycle analyses.

The remainder of the paper is outlined as follows: Section 2 provides an overview of the materials and methods used to implement the research; Section 3 consists of the case study carried out at a medical equipment manufacturer, making use of the research approach; the results are addressed and analyzed in Section 4 while reflecting on the implications at a broader scale; and Section 5 concludes the paper by summarizing the key points of the manuscript, addressing any limitations, and offering leads for further research in this topic.

2. Materials and Methods

The success of PSS business models in achieving CE solutions is demonstrated by the large number of studies that can be found in the literature [32,33]. In this context, numerous authors have investigated the implementation of use-oriented PSS solutions (i.e., when the manufacturer retains ownership of the product and the customer purchases the product functions measured in “per time use” or “per unit use” services [34,35]). This type of PSS allows continuous interaction with the customer, fostering the development of customized functions as well as an augmented knowledge of technical and customer care requirements while assuring continuous availability of the system [36,37]. At a general level, when implementing a PSS model from the manufacturer’s perspective a systemic approach is needed, rather than separately focusing on the product and service elements [38]. Therefore, the transformation process that leads from the input of customers to an operating PSS is influenced by different operators, which are represented by the PSS actors (PSS providers and receivers), the information systems, and the technical means [34]. To achieve such a goal, the research approach followed in this study consists of two main phases:

• Functional analysis of the business model, which is aimed at defining the combination of tangible and intangible goods through which customer needs and expectations can be satisfied
• Scenario modelling and iterative negotiation, which allow for customization of the PSS supply chain and optimization of costs and environmental impact.

2.1. Functional Analysis

The core of this process can be synthesized in the following main steps:

• Definition of the PSS context and the main function that the PSS model seeks to accomplish
• Decomposition of the main function into sub-functions
• Definition of the PSS enablers of each sub-function
• Elicitation of the PSS functional model

Accordingly, starting from the black box model [34] as depicted in Figure 1, functional decomposition can be performed by means of adaptation of morphological reasoning to a PSS setting [18].

It has to be noted that in the PSS Black Box scheme (Figure 1), the PSS operators (i.e., the entities influencing the transformation process) are divided into two main categories:

• PSS actors, i.e., the manufacturer, the third-party operators (if needed) and the customers
• PSS means (information and technical systems)

The overall function is then decomposed into sub-functions, which are arranged according to logical flows and compatibility. Such a transformation process leads to the definition of the PSS Concept Matrix [29], as can be seen in Figure 2, where each sub-function is provided with specific associated actuator(s), provider(s), and receiver(s) and evaluated to bring to light a conceptual PSS model capable of satisfying customer needs.

2.2. Scenario Modelling

The next step involves developing a detailed PSS model to verify its operational effectiveness practically [38]; such an analysis can be performed by means of the Screening Life Cycle Modelling (SLCM) method, which, through the development of several different PSS scenarios can allow the identification of critical servicing options during the whole product life cycle [30]. Based on the features of the scenario, the performance of field technical assistance (e.g., maintenance operations) and spare parts distribution can be optimized through a “negotiation” [31], i.e., an iterative process of refinement aimed at balancing the manufacturer’s bottom line with both the environmental performances of these services and the customers’ expectations.

2.3. Research Approach

In synthesis, the research approach followed in this study relies on the following main steps, described in Figure 3.

