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  • Writer's pictureGayané Grigoryan

What is servitisation, and how can it help save the planet?

The concept of servitisation has been gaining traction in recent years, with more and more companies exploring new business models that focus on providing services and solutions rather than just selling products. This trend is not only transforming the way businesses operate, but it has also the potential to play a significant role in reducing waste and resource consumption, as well as in mitigating climate change. In this article, we will explore what servitisation is, how it can contribute to a more sustainable future, and what challenges and opportunities lie ahead for companies that choose to embrace this approach.


Introduction to Servitisation


What is Servitisation?

In simple terms, servitisation is a business strategy that involves offering services alongside products. Instead of just selling a product, companies provide services that complement the product, such as maintenance, repair, or replacement. Servitisation can take different forms, such as leasing, performance-based contracts, or pay-per-use systems.


History of Servitisation

Servitisation is not a new concept. It has been around for decades, particularly in industries such as aerospace, defence, and heavy machinery. However, in recent years, servitisation has gained momentum as a response to changing consumer demands, technological advancements, and sustainability challenges.


Servitisation in the Sustainability Movement

Servitisation aligns with the principles of the sustainability movement. By focusing on providing services rather than just selling products, companies can reduce waste, extend the lifespan of products, and decrease their carbon footprint. Servitisation can also enable companies to shift from a linear business model (take-make-waste) to a circular one (reduce-reuse-recycle).


The Benefits of Servitisation in Saving the Planet


Reducing Waste and Resource Consumption through Servitisation

By offering services that help customers use products more efficiently and effectively, companies can reduce waste and resource consumption. For example, instead of buying a new printer every time the ink runs out, customers can subscribe to a printing service that provides ink refills and maintenance.


Extended Product Life Cycle with Servitisation

Servitisation can help extend the life cycle of products, reducing the need for new products and minimising waste. By providing maintenance and repair services, companies can ensure that products are functioning properly and can be used for longer. This can also increase customer loyalty and satisfaction.


Reduced Carbon Footprint with Servitisation

Servitisation can enable companies to reduce their carbon footprint by optimising the use of resources and reducing waste. For example, a company that offers energy-efficient lighting as a service can help customers reduce their energy consumption, resulting in lower greenhouse gas emissions.



Case Studies of Successful Servitisation in Sustainability

Case Study 1: Philips Lighting

Philips Lighting (now Signify) shifted from selling light bulbs to offering lighting as a service, where customers pay for the amount of light they use. Philips provides energy-efficient LED lighting, maintenance, and remote monitoring services. This approach has helped customers reduce their energy consumption by up to 80%, resulting in significant cost savings and emission reductions.


Case Study 2: Caterpillar

Caterpillar, a manufacturer of heavy machinery, offers a variety of services that complement its products, such as remote monitoring, predictive maintenance, and repair services. By providing these services, Caterpillar can ensure that its products are operating at optimal levels, minimising downtime and reducing waste.


Case Study 3: Interface Carpets

Interface Carpets, a manufacturer of modular carpet tiles, offers a leasing program called Net-Works, where customers lease the tiles and return them at the end of their useful life. Interface then recycles the tiles and uses the material to manufacture new tiles. This approach has enabled Interface to eliminate waste and reduce its carbon footprint.


Challenges of Implementing Servitisation for Sustainability


Cultural and Organisational Barriers to Servitisation Adoption

Implementing servitisation requires a shift in mindset and culture, which can be challenging for companies that are used to a traditional product-based business model. Companies may also need to restructure their organisation and develop new skill sets to support servitisation.

Technical and Financial Challenges of Servitisation Implementation

Implementing servitisation requires significant investments in technology, infrastructure, and personnel. Companies may need to develop new systems and platforms to support service delivery and customer management. They also need to consider the financial viability of offering services, such as pricing, revenue models, and risk management.


Managing Risks in Servitisation for Sustainability

Servitisation involves new risks, such as performance guarantees, service quality, and data security. Companies need to develop robust risk management systems and processes to ensure that they can deliver services effectively and mitigate potential risks. They also need to establish trust with customers and communicate the benefits and risks of servitisation clearly.



