Provisional Table of Contents

MULTI-CLIENT STUDY ON
THE SHIFT
FROM MANUFACTURING
TO A SERVICE ECONOMY
1998 to 2010

This report was researched by a team led by Walter R, Stahel, director of The Product-Life Institute Geneva.

The report represents eight man-months of research and editing, from June 1999 to January 2000.

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DO NOT COPY Copyright The Product-Life Institute, Geneva 2000

MULTI-CLIENT STUDY ON
THE SHIFT FROM MANUFACTURING TO SERVICES
1998 AND 2010

TABLE OF CONTENTS

EXECUTIVE SUMMARY

PART I : INTRODUCTION AND STRUCTURE OF THE REPORT

PART II : FROM MANUFACTURING TO A SERVICE ECONOMY

PART III : FROM SELLING PRODUCTS TO SELLING SERVICES

PART IV : CONCLUSIONS AND OUTLOOK

APPENDICES

- List of figures

- Market figures

- Statistics, tables

- Sources and literature

PART I : INTRODUCTION AND STRUCTURE OF THE REPORT

Chapter 1 INTRODUCTION: FROM MANUFACTURING TO A SERVICE ECONOMY			1
1.1 What this report is about			2
	1.11 'Doing the right things'			2
	1.12 'Service is the ultimate luxury'			3
1.2 The main driver of the shift from manufacturing to services: business !			5
	1.21 Business itself: a change in the way we look at business opportunities				5
	1.22 Scientific innovation and technology to build a more sustainable economy			5
	1.23 Shareholder value driving services			6
1.3 Environmental and social benefits too			7
	1.31 Reduced environmental impairment			7
	1.32 Social benefits : job creation			7
1.4 The common denominators			9
	1.41 A first mover (and first comer) advantage			9
	1.42 Opening the fork between revenue and costs through eco-efficiency and performance			9
	1.43 Selling know-how instead of goods incorporating the know-how: reaching down to the customer			9
1.5 New Synergies			11
	1.51 A mutual commitment between supplier and customer, based on customer satisfaction			11
	1.52 A logic in itself			11
	1.53 A tale of two economies: wealth without resource consumption? and a tale of two schools of corporate thinking: industrial throughput production versus asset management			12
1.6 Implications			17
	1.61 Implications for corporate strategy			17
	1.62 Implications for competitiveness			17
	1.63 Implications for investors			17
	1.64 Implications for technological innovation			18
	1.65 Implications for commercial innovation			19
	1.66 Implications for product design and system solutions			20
	1.67 Implications for greening the corporation			20
	1.68 Implications for policy-makers			20
		The pillars of a sustainable society Innovation as the key to lower resource consumption
	1.69 The issue of culture			23
1.7 Structure of the report			23

PART II : FROM MANUFACTURING TO A SERVICE ECONOMY

Chapter 2 THE DRIVERS BEHIND THE SHIFT		27
2.1 Business drivers: corporate strategy driving the shift from manufacturing to services		27
	2.11 Sufficiency strategies: from manufacturing to services		27

- S1 Sufficiency and prevention

2.12 Efficiency strategies: from products to services

- S2 Manufacturers selling performance

- S3 Manufacturers and fleet managers with take-back responsibility,
cradle back to cradle

- S4 Fleet managers with operation and maintenance responsibility

- R Remanufacturing

2.13 Supportive strategies

- S5 Extended quality guarantees by manufacturers

- S6 Service contracts

- S7 E-business

2.2 Innovation drivers: Science and Technology driving the shift from products to services		32
2.3 Is the environment a driver of the shift from manufacturing to services?		35
	2.31 Prevention and sufficiency solutions		35
	2.32 Efficiency solutions		35

- Consumption goods

- Catalytic goods

- Durable mobile goods

- Durable immobile goods

2.4 Green public procurement and other policy measures as drivers of the shift from manufacturing to services

Chapter 3 GENERIC PREVENTION STRATEGIES		41
3.1 Definitions and Issues		41
	3.11 Introduction		41
	3.12 The market		42
	3.13 Key players		42
	3.14 Expectations for 2010		43
	3.15 Implications for competitiveness,		43
	3.16 Implications for technology		44
	3.17 Implications for the environment		45
	3.18 Implications for jobs		45
	3.19 Key policy messages		46
3.2 Prevention strategies: examples		47

- Professional cooperatives (Berufsgenossenschaft)

- Incident reporting system

- ZEV initiative in California

- Quality verification mechanisms

3.3 Sufficiency strategies: examples

- Saving the environment by re-using towels in hotels

- Car sharing

PART III : FROM SELLING PRODUCTS TO SELLING SERVICES

Chapter 4 CONSUMPTION GOODS - A CASE FOR SCIENCE		51
4.1 Definitions and Issues: consumption and dissipative goods		51
	4.11 Introduction		52

- The main business drivers

- The main technology drivers

4.12 The market	53
4.13 Key players	53
4.14 Expectations for 2010	54
4.15 Implications for competitiveness,	55
4.16 Implications for technology	55
4.17 Implications for the environment	55

- Consumption goods

- Dissipative goods

4.18 Implications for jobs	56
4.19 Key policy messages	56

- Junction 2 in a loop economy

4.2 Examples of Life Sciences for consumption goods			60
	4.21 Sufficiency solutions			60
		- Zero-energy houses - Chinese doctors 2000 years ago - HMOs health maintenance organizations - Vaccinations - Mobil Oil selling quality checks
	4.22 Efficiency solutions			61
		- Strategy of selling performance based on knowledge - Green Life Sciences in agriculture - Grey Life Sciences in process technology
4.3 Life Sciences of management strategies for consumption goods			65
	4.31 Selling commodity consumption goods			65
		- Drinks and food - (Energy) contracting
	4.32 Fleet managers with operation and maintenance responsibility			66
		- Energy contracting by public utilities - Catering - Cleaning and hygiene services - Integrated company strategies
4.3 Examples of Material Sciences for dissipative goods			68
	4.31 Re-usable smart materials			68
		- Absorbing materials - Service of ceramic valves - De-bonding and de-polymerization
	4.32 Materials with enhanced qualities in utilization			69
		- Kyocera drums for laser printers - Castolin-Eutectic - Interface's leasing of carpet tiles - From manufacturer of rails to provider of railroads - other examples
	4.33 Branded materials			71
		- Lycra

Chapter 5 CATALYTIC GOODS - LOGISTICS AND POLICY AS KEYS			73
5.1 Definitions and Issues: catalytic goods			73
	5.11 Introduction			74
		- The main driver is the environment
	5.12 The market			75
	5.13 Key players			75
	5.14 Expectations for 2010			76
	5.15 Implications for competitiveness,			76
	5.16 Implications for technology			77
	5.17 Implications for the environment			77
	5.18 Implications for jobs			77
	5.19 Key policy messages			77
5.2 Examples of catalytic goods			79
	5.21 Rent a molecule and re-refining solvents			79
	5.22 Renting out textiles to industry			79
		- MEWA Wiesbaden - Eder Werbematten

Chapter 6 DURABLE GOODS - A CASE FOR FLEET MANAGEMENT AND PRODUCT-LIFE OPTIMIZATION				81
	6.1 &nb