Servitization Ángeles Pereira

A case study of servitization in the farming

livestock sector: organizational change

and potential environmental improvement

3rd International Business Servitization

Conference

Bilbao, 13th-14th November

Ángeles Pereira, Adolfo Carballo, Manuel González, Xavier Vence

Dept. of Applied Economics – University of Santiago de Compostela

PRESENTATION SUMMARY

Conclusions

Results

Carbon footprint methodology

Case study: cooperatives for farm services

Servicizing and sustainability

Defining servicizing

Research objectives

3rd International Business Servitization Conference

Research objectives


• A conceptual framework to clarify how servicizing is

present in the farming sector

• Measuring the potential contribution of servicizing to

diminishing the environmental impact of farming activities

What is servicizing?

Servitization

• PSS

• Servicizing

• Transaction / business

model

• Combination of

products & services

• Selling functions

• Satisfaction of

customer’s needs


Types of servicizing


Tukker (2004)

Servicizing in the agri-food sector


Organic food home-delivery

Biological pest management

Services in PSS

Agricultural phase

Integrated pest management

Organic farming

Soil conservation

activities

Processing & transportation

Sharing common

processing facilities

Common transportation

Internal capacity building

On eco-sound agriculture

On Fair Trade and organic certification

Marketing (international)

International and national marketing

Fair Trade and organic

certification

Promotion (local)

Coffee museum

Coffee bar

Tourism programmes presenting

coffee production

Maintenance services

Cleaning, repair and

maintenance of coffee

processing equipment

EOL treatment

Worm-composting system for

waste

Biological wetland

treatment for waste water

Services to coffee growers. Devissher&Mont (2008)

Servicizing generic elements


Enabling platform

Products &services

Functional result

Servicizing and environmental sustainability


• Servicizing vs green servicizing

• Eco-efficiency improvements due to extended producer

responsibility:

• Use and disposal costs

• End-of-life value

• Profit linked to units of service

• Role of design:

• Closing material loops

• Alternative scenarios of product use

• Increasing productivity of resources use and dematerialization

• Providing system solutions

Case study: agricultural cooperatives


Machinery services Heifer breeding

Fodder production and delivery

Servitization through cooperatives

• Combination of products & services: material inputs,

technical advice, maintenance and reparation,

transportation

• Enabling platform: access to the last technological

advances and technical knowledge

• Functional result: land labored, healthy productive cows,

adequate animal feeding


Servitization through cooperatives: organizational

changes

• Cultivation planning adapted to machinery services

availability

• Heifers breeding in common facilities and pay per day of

stay

• Commitment to planned growing and harvesting

• Farmers avoid acquiring expensive machinery and

carrying out some risky works at farm

• Farmers get genetically improved cows while avoid

potential problems from animal diseases

• Farmers are released from feeding their cows


Servitization through cooperatives: environmental

improvement potential


SERVICIZING PRACTICE Potential sources of environmental improvement

Farm machinery Reduction of processes and material requirements to

produce farm machinery

Efficient consumption of fuel and less emissions to the

atmosphere

Professional and efficient use of machinery

Diffusion of more efficient technologies

Heifer breeding Effective disease prevention, with less needs of medicines

Optimized food portions

Efficient use of facilities

Fodder production and

delivery

Optimal use of land

Local distribution, less kilometres

Efficient ensilage process: less loss and less plastics

Elimination of the mixing kart at farm

Reduced demand for external concentrated food

Measuring environmental impacts from

servicizing: the carbon footprint

• OBJECTIVE: identifying environmental improvements in

farms shifting to servicizing

• INDICATOR: the carbon footprint (CF), which includes

CO2 and other greenhouse gases emissions

• METHOD: Composed method based on financial

accounts MC3 (Carballo-Penela & Doménech, 2010; Coto Millán, Doménech, &

Mateo Mantecón, 2008; Penela, García-Negro, & Quesada, 2009)

• COMPARISON of the three farms’ CF before and after

joining into cooperatives (2002 – 2011)


Results: absolute change in the CF

• Increase in the farms’ size: number of heads of cattle and

milk production

• Overall increase in the farms’ CF

• Emissions due to the production of animal food purchased

by the farms are the main source of CF

• Reduction in the CF due to electricity and materials

• Increase in the CF due to services


Results: the CF considering the farms’ size


FARM 1 FARM 2 FARM 3

2002 2011 2002 2011 2005 2011 Carbon

footprint

(tCO2)

704.31 1919.97 1010.58 1304.44 1272.64 1385.81

Number of

heads of

cattle

80 210 232 321 135 150

Liters of milk 544.115 1.766.101 938.203 1.672.679 1.288.394 1.708.34

tCO2 / heads

of cattle 8.80 9.14 4.36 4.06 9.43 9.24

tCO2 / liters

(thousands) 1.29 1.08 1.07 0.7 0.98 0.81

tCO2 / heads

of cattle

(2002=100)

100 103.86 100 93.11 100 97.98

tCO2 / liters

(2002=100) 100 83.98 100 72.40 100 82.12

Results: CF average relative variation (tCO2/litres)


FARM 1 FARM 2 FARM 3

1.-FUEL -3,20% 12,37% 23,54%

2.-ELECTRICITY -2,50% -20,66% -9,44%

3. MATERIALS -19,84% -14,42% -8,19%

4. SERVICES 65,40% 57,72% -2,89%

5

AGRICULTURAL

RESOURCES

-0,29% -2,44% -3,77%

6 FOREST

RESOURCES -51,77% -100,00% -

TOTAL [tCO₂] -1,92% -3,52% -3,23%

Conclusions

• Main contributions:

• Understanding servitization in the farming sector

• Measuring the environmental impact from shifting to servicizing

• Agricultural cooperatives represent a shift to servicizing in

the farming sector

• Products do not disappear but the service component is

the relevant element of the value proposal to the farmers

• Servicizing through agricultural cooperatives helps to

reduce the individual CF of farms


Conclusions

• Specialized services provided by the cooperatives (such

as those related to the cows’ feeding and genetic

improvement) allow to improve the efficiency of dairy

farms

• Environmental gains from servicizing in the farming sector

are linked to a more efficient use of resources:

• More efficient and intensive use of strong machinery

• Reduced material and energy intensity based on experts

consultancy for animal care and feeding



Thank you very much for your attention!

Ángeles Pereira, Adolfo Carballo, Manuel González, Xavier Vence

Dept. of Applied Economics – University of Santiago de Compostela