In the PHM literature a majority of the research deals with solving technically related issues and there is a lack of material addressing the business benefits of such technology. Although PHM has the potential of creating a true paradigm shift, little consideration has been given to PHM being used for revenue generation other than the frequently cited case of maintenance cost reduction and certainly not as a new and powerful business model enabler. The thesis offered here is that a Product-Service System (PSS), which offers a bundle of products and services where emphasis shifts from selling a product to selling the use of a product, is the true business reason for adopting PHM. This paper presents an approach and the tools developed to support a cost/benefit analysis of deploying PHM technologies on a machine tool, where PHM is being used to support a PSS business model. The paper also introduces a model which could frame future research direction, exploring the further benefits PHM technology could bring to a business and the changes necessary to realise those benefits.
How to Cite
condition based maintenance (CBM), deployed applications, economics and cost-benefit analysis
(Banks et al., 2005) J. Banks, K. Reichard, E. Crow and K. Nickell. (2005), How engineers can conduct cost-benefit analysis for PHM systems, in Proceedings of IEEE Aerospace Conference, Big Sky, Montana, USA, 5-12 March, pp. 3958-3967.
(Byer et al., 2001) B. Byer, A. Hess and L. Fila. (2001), Writing a convincing cost benefit analysis to substantiate autonomic logistics, in Proceedings of IEEE Aerospace Conference, Big Sky, Montana, USA, 10-17 March, pp. 3095-3103.
(Chircu and Kauffman, 2000) A.M. Chircu and R..J. Kauffman. (2000), Limits to value in electronic
commerce-related IT investments, Journal of Management Information Systems, Vol. 17, No. 2, pp. 59-80.
(Davern and Kauffman, 2000) M.J. Davern and R..J. Kauffman. (2000), Discovering potential and realizing value from information technology investments, Journal of Management Information Systems, Vol. 16, No. 4, pp. 121-143.
(Gebauer et al., 2006) H. Gebauer, T. Friedli and E. Fleisch. (2006), Success factors for achieving high service revenues in manufacturing companies, Benchmarking: An International Journal, Vol. 13, No. 3, pp. 374-386.
(Hess and Fila, 2002) A. Hess and L. Fila. (2002), Prognostics, from the need to reality – from the fleet users and PHM system designer/developers perspectives, in Proceedings of IEEE Aerospace Conference, Big Sky, Montana, USA, 9-16 March, vol.6, pp. 2791-2797.
(Hoyle et al., 2007) C. Hoyle, A. Mehr, I. Turner and W. Chen. (2007), On quantifying cost-benefit of ISHM in aerospace systems, in Proceedings of IEEE Aerospace Conference, Big Sky, Montana, USA, 3-10 March, pp. 1-7.
(Kacprzynski et al., 2002) G.J. Kacprzynski, M.J. Roemer and A.J. Hess. (2002), Health management system design: development, simulation and cost/benefit optimization, in Proceedings of IEEE Aerospace Conference, Big Sky, Montana, USA, pp. 3065-3072.
(MacConnell, 2007) J.H. MacConnell. (2007), ISHM & Design: A review of the benefits of the ideal ISHM system, in Proceedings of IEEE Aerospace Conference, Big Sky, Montana, USA, 3-10 March, pp. 1-18.
(Oliva and Kallenberg, 2003) R. Oliva and R. Kallenberg. (2003), Managing the transition from products to services, International Journal of Service Industry Management, Vol. 14, No. 2, pp. 160-172.
(Price et al., 2003) D.C. Price, D.A. Scott, G.C. Edwards, A. Batten, A.J. Farmer, M. Hedley, M.E. Johnson, C.J. Lewis, G.T. Poulton, M. Prokopenko, P. Valencia and P. Wang. (2003), An integrated health monitoring system for an ageless aerospace vehicle, in Structural Health Monitoring: From Diagnostics & Prognostics to Structural Health Management, Ed. Fu-Kuo Chang, DEStec Publications, Lancaster, Pennsylvania, USA, pp. 310-318.
(Söderholm, 2004) P. Söderholm. (2004), Continuous improvement of complex technical systems: A theoretical quality management framework supported by requirements management and health management, Total Quality Management & Business Excellence, Vol. 15, No. 4, pp. 511-525.
(Williams, 2006) Z. Williams. (2006), Benefits of IVHM: An analytical approach, in Proceedings of IEEE Aerospace Conference, Big Sky, Montana, USA, 4-11 March.
(Wilmering and Ramesh, 2005) T.J. Wilmering and A.V. Ramesh. (2005), Assessing the impact of health management approaches on system total cost of ownership, in Proceedings of IEEE Aerospace Conference, Big Sky, Montana, USA, 5-12 March, pp. 3910-3920.
This work is licensed under a Creative Commons Attribution 3.0 Unported License.
The Prognostic and Health Management Society advocates open-access to scientific data and uses a Creative Commons license for publishing and distributing any papers. A Creative Commons license does not relinquish the author’s copyright; rather it allows them to share some of their rights with any member of the public under certain conditions whilst enjoying full legal protection. By submitting an article to the International Conference of the Prognostics and Health Management Society, the authors agree to be bound by the associated terms and conditions including the following:
As the author, you retain the copyright to your Work. By submitting your Work, you are granting anybody the right to copy, distribute and transmit your Work and to adapt your Work with proper attribution under the terms of the Creative Commons Attribution 3.0 United States license. You assign rights to the Prognostics and Health Management Society to publish and disseminate your Work through electronic and print media if it is accepted for publication. A license note citing the Creative Commons Attribution 3.0 United States License as shown below needs to be placed in the footnote on the first page of the article.
First Author et al. This is an open-access article distributed under the terms of the Creative Commons Attribution 3.0 United States License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.