Is it wise for manufacturers to implement preventive maintenance in the sharing business model?

Abstract

In the sharing business model, manufacturers typically increase customer usage through product design but contend with escalating failure costs stemming from heightened customer usage and moral hazard concerns. The preventive maintenance (PM) typically serves as a means for manufacturers to tackle the growing failure cost problem. However, manufacturers face the challenge of how to make PM strategies in intricate operational environments. We formulate a theoretical model to investigate when a manufacturer should implement PM, taking into account customer usage and product design. Our results suggest that when the fixed cost of PM is low and the customer moral hazard is not sufficiently high, or when both the fixed cost of PM and the customer moral hazard are at moderate levels, it is wise for the manufacturer to implement PM. We also find that the PM can lead to higher consumer surplus by increasing customer utility, achieving a win-win situation. In addition, our findings reveal a positive correlation between the PM effort and product quality, with higher PM effort leading to higher product quality and thus increasing customer usage. In extension models, we further explore the issues of maximising social welfare, non-zero maintenance time and endogenous maintenance frequency

KEYWORDS:

• Sharing
• servitization
• pay-per-use
• product design
• preventive maintenance
• responsible consumption and production

Data availability statement

Data sharing is not applicable to this article as no new data were created or analysed in this study.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 https://baijiahao.baidu.com/s?id=1699347458614165882&wfr=spider&for=pc.

2 https://articles.e-works.net.cn/iot/article147969.htm.

3 https://baijiahao.baidu.com/s?id=1793464112441762114&wfr=spider&for=pc.

Additional information

Funding

This work is supported by research grants from the National Natural Science Foundation of China [grant number 72171105], Humanity and Social Science Youth Foundation of the Ministry of Education of China [grant number 21YJC630133], Fundamental Research Funds for the Central Universities [grant number 21lzujbkyjh008]. Soft Science Fund Project of Gansu Province [grant number 23JRZA365].

Notes on contributors

Dong-dong Wang

Dong-dong Wang is a Ph.D. candidate in Operations Management at the School of Management, Lanzhou University, China. His work has been published in International Journal of Production Research, Journal of Retailing and Consumer Services, Technology Analysis & Strategic Management, etc. His research interest focuses on product design and maintenance in the sharing business model.

Kangzhou Wang

Kangzhou Wang is a professor and doctoral supervisor of Operations Management at the School of Management, Lanzhou University, China. He received his PhD in Management Science and Engineering from Shanghai Jiao Tong University, China, in 2014. His work has been published in Production and Operations Management, International Journal of Production Research, International Journal of Production Economics, Journal of the Operational Research Society, Transportation Research Part D, etc. His research interest lies in operations and supply chain management, and he currently concerns Service-oriented Manufacturing, Shared Manufacturing and Cloud Manufacturing.

Zhifeng Qian

Zhifeng Qian is a lecture and master supervisor of Operations Management at the School of Management, Lanzhou University, China. His work has been published in European Journal of Operational Research, International Journal of Production Research, Annals of Operations Research, Technology Analysis & Strategic Management, etc. His research interest lies in green supply chain management and marketing science.

Feng Jiang

Feng Jiang is a Ph.D. candidate in Operations Management at the School of Management, Lanzhou University, China. Her research interest lies in supply chain finance under servitization business model. She has published paper in the academic journal International Journal of Production Research.