Why servitisation practices are good for the environment

Tukker (2004) has looked at eight specific types of servitisation (or product-service systems) and identified their likely environmental impact.  In most cases PSS are sustainable business models.  The conclusions are as follows:

  1. Product related services. There may be steps made to improve the design and manufacturer of the product in order to increase its reliability, but no major steps taken to internalise the true life cycle costs of the product.
  2. Advice and consultancy. The provider may make suggestions as to how to optimise the use of the product, which may have beneficial environment impacts, marginally.
  3. Product lease.  The provider has some incentive to prolong the product life and therefore design it to last longer and be more reliable in its use. However, the provider may have little or no control over the consumables used the product during its lifetime, which may have a detrimental impact on the environment, such as fuel in leased cars.
  4. Product renting and sharing. This results in the product being used more intensively and because users pay for every time it is used, they are likely to be discouraged from using it indiscriminately.
  5. Product pooling.  As for renting, but could have more beneficial impacts during the use phase of the product.
  6. Activity management/outsourcing.  As the outsourcer has to be more efficient that the in-house provider, this should have beneficial environmental impacts.
  7. Pay per unit use.  This makes the provider responsible for all life cycle costs and hence will strive to improve performance over all stages of the life cycle.
  8. Functional result. This is because the user pays only for the outcome and there are no stipulations as to how this is to be achieved. Hence the provider will try to achieve this in the most cost effective way and is more likely to engage in radical innovation to do so.

Tukker, A. (2004) Eight Types of Product-Service System: Eight ways to Sustainability? Experiences from Suspronet, Business Strategy and the Environment, 13, 246-260

This entry was posted in Chap 14 Operations strategy, Sector: Manufacturing and tagged , , . Bookmark the permalink.

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