Recently the Ellen McArthur Foundation launched its strategy for circular design, offering a timely call for a systemic shift in product design. The approach emphasizes the need for organizations to adopt a holistic design perspective and aligns with emerging trends in fields like servitization.
It's easy to see the value in repairing and reusing equipment if it means keeping costs low and ensuring productivity uptime. Servitization is built on the premise that organizations sell outcomes rather than products, so customers focus not on how new or shiny equipment is but whether or not it gets the job done.
This fits with the basic principles of the circular economy outlined by the Foundation, the idea that manufacturers can design out waste and pollution and keep products and materials in use. Like servitization, it takes a different way of thinking to realise how this can benefit the overall business. Malin Orebäck, Senior Expert Design at McKinsey Design aptly notes in the Foundation’s design strategy report that a lack of holistic thinking has been a barrier to progress in industries still rooted in linear business models. To truly implement a circular model, companies should apply design thinking throughout the entire process, from cradle to cradle.
Maintenance and the extension of useful life
To be genuinely circular, organizations should design with service in mind from the outset. This involves considering service-related factors, like standardized components, while minimizing the environmental impact of parts and incorporating reuse, remanufacturing and recyclability into the initial design phase.
The linear model of buying and selling products, often with a focus on rapid replacement and upgrades, is deeply ingrained. Manufacturers face the challenge of reimagining trade as a more service-centric rather than product-centric endeavor. While this transition requires time, it offers economic advantages for both suppliers and customers.
The European Parliament asserts that a shift towards a more circular economy could lead to increased competitiveness, foster innovation, spur economic growth, and generate a significant number of jobs (an estimated 700,000 in the EU by 2030). Rethinking materials and products for circular use has the potential to drive innovation across various sectors.
A key capability here is being able to plan product lifecycles based on customer needs. This means having real-time insights into each product's performance and knowing when maintenance or part replacement is necessary to ensure Service Level Agreements (SLAs) are met.
Return and reuse of materials
AI-enabled asset management systems with predictive maintenance capabilities can do this, enabling organizations to stay on top of product performance. This is where organizations can have insight into how to repurpose products as well as understand when to return and reuse materials.
There is a lot of attention paid to the forward logistics associated with equipment and service parts, but not as much to the reverse piece. Bringing parts and assets back into inventory or repair depots can have a significant impact on net new purchase and consumption of resources. Technician vans and forward stocking locations can provide an incredible amount of unused inventory that can be repurposed for other service and maintenance initiatives.
All of this product intelligence can also be fed back to product designers, enabling them to better design for circularity. This intelligence shows them how customers use products and what the common issues with parts are, allowing designers to improve product maintenance and reuse. This makes for more reliability in product performance as well as faster and more efficient maintenance work should it be required.
Additionally, organizations must invest in the resources and tools needed to manage the reverse logistics of products and parts. This includes the capacity to repair, refurbish, or remanufacture these items for industrial use.
From a financial perspective alone, this shift makes sense. It reduces costs, such as energy bills, stemming from reduced new production. Additionally, it curtails carbon emissions and lessens landfill waste, promoting more reuse and recycling. At a time when businesses are scrutinizing costs, energy efficiency, and emissions compliance, this transition holds significant potential. The circular economy places business and service teams at the forefront, ultimately influencing its success or failure.