Extended Products and VOs Prof. Dr.-Ing. Klaus-Dieter Thoben BIBA (Bremen Institute of Industrial Technology and Applied Workscience) and University of Bremen, Germany ECOLEAD Summer School on Collaborative Networks Helsinki 2006 UNIVERSITÄT BREMEN

DevelopmentManufacturingOperation Added Value Future ? Past Customer Needs „Realisation“Customer Needs Fulfilment Achieving customer satisfaction: Change of Value Chain Characteristics Extended View on Manufacturing Past (adopted from Browne et al, 1994)

(Pine, 2000) Processing of Raw Materials Manufacturing Of Goods Offering of Services Creation of Events Price of Offering Low PriceHigh Price Competitive Position High Competition Low Competition Customer Satisfaction Not Relevant for Relevant for Customisation Downgrading to Mass Product Downgrading to Mass Product The Progress of Competitive Advantage

(Pine, 2000) Processing of Raw Materials Manufacturing Of Goods Offering of Services Creation of Events Price of Offering Low PriceHigh Price Competitive Position High Competition Low Competition Customer Satisfaction Not Relevant for Relevant for Customisation Different Raw Materials for a Cake Ready prepared Mixtures needing only milk etc. Fully designed and customised cakes Birthday celebrations hosting services The Progress of Competitive Advantage

(adopted from Pine, 2000) Manufacturing of Raw Materials Offering of Products Offering of Solutions Guarantee for Success Value Added LowHigh Competitive Position High Competition Low Competition Customer Satisfaction Not Relevant for Relevant for Customisation Downgrading to Mass Products The Progress of Competitive Advantage

Non-tangible Product Intangible Surroundings of the Tangible Product Services Tangible Product Shell Including the Packaging of the Core Product Product Shell Concept of Product Core Product (Tangible) Including Materials and Technical Functions of a (Tangible) Product Kernel of Product Product in a Narrow Sense (Tangible Entity to be Offered to the Market) Product in a Broader Sense (Product Solution, consisting of Tangible as well as Intangible Assets) Examples: PCs, Books Examples:

Tangible and Non-tangible Value-share 0 % 100 % Value Time Tangible value-share of a product Non-tangible value-share of a product

(adopted from Pine, 2000) Value Added LowHigh Competitive Position High Competition Low Competition Customer Satisfaction Not Relevant for Relevant for The Progress of Competitive Advantage Customisation

(adopted from Pine, 2000) Value Added LowHigh Competitive Position High Competition Low Competition Customer Satisfaction Not Relevant for Relevant for The Progress of Competitive Advantage Customisation Downgrading to Expected “Core Functionalities”

EnterpriseProduct Extension of System Boundaries Traditional Boundary Extended Boundary (Extended Enterprise) Extended Boundary (Extended Product) Extended EnterpriseExtended Product 32 % 39 %

32 % 39 % Providing Extended Products through Co-operation

Common Culture: gemeinsame Wertvorstellungen und Erwartungen dienen der Verbesserung der Zusammen- arbeit und der Konfliktbewältigung Common Standards: Gemeinsame Begrifflichkeiten und Verfahrensweisen zur Unterstützung voneinander un- abhängiger Geschäftsprozesse Information Sharing: Gegenseitiger Zugriff auf Daten unabhängig voneinander laufender Geschäftsprozesse Coordination: Verhandlung und Informationsaustausch zur Synchronisierung unabhängiger Geschäftsprozesse Collaboration: Integration ursprünglich eigenständiger Geschäftsprozesse. Verschmelzung der Prozesse und Verlust ihrer Unabhängigkeit Stages of Collaboration Level of Integration + -

Said Heard is not Understood is not Implemented is not Sustained is not Agreed is not Quelle: Ulrich Reetz, CSC Ploenzke, 1999 The Lorenz-Chain About the difficulties to co-operate

simplecomplex Resources simple complex Product simple complex Life-Cycle “New Product” “Old Product” Future Products: Dimensions to be considered! lowhigh Customization simplecomplex Ownership simplecomplex etc. © BIBA / Thoben

Along its Life-cycle a Product has to be: Maintenance Phase Realisation Phase End of Life Phase Specification Phase Requirements Phase Usage Phase operated refurbished financed developed delivered assemble d calculated, simulated designed specified maintained disassembled/ recycled repaired

Products can be customised: Maintenance Phase Realisation Phase End of Life Phase Specification Phase Requirements Phase Usage Phase operated to order refurbished to order financed to order delivered to order assembled to order manufactured to order calculated, simulated to order designed to order maintained to order repaired to order disposed to order specified to order

Maintenance Phase Realisation Phase End of Life Phase Specification Phase Requirements Phase Usage Phase Potential Services Along the Product Life-Cycle Formalisation of the needs consultancy services Product dependent or independent services Services to support co-operations of enterprises Customer integration into realisation phase Qualification and training Operation support Co-development Routine Maintenance Financial services Collection services Collation of materials Dismantling services Disposal of hazardous materials Repair Evaluation and benchmarking services

„Extended“ Products require integration IT- infrastructure different business models different organisations life-cycle phases different types of products

Customer get better value for money and more flexibility increased benefits new / innovative types of benefits … Provider(s) increased options to add value to a product and earn money generate new business opportunities (new services) increase added value achieved with the same customer Extended Products – Summary

Extended Services (Example) 1. Locate the customer 2. Locate and book hotel 3. Locate and inform taxi 4. Pickup customer 5. Take customer to hotel Customer: „Find a hotel and get me there“ Hotel (Source: EU-Project NOMAD)