From mass customization to circular customization – measuring and managing variety in product service systems

Product-service systems (PSSs) are considered a cornerstone of the circular economy, as they enable manufacturing companies to decouple economic growth from resource consumption. However, numerous challenges to PSSs’ economic success or environmental benefits have been reported. One such challenge is variety-induced complexity. While variety provides a competitive advantage through customized PSSs, it also causes complexity, leading to high costs and inefficiency throughout the lifecycle. Despite this, little research discusses the challenges caused by and approaches to measuring and managing variety. This article aims to fill this gap by reporting an in-depth three-year study involving 39 experts at a globally active manufacturing company. The results evidence negative impacts from variety across the lifecycle. To mitigate these, indicators and management approaches for variety are co-developed with industry and practically tested. Building on these results, the circular customization concept is introduced, which facilitates value-creating customization while taking advantage of PSSs’ resource decoupling potential.