Date of Graduation
Statler College of Engineering and Mineral Resources
Industrial and Managements Systems Engineering
Building on manufacturing servitization and Product-Service Systems (PSS) business models, the midlife equipment upgrade services introduce promising alternative to traditional equipment replacement, which is often capital intensive and time consuming. Midlife upgrade describes the process of improving the performance of and adding new functional capabilities into equipment during their active usage period by embedding technological innovation while satisfying evolving customers’ preferences over time. This strategy, however, has thus far been discussed primarily from a conceptual perspective in literature, and the state of the art lacks empirical evidence regarding the potential and outcome of successful midlife upgrades. Additionally, explorative studies report a low adoption of this strategy and attribute this to the limited strategic awareness and readiness of manufacturing firms.
Based on a systematic literature review and multiple case study analysis, this research empirically shows that midlife upgrades can: i) enable capital equipment to continuously provide value and remain relevant to its owner, and ii) effectively postpone replacement despite changes in technology, market conditions, and/or user requirements. Additionally, this research reveals that PSS business models allow equipment manufacturers to establish a business case for the provision of upgrade services. This creates an entirely new revenue stream and provides an alternative route to capitalize newly developed technologies faster while improving customer retention. Furthermore, in order to facilitate manufacturers’ strategic awareness and readiness, first, this study reveals three sets of drivers (i.e., strategic, marketing, and financial) that prompt manufacturers to offer equipment upgrade services. Second, taking the resource-based view as a theoretical foundation, this study identifies unique resources and distinctive capabilities that are key to generate successful upgrade offerings. Finally, this study integrates the identified resources and capabilities into a framework that manifests different stages of industrial service development process, namely, market sensing, development, sales, and delivery.
Khan, Muztoba Ahmad, "Capital Equipment Upgrade Strategy in the Context of Servitization" (2020). Graduate Theses, Dissertations, and Problem Reports. 7706.