Abstract for: Business Models for Condition Based Maintenance Services

Commonly, maintenance is performed on a corrective basis. When the equipment condition can be monitored, a condition based maintenance (CBM) strategy can be implemented by the original equipment manufacturer (OEM). CBM has the potential to help boost business for both the OEM and its customers, but when applying CBM practices, managers always face the problem of transparency from business context. This is due to organizational complexity and dynamic complexity: within both the OEM and its customers, the perspectives and interests of maintenance, service, sales, finance, and others differ, and need to be reconciled; all these interrelations evolve over time, so any static picture is bound to be increasingly more incorrect as time passes. Through system dynamics modeling of a real case, we clearly show the performance improvements for both the OEM and its customers from the scenario with rare CBM practices to the scenario with CBM as a majority. Managers from different departments can understand the dynamic behavior of CBM through their interactions (i.e. organizational complexity) and the lead time involved (i.e. dynamic complexity). Moreover, via sensitivity analysis, we provide further suggestions to better implement CBM in practice.