• Customer and market surveys, to define and understand customers’ point of view regarding the current product and services offered by the manufacturer [39]. In other terms, the surveys establish the basis for the definition of customers’ needs and expectations.
• Consultations with the manufacturer’s group of experts, in order to have a solid understanding of the supply chain activities related to the field service management, notably the management of spare parts and ordinary and extraordinary maintenance activities. This offers valuable insight into how interventions are performed and how replacement parts are provided.
• Application of the critical-to-quality (CTQ) tool [40], to relate the quality parameters to what matters to the customer; in other words, the CTQ tool allows highlighting of the product and service parameters that determine how quality is perceived by the recipient of the latter, i.e., the customer.
• Functional decomposition; a system can be delineated as a main function that is decomposed into sub-functions the combination of which answer customer expectancies and requirements [41,42]. This decomposition simplifies the product–service development process, reducing business and engineering risks while facilitating the conception of a novel solution [5]. Based on this, the PSS Concept matrix [29] can be used to outline the customer and manufacturer activities needed to develop a PSS solution. It extends functional decomposition by considering the required activities by including the actors as well as the product and service components that will come into play. In other words, the main function is decomposed into sub-functions the realization of which is actuated by PSS elements that are provided by the PSS provider, i.e., the manufacturer and authorized third parties, to PSS receivers, i.e., the customer, etc.
• Application of the SLCM method, which is composed of four main steps: the definition of the current solution (known as the base scenario); the definition of alternative models (i.e., alternative scenarios) for fulfilling the required objectives; the simulation of the life cycles of the base and alternative scenarios; and finally, the analysis of the simulation results.
• Supply chain analysis; the resulting possibilities by which a solution can achieve the needed requirements are evaluated taking into consideration supply chain and logistical elements, notably inventory management, starting from the most critical components that need to be replenished. The “negotiation” involves evaluating the different impacts on the supply of spare parts and inventory items for each scenario. In other words, based on the analysis of the practical needs of customers, different options are taken into account in order to optimize costs while assuring shortened lead times and increased dependability.

3. Case Study

3.1. Overview

The following case study takes place at a medical equipment manufacturer specializing in the production of haemodialysis products. Medical equipment is reputed to have a short life cycle, leading to heavy economic costs as well as significant negative environmental impacts [43]. In detail, the development process is the most impactful, as many prototypes are produced and, after meeting regulatory requirements and passing rigorous qualification phases, only a handful are released on the market [44]. Accordingly, this sector presents great potential for the implementation of end-of-life (EoL) approaches aimed at improving the environmental performances of the overall equipment life cycle and putting into practice circular economy strategies [45]. Increasing the reuse, refurbishment, and remanufacturing options can, together with a proper maintenance service, allow the transition from a single life cycle to a multiple product life cycles approach [46]. Moreover, the provision of this type of equipment usually includes services (e.g., installation, maintenance, supply of consumables) which can be assured by the manufacturer itself or by third-party companies, suggesting the implementation of a PSS business model that goes beyond the life-span of a single piece of equipment [47]. In line with this goal, better supply chain management can lead to better “down-stream” management, e.g., end-of-life schemes such as disposal, recovery, and reconditioning, as pinpointed by Gabriel et al. [48].

According to the information provided by the manufacturer, the product chosen for this case study lasts approximately four years instead of its intended five, with several interventions taking place to ensure maintenance, replacement of parts, and upgrades. Given the current business model these interventions take place at irregular intervals, heavily affecting the availability and management of spare parts. Hence, response times are not always respected and delays occur, which results in customer dissatisfaction and further degradation to the product in certain cases, e.g., faulty pressure sensors, unwanted stress on mechanical components, etc.

The product (Figure 4) is used in renal replacement therapy, and is popularly named the “artificial kidney”.

It is made of approximately two thousand components, including:

• Hydraulic components, i.e., those parts that come into contact with the dialysis fluid
• Mechanical and electromechanical components, e.g., the motors necessary for correct functioning and operation
• Electronics and controls, e.g., electronic boards, processing units, monitors and keyboards
• Structural metallic and plastic components which form the chassis
• Blood components, e.g., the arterial–venous pump, probes, and exchangeable components such as filters, needles and dialyzer.

In detail, the main parts of the equipment are represented by the following:

• The dialysis filter constitutes the most important part of the artificial kidney. It contains a semipermeable membrane that allows the exchange of solutes and water between the blood and the dialysis fluid, and its main functions are to pump blood and keep circulation under control, to cleanse the blood of waste substances, and to control fluidic pressure and the rate of removal of waste substances from the body.
• The extracorporeal blood circuit consists of vascular accesses (needles or catheters) along with a set of cables and accessories for blood circulation. Most dialysis centers use two cannulas, one to make the blood flow towards the dialyzer and one to bring clean blood back to the body.
• The dialysis fluid circuit consists of a solution composed of renal water, mineral salts, osmotically active substances, and buffer substances.
• The control monitor is the instrument that prepares the dialysis liquid in compliance with the appropriate physio-chemical characteristics, controls the blood circulation in the extracorporeal circuit, and supervises the entire hemodialysis process.

