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

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.