28.4 Succeeding in Business by Managing Consumption - a more sustainable approach to selling for manufacturers

Adrian Ronald Tan , DTU Management Engineering, Technical University of Denmark (DTU), Kgs. Lyngby, Denmark
Steve Evans , Manufacturing Department, Cranfield University, Bedfordshire, United Kingdom
Timothy Charles McAloone , DTU Management Engineering, Technical University of Denmark (DTU), Kgs. Lyngby, Denmark
Full Papers
  • ManagingConsumption_JAOCC_TanEvans&McAloone_final.pdf (759.1 kB)
  • Background
    The dominant paradigm of industrial systems the past century has been mass production. This allowed products to be designed and manufactured in great quantities at lower costs, faster and of better quality than ever before. The efficiencies of mass production paved the way to mass consumerism that has since spurred global economic wealth and improved the lives of billions of people. Today it is apparent that the effects of the current industrial systems on our natural environment and consequently our own well-being are unsustainable.


    Manufacturing firms have traditionally succeeded in business by selling as much as they could produce. Designers constantly created new products, factories produced them as fast and cheap as possible and marketing encouraged demand – all contributing to ever increasing levels of natural resource consumption. It was of little concern what happened to the products once they were sold and handed over to the customer. This situation is now changing rapidly, with industry creating environmentally superior products in environmentally superior factories using environmental supply chains. However, if industrial systems are to become sustainable they also need to directly address issues of consumption. The role of design, manufacturing and service delivery may no longer be to sell ‘more stuff’, but to address how people’s needs can be sufficiently fulfilled in a manner which is economically and environmentally sensible – ‘selling less’.

    This paper provides three cases of manufacturing companies that demonstrates that business can be successful by selling less. The business model of each of the companies actively attempts to reduce their customers’ consumption while increasing customer satisfaction. This has proved to reduce customers’ costs, increased long term relationships to customers and radically reduced the environmental effects.

    ·         Steelcase is the world’s largest manufacturer of office furniture.  The development of their products is based on user-centred insights where work, workers and workplaces are studied intensively to create new solutions of furniture, interior architecture and technology. They no longer see it as their role to sell as many chairs and desks, but to work with their customers in finding solutions to workspaces that allow employees to work effectively and satisfactorily. This might actually mean less space and less furniture, but a better work environment and better business results for their customers.
    ·         Vitsœ is a small company based in England. They manufacture a universal shelving system originally designed by Dieter Rams in 1960. The shelving system is designed with longevity in mind and is easy to construct, repair and dismantle allowing the system to be extended, rearranged and moved. All new components of the shelving system are compatible with the original system. Vitsœ discourages their customers to buy more than necessary as they can always add more components at a later stage; this is seen to result in long term commitments between customers and the company. Half of their business is from existing customers, and considering the durability and long product life, this is very high.
    ·         SCA Hygiene Products is a global manufacturer of paper based hygiene products (paper towels, nappies, feminine hygiene products, etc.). They are the world leader in incontinence care. In Denmark the majority of their products for incontinence are sold to health care institutions and nursing homes. Here, in addition to their products, they offer a whole range of services from planning how to achieve improvements in incontinence care, to training and coaching health care personnel on how to best use their products, including monitoring product consumption and intervening when deviations occur. This integrated approach to products and services allows SCA to improve the well-being for the users of incontinence products, the work conditions for health care providing personnel and the total economy for incontinence care for the health care institution.
                              

    Objectives
    This paper describes each company and their value propositions and how these were developed, delivered and nurtured in cooperation with customers. This is done on the basis of a framework of product/service-system (PSS) conceptualisation that elucidates four essential perspectives of PSS:
    -          Value perceptions
    -          Product and product life
    -          Customers and customer activities
    -          Actor network
    Insight into these companies’ business and context is presented in order to show how new, more sustainable, business models and design methods can be developed.
                                           

    Method
    Case study research is chosen as the research method as it gives deep insight to the research object and its context while allowing analysis of many variable factors (Yin 1994). As the objective is to gain insight in a company’s practice and context, the case studies are qualitative and explorative. All the cases derive from a PhD project on PSS development for manufacturing firms. The information for Steelcase and Vitsœ was gathered by one of the authors as a participant observer in new service development projects with the companies covering 15 months and 4 months respectively. The case on SCA was mainly established through interviews of 8 key employees and 5 customers and observations from company meetings and workshops. In all three cases multiple sources of information were used and findings were presented and discussed with the companies.   

    Results
    The three case studies presented here provide evidence that a potentially lucrative business strategy for manufacturing firms is to not just sell as much as possible but to address the consumption of their own products and thereby ensure proper use and reduce unnecessary waste of natural resources. All the companies described manufacture fairly low-tech, uncomplicated products but even in this situation, the cases show large savings can be made for the customer by influencing his or her planning and use activities. In each case the delivery of products and services supported a clear strategy to support the customer throughout the total life cycle of the products. It would seem that this approach of production and delivery efficiency combined with consumption sufficiency could hold business potential for many other manufacturers to achieve environmentally and economically sustainable consumption and production.


    References
    Yin, R. K. (1994). Case Study Research: design and methods, Sage