Despite the continuous need for such products and the continuous growth of this market sector [49], manufacturers’ revenues are hindered by frequent replacements and interventions which weigh heavily on their current business model, i.e., sales and supplementary maintenance service contracts. In detail, customer surveys collected over the past 24 months, of which 79 were returned in full, point out concerns regarding the intervention response time, the reliability of the product, and its hampered lifespan. For instance, customers pointed out that the delays for a technician to intervene and carry out repairs are long and replacement parts undergo significant lead times, causing substantial downtime. The key requirements collected from customers allowed us to pinpoint the critical-to-quality features, i.e., the CTQ tree, related to the product and its complementary services. Figure 5 portrays an excerpt of the maintenance operations.

3.2. Current Business Model

Based on the manufacturer’s current business model relying on sales and supplementary after-sale services, the main service processes are:

• Product installation, including all activities for preparing the use of the device and its configuration
• Customer interaction, consisting of phone calls between the customer and the customer service operator, remote monitoring of product performance, and diagnosis activities
• Spare parts stock management, including stock planning, operational management of warehouses and shipments, and the management of return flows of materials
• Field service management, consisting of repairs and maintenance interventions which can be carried out either directly through internal technicians or indirectly via authorized third parties.

Concretely speaking, the manufacturer has a central warehouse where all manufacturing processes (assembly, sterilization, packaging, storage, and distribution) are integrated by means of cross-docking. Additionally, critical components and particular parts are stored there. The customer has access to these components via this central warehouse. The manufacturer is responsible for delivering the device to the customer and training the customers, i.e., laboratory technicians and medical staff, on its use. Regarding ordinary and extraordinary maintenance, these tasks are shared with authorized and qualified suppliers based on the geographical area and distance from the customer. Based on the data collected, a radius of 300 km dictates intervention activities; within this range, the manufacturer itself provides them through the central warehouse, and when the distance exceeds it, authorized suppliers use the customer’s warehouses to provide them. A call center centralizes requests by managing communication with the customer. At the end of its lifecycle, the product is recovered by the manufacturer (Figure 6).

3.3. The PSS Alternative

Given the information above, the manufacturer is opting to change its current business model and adopt a PSS model instead, i.e., a use-oriented solution focused on leasing the product and providing the necessary services for its installation, operation, and retirement. On the one hand, this enables the manufacturer to ensure that customers are correctly trained on its use and can carry out maintenance operations in due time, replace defective components with qualified genuine parts, and monitor usage and deterioration of the modules (and hence be proactive to reduce downtimes), as well as recover the product once the contract reaches its end, ensuring the recovery of certain reusable elements and reducing production costs. On the other hand, this allows for offering customized solutions to customers, whose use patterns can vary from one to another, and provides them with the capacity to adapt to changing demands in the future. In addition, it relieves them from the burdens of planning maintenance activities. reassures them by knowing that the latter are carried out by qualified personnel, and eases disposal activities, as the manufacturer handles them.

Focusing on aftersales activities, the logistics network (which consists of a variable number of levels based on the strategic and operational needs of the company) was analysed. In the scope of this study, networks with two or more levels (i.e., networks where the central warehouse is flanked by one or more peripheral warehouses, which in turn serve customers in their own area of expertise) guarantee a quicker response time, as interventions must be carried out quickly and the related breakdown has a direct impact on the product’s functioning. In

Table 1. Extract of the aftermarket service organization.

