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Unformatted text preview: © Copyright 2000 by the Massachusetts Institute of Technology and Yale University Volume 3, Number 2 & 3 y FORUM Servicizing the Chemical Supply Chain Edward D. Reiskin Allen L. White Tellus Institute Boston, MA USA Jill Kauffman Johnson California Environmental Associates San Francisco, CA USA Thomas J. Votta Tellus Institute Boston, MA USA Summary Servicizing the transformation from product- to service- based enterprise is a major force in changing how firms manage material input, throughput, and output. Redefinition of the firm as a service provider instead of a product manu- facturer means that function, not form, is the source of added value delivered to the customer. To realize the dema- terialization benefits of such a transformation requires a fundamental realignment of the supplier-customer relation- ship. Instead of the traditional incentives to maximize the volume of physical product sold, servicizing requires a part- nership wherein the financial rewards of reduced material consumption are shared between supplier and customer. We illustrate this partnership concept with the example of chemical management services (CMS), an approach that is gaining momentum in the automobile and electronics sec- tor. Compensation and gain-sharing based on chemical effi- ciency and chemical use reduction, often tied to fixed price mechanisms, lie at the core of the CMS model. Diffusion of the servicizing model holds much promise for driving dematerialization while reducing the environmental burden of product manufacturers. Keywords chemical management services (CMS) dematerialization environmental cost accounting greening the supply chain outsourcing product-to-service Address correspondence to: Allen L. White Tellus Institute 11 Arlington Street Boston, MA 02116 USA [email protected] http//:www.tellus.org Journal of Industrial Ecology 19 20 Journal of Industrial Ecology y FORUM Introduction The shift from a product-focus to a service- focus enterprise in the manufacturing sector—a transformation we call “servicizing”—has poten- tially profound implications for the theory and practice of industrial ecology (IE). Looking back over ten years of organizational change in tradi- tional manufacturing firms, servicizing emerges as a major thrust in industrial organizations dur- ing the last two decades. It appears in both in- cipient and mature forms across a broad array of traditionally product-based firms: XEROX mov- ing from a photocopy machine maker to the “Document Company”; IBM from a mainframe and PC maker to an information services com- pany; Herman Miller from an office furniture maker to an office furnishings service provider; Electrolux from an appliance manufacturer to an industrial cleaning service firm; and a unit of Castrol from an industrial lubricants vendor to an industrial lubricants services supplier....
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This note was uploaded on 08/06/2008 for the course ESM 289 taught by Professor Geyer during the Spring '07 term at UCSB.
- Spring '07