Circularity

Make business not waste

What is a circular economy? Why is it an important step on the path towards a more sustainable future?

Circular economy

Are you ready for the circular economy?

In the future your customers will only pay for what they use. Substantial investments in manufacturing equipment, complicated maintenance and unforeseen expenses will be a thing of the past.

At the same time many companies wish to replace today’s throw-away culture in favour of a more responsible approach by maintaining and recycling machinery and equipment.

This calls for a new circular market strategy that gives your customers more flexible payment models based on, e.g. function and availability, while simultaneously delivering strong, carefully thought-out plans for maintaining, updating and recycling equipment.

The good news is that these innovative business models not only benefit your customers but provide you with an array of completely new advantages and revenue opportunities, leading to even stronger, longer-lasting customer relationships.

Linearity vs circularity

The linear economy

Linear business models are based on today’s throw-away culture, where resources are extracted from the Earth, processed, sold and ultimately discarded. This model financially rewards manufacturers that produce goods that break or quickly become obsolete, which means they are cast aside only for customers to buy something new. Worn-out products often end up in landfills, where materials remain until they break down – and in the worst case – pollute the environment.

The recycling economy

The goal of the recycling economy is to reuse products when they are worn-out. Even though this model is better for the environment than the linear one, it is still based on a culture where products are manufactured to be sold once and then subsequently thrown away. Preferably as quickly as possible. Far from everything can be recycled and this model continues to unnecessarily burden the environment since new products must continually roll off the assembly line.

PaaS

With circular business models such as PaaS manufacturers retain responsibility for a product throughout its lifetime. As a result they are not reliant on short-term one-off sales but rather long and healthy customer relationships, where customers pay for access to a product on an ongoing basis, often combined with service agreements, consumables, upgrades and much more. This model provides manufacturers with the financial incentive to develop durable products, reducing the need to obtain new materials. Multiple studies show that there are significant environmental – and financial – gains to be made by switching from a linear to a circular business model.*

*Source: Product-as-a-service in the circular economy: The nine critical challenges and how to fix them, European Union, European Regional Development Fund

Sustainability

More sustainable business model

A prominent aspect of the United Nations Sustainable Development Goals is improving the climate and environment. Businesses and industry bear a unique responsibility for solving this task, which cannot be conquered alone. Transitioning from a linear to a circular economy is one of the tools available for achieving these goals.

PaaS is more than just a superior financial model for you and your customers. It is a more sustainable way of doing business and a prime example of how to break away from the throw-away culture currently damaging our climate.

Repairing your own products ensures that they are maintained as optimally as possible, which prolongs their lifespan. You likewise have the opportunity to continually update them to extend their relevance and usefulness.

The ongoing stream of data that you receive about your products furnishes you with valuable information about how to improve your products so they last even longer in the future. Ideally, once products are worn out or out of date, you can reuse them in new products.

Advantage

Green competitive advantage

Consumption of the Earth’s resources has more than tripled in the past 50 years, with the extraction and processing of materials, fuels and foodstuffs accounting for more than half of all global CO2 emissions.* The time for change has arrived.

Fortunately, increasingly more companies and consumers are demanding sustainable products. What is more, the opportunities available for implementing PaaS have never been better. Smart sensors and the Internet of Things are making it progressively easier to monitor products and develop intelligent payment plans and maintenance solutions.

This means that joining the circular economy now will allow your company to get ahead and gain a valuable competitive advantage that will only continue to grow in the future.

That certainly makes a difference. Estimates show that if global circularity doubles we can reduce global emissions by 39% and our overall material footprint by 28% by 2032.*

*Source: Product-as-a-service in the circular economy: The nine critical challenges and how to fix them, European Union, European Regional Development Fund