Area	Decision-Making Alternatives
Distribution and territorial coverage of aftersales support	Service provision coverage based on geographical areas Segmentation based on type of customer
Technical assistance network ownership	Direct intervention by the manufacturer’s technicians of each branch Indirect assistance through dealership workshops Secondary network of authorized and controlled workshops Indirect assistance through independent workshops
Spare parts distribution network: number of levels	One level: supplier-central warehouse-customer. Two levels: supplier-central warehouse-peripheral warehouse-customer Two levels (mixed): supplier-central warehouse-customer OR peripheral warehouse-transit point-customers Three levels (mixed): supplier-central warehouse-peripheral warehouse-distribution center-customer
Logistics operations outsourcing	Transport Inventory Spare parts planning and management Full outsourcing of logistics operations

, an excerpt of the analysis of the main aftermarket services is provided based on the scheme proposed by Martinez et al. [50].

Once the most suitable logistics network for supporting aftermarket activities has been defined, it is necessary to identify the planning and management choices for carrying out the services. Accordingly, the leasing solution is addressed from a functional point of view where the function tree deployment is applied to identify the main haemodialysis functions and decompose them into Sub-Functions (SFs) and then Elementary Functions (EFs) that the PSS will have to fulfil (Figure 7).

Then, the PSS concept matrix is used to identify the possible products and services required to fulfil each sub-function (

Table 2. Application of the PSS concept matrix to the haemodialysis solution (excerpt).

EF	Product or Service Enablers			PSS Provider
1.1	Online form	Call centre	/	Customer	Manufacturer	Third party
1.2	Customer survey	Technical expert visit	/	Customer	Manufacturer	Third party
2.1	Purchase	Leasing	Temporary rental	Customer	Manufacturer	Third party
2.2	Forecast-based delivery service	On-demand delivery service	Purchase and pickup	Customer	Manufacturer	Third party
2.3	Product manual	Training	/	Customer	Manufacturer	Third party
2.4	Haemodialysis product	/	/	Customer	Manufacturer	Third party
3.1	Preventive maintenance	Predictive maintenance	Risk-based maintenance	Customer	Manufacturer	Third party
3.2	Customer interaction	Online form	Manufacturer recommendation	Customer	Manufacturer	Third party
3.3	Deferred corrective maintenance	Immediate corrective maintenance	/	Customer	Manufacturer	Third party
3.4	Customer interaction	Online form	/	Customer	Manufacturer	Third party
4.1	Shipping by customer	Field service intervention	None (scrap)	Customer	Manufacturer	Third party
4.2	Engineer report	Computer-run diagnostic	Product disassembly	Customer	Manufacturer	Third party
4.3	Worn parts replacement	Systematic replacement of all wearable parts	None (no wear and tear)	Customer	Manufacturer	Third party

).

Based on the PSS concept matrix, an alternative solution to can be defined: a leasing service where the manufacturer provides the customer with the product and its consumables and offers the training required for its proper use. Upon consultation with the manufacturer’s group of technical and marketing experts, a “4 + 4” lease option was proposed and evaluated. During the lease period, the manufacturer carries out the required maintenance activities, installs software updates, and collects feedback from the customer and information regarding any deterioration of components. Once the end of the first period is reached, the product is recovered by the manufacturer or a qualified and authorized third party for end-of-life treatment, and the customer is given a new or reconditioned product for the second period of the lease.

Given the impact on the inventory of components and parts required to carry out ordinary and extraordinary maintenance activities, the SLCM method was used to evaluate the feasibility of this solution. Accordingly, the first step in assessing the hypotheses and the details of the maintenance interventions (

Table 3. Maintenance activities comparison (MO = Ordinary maintenance; EM = Extraordinary maintenance).

Base Scenario (BS)
Year	0	1	2	3	4	5	6	7	8	9
MO1		x	x	x	x	x	x	x	x	x
MO2			x		x			x		x
EM1		x	x	x	x	x	x	x	x	x
EM2				x		x			x
Alternative Scenario (AS)
Year	0	1	2	3	4	5	6	7	8	9
MO1		x	x	x		x	x	x		x
MO2			x				x
EM1		x	x	x		x	x	x		x
EM2				x				x

) was to compare the Base Scenario (BS), i.e., the current model, to the Alternative Scenario (AS), i.e., the PSS leasing solution:

