Advancing Sustainable Manufacturing through Pay-per-Use Servitization Model

Abstract

In the face of global environmental challenges and their significant impact, manufacturing firms have been recognized as major contributors to environmental degradation and emissions. Additionally, these firms encounter various challenges arising from evolving economies, emerging competitors, shifting consumer preferences, and rapidly advancing digital technologies. To address these challenges and foster innovation, manufacturers are turning to servitization as a strategic approach. Within servitization, the pay-per-use service model emerges as a promising solution. Furthermore, integrating circular economy principles into this model presents an opportunity for sustainable business practices. This paper examines successful examples of companies that have adopted servitization and effectively implemented pay-per-use models while incorporating circular economy principles. Drawing upon these lessons, we propose the “Wheel of Servitization” framework, which enables manufacturers to approach servitization holistically, ensuring that all critical dimensions are addressed to maximize the likelihood of success. By embracing servitization and pay-per-use models within a circular economy context, manufacturing companies can embark on a pathway towards sustainability, addressing environmental concerns and simultaneously meeting the demands of a rapidly changing business landscape.