Servitization to promote a circular economy The case of the Swedish process industry

Abstract

The urgency to change due to the climate crisis, has increased the awareness of the need to break the linear economy and strive for circular economy. To do so, companies has started to change, creating new value with less resources. One way of doing so, is to sell the function of a product rather than the product itself. How does circular economy and selling the function interlink and, how does the customers perceive these offerings? This thesis explores the development of circular economy and servitization within a large manufacturing company, with its customers in the Swedish process industry. Found in the literature is that servitization enables features in circular economy which were further acknowledged by the qualitative interviews conducted at the chosen case company and with their customers. Further, a quantitative survey has been used to provide more detailed insights of how different companies perceives circular economy and the connection to servitization. As part of the survey, a Discrete Choice Model has been used to quantify possible trade-offs between attributes of services or products. The results indicates that customers within the Swedish process industry are highly aware of circular economy and perceives it as very important. Regarding service attributes, they highly values saved CO2 & increased uptime, which they also are willing to pay more for. Several gaps were also identified, both within the company studied, but also between the company and their customers. This could imply different strategies to reach a circular economy and, as there are gaps, two companies could work in different directions even though they have the same goal - a circular economy. Key findings Different definitions of a circular economy may lead to challenges. Servitization is one way to enable the features of circular economy. The awareness of circular economy is regarded as high. Customers values saved CO2-emissions and increased uptime the most. There is a gap between customer needs and provided offerings. There is a risk that circular economy stays at strategic level. A 50/50 combination of traditional affairs and service offerings is most likely in the future based on the customers opinion. Key propositions Incorporate the voice of the customer to a greater extent when developing offerings. Implement the right KPI’s together with key stakeholders. Develop the traditional affair as well as services. Dare to continuously improve to reach circular economy.