Future of Servitisation in the Sustainability Movement


As the world begins to take more and more serious steps towards sustainability, servitisation is emerging as a powerful tool that can help businesses and industries reduce their environmental impact. Servitisation, as a concept, involves shifting the focus of a business from selling products to offering solutions and services instead. This approach not only reduces the pressure on resources, but it also creates a circular economy where products are continuously reused, recycled, or repurposed.


So, let’s explore the potential applications of servitisation for sustainability, the trends and predictions for the future, and the new business models that emerge as a result.


Potential Applications of Servitisation for Sustainability

There are several potential applications of servitisation that can revolutionise the way we approach sustainability. One application is in the field of transportation where companies are switching from selling cars to offering mobility solutions such as car-sharing services or electric scooter rentals. This shift can help reduce the number of cars on the roads, and thereby reduce carbon emissions. Similarly, in the retail industry, companies can offer product-as-a-service models, which allow customers to rent products instead of buying them outright. This approach keeps products in use for longer and reduces waste. Another potential application for servitisation is in the energy sector, where companies can offer energy-as-a-service models, which means providing energy efficiency services instead of just selling energy. These services can include things like smart energy management, renewable energy solutions, and energy monitoring.


Trends and Predictions for Servitisation in Sustainability

The trend towards servitisation in sustainability is gaining momentum, and there are several predictions for its future. One prediction is that servitisation will continue to spread to industries beyond transportation, retail, and energy. For example, the construction industry could shift towards offering building-as-a-service models, where customers pay for the use of a building instead of owning it outright. Another prediction is that servitisation will lead to more circular business models, where products are designed with reuse and recycling in mind. Finally, there is a prediction that servitisation will lead to more collaborative business models, where companies work together to offer solutions and services.


New Business Models for Servitisation in Sustainability

The shift towards servitisation in sustainability is also leading to new business models. One such model is the as-a-service model, where companies offer services instead of selling products. This model can be applied to a range of industries, from transportation to construction to retail. Another model is the sharing economy model, which involves sharing products and resources instead of owning them outright. Finally, there is the circular economy model, where products are designed with reuse and recycling in mind, and a focus is placed on keeping products in use for as long as possible.


Servitisation is emerging as a powerful tool that can help businesses and industries reduce their environmental impact. By focusing on services instead of products, companies can create a circular economy, reduce waste, and reduce their carbon footprint. As the trend towards servitisation in sustainability continues, we can expect to see new business models and applications emerge that will help us move towards a more sustainable future.


In conclusion, servitisation represents a promising path towards a more sustainable and circular economy. By shifting the focus from products to services and solutions, and by embracing new business models and technologies, companies have the opportunity to reduce waste, extend product life cycles, and mitigate the environmental impact of their operations.


However, the path towards servitisation is not without challenges, and organisations need to carefully evaluate the risks and benefits of this approach before embarking on this journey. Nonetheless, the potential rewards of servitisation in terms of sustainability and business growth make it a trend worth watching in the coming years.


 

FAQs


What is servitisation?

Servitisation is a business concept that involves transforming traditional product-centric business models into service-oriented ones. In a servitisation model, companies focus on providing solutions and services to customers, rather than just selling products.


What are the benefits of servitisation for the environment?

Servitisation can contribute to sustainability and environmental protection in several ways. By extending product life cycles, reducing waste and resource consumption, and encouraging the adoption of greener technologies, servitisation can help businesses reduce their environmental impact and carbon footprint.


What are the challenges of implementing servitisation?

Implementing servitisation can be challenging for companies, as it involves significant organisational and cultural changes. It can also require substantial investments in technology and staff training. Additionally, incorporating services into a product-based business model can be complex, and companies need to carefully evaluate the potential risks and benefits of this approach.


Is servitisation suitable for all types of businesses?

While servitisation can be beneficial for many companies, it is not a one-size-fits-all solution. It may be more suitable for businesses that sell durable goods with high maintenance needs, complex products, or products that have a high environmental impact. However, businesses across many industries can benefit from a servitisation model, including manufacturing, retail, and healthcare, amongst others.



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