• Yearly production: 700 products
• Product lifespan: 5 years
• Operational hours per year: 3000–3500 h (~15,000 to 18,000 h over five years)
• Yearly average of hemodialysis treatments: 624 h
• Ordinary Maintenance operations 1 (MO1) after 3000 h: connectors, joints. and solenoid valves
• Ordinary Maintenance operations 2 (MO2) after 6000 h: filters, connectors, joints, and solenoid dialysis valves
• Extraordinary Maintenance (EM1): fluid pumps and inlet connections failing before their normal operational hours limit; the manufacturers’ information obtained via the customer services team shows an occurrence trend every 2800 to 3300 operational hours
• Extraordinary Maintenance 2 (EM2): pressure sensors and pressure valves; in this case, the information gathered indicates an average value of 7000–7500 h before occurrence
• Yearly number of ultrafilters: 18,000
• Operational duration of ultrafilters: 400 h. These are produced and maintained by the manufacturer; an authorized third party handles distribution and recovery, whereas the customers are responsible for their replacement during the use of the equipment.

End products are stored in a central warehouse, and hospitals and medical laboratories possess and manage their own warehouses.

SLCM was applied using Eco-Indicator 99 [51], a well-known life cycle assessment tool that considers the raw materials and associated processes during production, transportation, and disposal. It is expressed in damage points (Pt) to reflect damage caused to the environment, human health, and natural resources. SLCM enables assessment of the environmental impact of the base and alternative scenarios and takes into consideration all of the main activities (described above) related to the production and distribution of the equipment, as well as maintenance and end-of-life activities (Figure 8).

In collaboration with the company’s experts from the technical and financial departments, we addressed the costs related to each phase of the equipment lifecycle, including the inventory and spare parts required for manufacturing, distribution, ordinary maintenance, extraordinary maintenance, and end-of-life activities (i.e., recovery, reconditioning, disposal, etc.). Due to a non-disclosure agreement, the costs are expressed as percentages of the market value of one piece of haemodialysis equipment. Accordingly, the computation of all costs related the lifecycle of a piece of equipment can be higher than 100%. In

Table 4. Extract of the embedded costs.

Category	Unitary Cost (%) *
Manufacturing
Packaging	0.5
Transport	1
Assembly	1.5
Maintenance
Spare parts replacement	11.9
Transport	4
Labor	3
End-Of-Life
Recovery	1.5
Transport	1
Electronic	−0.62
Hematic	−0.12
Structural	−0.24
Hydraulic	−0.29
Mechanical	−0.05
Contractual	−1.5
Labor	2
Other costs	76.42

* In this excerpt, the cost of each activity is calculated as a percentage of the cost of the whole piece of equipment due to a non-disclosure agreement with the company. The negative costs reflect the ‘benefits’ that emerge from end-of-life activities such as the recovery of components that can be used in the production of new equipment.

, an excerpt of the lifecycle cost analysis is reported.

3.4. Supply Chain Analysis

Once the most suitable logistics network has been defined to support after-sales activities, it is necessary to identify the planning and management choices required in order to carry out the services. The choice of the most suitable spare parts management policy depends on both the characteristics of the market and the general strategy of the company, as well as on the characteristics of the component to be managed, most notably criticality, specificity, and value.

Specifically, the manufacturer brought to light the importance of managing the supply of the haemodialysis ultrafilters, as these are the most significant in terms of use frequency and costs. The ultrafilter is the filter used to keep clean the liquids inputted in the equipment; its lifetime duration is about 400 h, and its replacement is included in ordinary maintenance operations. As all pieces of equipment do not function for the same number of hours per year, the optimization of the number of ultra-filters distributed by the manufacturer can lead to optimization of both stock and supply management, which can be beneficial for both manufacturer and customers considering, e.g., the storage of the spare parts. With this goal in mind, we took into consideration the possibility of variable usage from one customer to another, calculating the lognormal distribution of ultrafilter use given that the yearly use of a piece of equipment ranges from a minimum of 156 treatments to a maximum of 936, with the average number of treatments equal to 624. The results of this analysis are shown in Figure 9.

