ASU Center for Organization Research and Design

Simulation Model for Quantifying the Environmental Impact and Demand Amplification of a Product-Service System (PSS)

by Pilada Wangphanich

Feb 4, 2011

The concept of a Product-Service System (PSS) was firstly published in 1999 as a "product(s) and service(s) combined in a system to deliver required user functionality in a way that reduces the impact on the environment". Although this concept has been discussed in literature over a decade, it still lacks of tools for evaluating the impacts of a PSS in a supply chain. This paper proposes a simple model based on a system dynamics simulation for quantifying the environmental impact and demand amplification along a supply chain when a PSS is applied. The proposed model is comprised of four generic models which are an Inventory model, a Linkage model, a Contribution model and a PSS model. A simple case of a PSS in a washing machine business was selected to validate and demonstrate the flexibility of the proposed model. The results showed that a PSS was able to decrease demand amplification by smoothing the end customer demand in a supply chain. Moreover, a PSS was capable to reduce the total number of washing machines to fulfill customer need while it was able to increase an opportunity to replace those machines with new items which were adapted technology to reduce water and energy consumptions. Consequently the total amount of CO2 emission generated in a PSS was lower than in a traditional purchase system. Therefore, a PSS has potential to reduce the environmental impact and demand amplification in a supply chain.

Simulation Model for Quantifying the Environmental Impact and Demand Amplification of a Product-Service System (PSS)