Operations strategy for the effective delivery of integrated industrial product-service offerings: Two exploratory defence industry case studies

Abstract

Purpose: As enterprises focus on offering integrated product/service bundles, performance-based contracts become ever so important in ensuring effective delivery. Performance-based contracts fall under the result-oriented category of industrial product service systems (PSSs). The paper aims to present a conceptual framework for operations strategy in performance-based industrial PSSs that will help manufacturing companies configure their operations to support effective delivery of integrated product/service offering. Design/methodology/approach: This paper first develops a conceptual framework for operations strategy in performance-based contracts by identifying the key elements after a detailed systematic review of literature. A major shift in support and maintenance logistics for complex engineering systems over the past few years has been observed in the defence and aerospace industries. Availability contracting, a special type of performance-based contracts, is replacing traditional service procurement practices. Two exploratory case studies involving defence availability contracts are conducted for making inferences regarding the operations strategy. Findings: The important findings of this research are a set of elements of operations strategy guiding the development of a conceptual framework, a set of operating principles and processes supporting effective delivery of performance-based service contracts. Originality/value: The true value of this research is to open up the novel area of result-oriented industrial PSSs operations strategy by capturing the key characteristics of operations using both literature and empirical evidence. © Emerald Group Publishing Limited.