Then, we simulated the use of 10, 11, 13, 15, 17 and 19 filters per piece of equipment in order to bring forward the financial impact of customizing the PSS to varying requirements vis-à-vis its traditional model, i.e., the BS (Figure 10). It has to be noted that in this analysis the distribution was considered as follows:

• For a distance up to 300 km from the central warehouse, the distribution of both spare parts and maintenance operations is provided by the manufacturer
• For distances greater than 300 km from the central warehouse the distribution is entrusted to third parties, whose costs are minor or at least equal to those borne by the manufacturer.

In addition, as schematized in Figure 11, it was foreseen that a stock of critical parts such as ultrafilters were stored in a specific warehouse at the customer. This allows for shorter lead times and increased dependability.

4. Discussion of Results

4.1. Practical Results

The case study brings forward the positive effects of transitioning from a traditional sales model to a leasing solution such as a Use-Oriented PSS. In fact, the PSS allows for extension of the lifecycle of the equipment from four years to five while maintaining its correct functionalities through the improvement of aftersales services via better management of both maintenance activities and the supply of spare parts. In detail, effective management of the needed spare parts enables the carrying out both ordinary and extraordinary maintenance tasks in due time while reducing the risk of the client, as no original components must be acquired and equipment performance is not jeopardised. Additionally, the risks related to over/underestimation of the reordering quantity of critical components can be reduced. From an environmental perspective, the AS allows for a reduction in the environmental impact by 13.8%, as exhibited in Figure 8. This takes place through the extension of the product lifespan as well as through the facilitation of end-of-life activities such as product recovery, reconditioning, and refurbishment. Moreover, tailoring the quantity of the ultrafilters to the specific needs of the hospital can allow a reduction of waste (expired filters). Similarly, as illustrated in Figure 10, the costs embedded by the ensuing inventory and inventory management are reduced by 13.3% on average when considering the variable number of filters required to meet the increasing or decreasing use patterns of customers.

In detail, given the nature of the BS (i.e., a sales model), the terms of the supply of filters are fixed in the sales contract: an initial quantity of consumables is provided, and replenishment involves reordering predetermined quantities at constant intervals to maintain stocks at a pre-set level. In other terms, a fixed ordering criterion is adopted. This coincides with common practices related to sales-based business models [52,53].

A key point that can be highlighted is the lack of flexibility and high risk of inadaptability to real and variable customer needs and the subsequent consequences [54]. For instance, in the case of a customer whose use frequency increases the contractual supply of the filters is insufficient, and therefore the customer must solicit the manufacturer for “extraordinary” distribution of filters. In addition, the maintenance contract proves to be inadequate for maintaining the performance of the equipment; extraordinary maintenance activities must be scheduled, leading to unwanted costs and pressure on the manufacturer as well as the customer. On the other hand, switching to a PSS allows for continuous monitoring of the equipment as well as feedback from the customer regarding their satisfaction.

An even more important feature of this transition is the ability to react to fluctuations, notably in terms of consumables; for instance, with the ongoing COVID-19 pandemic treatment schedules may need to be rescheduled, and thus certain customers may find themselves with an excess of inventory items, leasing to the incurring of storage costs, deferred maintenance activities [55,56], and unwanted expenses. Hence, through the continuous customer feedback that the PSS enables, a variable ordering criterion can be adopted more easily; this optimizes the relationship between the number of required filters and extraordinary maintenance interventions. In other words, it means that based on the evolution of needs over previous years a proper dimensioning of unanticipated need for filters can be considered for the subsequent contract period.

Figure 12 illustrates an example of such a scheme (AS2) that considers the first five years to be identical to those of AS1, then presents a use decrease of 50% over the following three years; in detail, it portrays the cost reductions that can take place by opting for variable re-ordering via the PSS. It should be noted that the opposite can occur as well, i.e., an increase in the use of ultrafilters.

4.2. Research Implications

In summary, this study brings to light several implications related to the adoption of a PSS business model in the case of its application to market sectors such as the medical equipment sector where aftersales services play a key role in satisfying customer demands.

Firstly, it has to be noted that from a methodological point of view the functional analysis of the PSS allowed a clearer differentiation of the PSS actors, enabling the development of a system capable of fulfilling the practical needs of customers in terms of physical goods (i.e., the equipment, consumables, and spare parts), services (e.g., maintenance operations), and information (e.g., customer care, feedback data, and monitoring). This confirms the benefits of functional analysis in PSS development, as underlined by Song and Sakao [57].

Additionally, life-cycle modelling allows engineers to verify in detail the effectiveness of the business model, providing different solutions depending on customer needs. Such an analysis should cover more than the duration of a product’s lifespan in order to optimize the EoL stages of the physical parts. This shift from the logic of one life cycle to a multiple life cycles approach is in line with CE issues, fostering reuse, refurbishment, and recycling activities. Accordingly, the use of LCA and LCC tools needs to be supported by a method such as the SLCM in order to provide mid-term and long-term forecasts and better tailor the business model to practical features. Coherently with the results of the case study, RQ2 is answered. This allows the manufacturer to better design the service delivery process and reduce the risk of unsatisfactory profitability outcomes, in line with Hou and Neely [58].

However, from a long-term perspective, the manufacturer may incur the risk of improper estimation of market demand. To reduce such uncertainty augmenting the flexibility of the provision of both tangible and intangible goods, further analyses are required. In particular, this study shows the effectiveness of investigating supply chain features starting from the most critical aftersales services. In this case, we limited our analysis to maintenance operations and the provision of ultrafilters; however, the same process can be repeated for other PSS elements as well. From a general point of view, the current study addresses the consumable part of the solution as an example of critical components or items the use of which can vary over time and for which consequent management can be complex to manage. In other words, this shows how a PSS can react to varying customer demand and adapt accordingly, thus answering RQ1. Such an issue can certainly contribute to the augmentation of knowledge around the practical implementation of PSS business models when taking into account after-sales services, in line with research cues by Resta et al. [59] and Xu et al. [60]. Moreover, the proposed approach was effective in allowing the manufacturer to make a PSS offer capable of increasing the fulfilment of customer needs, guaranteeing a feasible configuration of services in agreement with the findings of Sakao et al. [61].

In short, the current study contributed to demonstrating the effectiveness of the PSS approach in integrating CE with supply chain management, balancing economic benefits with customer value and environmental performance in line with the call for practical research outlined by Kapsalis et al. [62]. These outputs confirm the benefits of the PSS approach in the medical equipment sector as a tool for improving relationships between the different actors, strengthening the research findings of Xing et al. [63]. Finally, it is worth underlining that the current study can contribute to augmenting knowledge on service customization, a research area that is not yet as mature as that of product customization, as pointed out by Sakao et al. [14].

5. Conclusions

The implementation of PSS business models to provide more sustainable solutions has increasingly attracted the attention of both practitioners and academics, who stress the potential benefits of shifting to integrated provision of tangible and intangible goods in different industrial contexts. However, recent research has brought to light the lack of studies addressing the practical implementation of such models, i.e., those which considering both manufacturing issues and supply chain features. Accordingly, the current study has the merit of contributing to PSS research by unveiling the practical implications related to the management of aftermarket services in the medical equipment sector using a PSS approach. The results achieved here stress the importance of life cycle modelling to the enhancement of CE goals. At the same time, the need to provide flexible business models which better balance environmental and economic features with the variability of customer demand emerged as an important research direction.

These outputs were verified in a practical case setting; hence, their validity needs to be extended by means of further research work that goes beyond the case study context. In addition, the case study did not consider the “wear and tear” to which equipment can be subject, which may alter the real need for ultrafilters. In other words, for more comprehensive and more reliable deductions such studies must grasp more elements than only the consumable part of the solution. Nevertheless, the case study was helpful in answering two research questions, the responses to which brought forth the benefits that a PSS can achieve. A broader study taking into consideration further PSS elements is required in order to verify the consistency and dependability of transitioning from conventional sales models to PSS solutions.