Less than 8% of products manufactured across the world have a circular lifecycle.
However, circularity provides great opportunities for businesses: access to materials and resources, lower costs, competitive advantages, and on top of it all, a better planet.
The circular economy is a way to rethink the end of life of our equipment. The main goals of circularity are to:
- design out waste and pollution as raw materials inside the equipment are kept in the production cycles
- keep products and materials in use for the longest time possible
- regenerate natural systems
In this article, you will learn more about the As-A-Service business model and how it is key to circularity. You’ll also discover which products and industries are the best candidates for Product-as-a-Service, including electronics. Finally, we’ll discuss how Product-as-a-Service and IT asset disposition (ITAD) work together to support a circular economy, and how this combined approach benefits businesses and consumers alike.
An article co-written with Quantum Lifecycle Partners.
What is Product-As-A-Service?
Integrating circularity into our economy means changing our business models from linear to circular. One of the growing models for Original Equipment Manufacturers (OEM) is Product-As-A-Service (PaaS).
PaaS is a product or a combination of products that are accompanied by a service contract (software updates, customized customer experience, repair, or replacement). It may also be referred to as a subscription-based model or a Product-Service model.
PaaS allows customers to satisfy their needs without the burden of ownership. It means that the OEM owns the product and is in charge of maintaining the product in as near to the purchase day condition as possible. The main advantage for the user is access to state-of-the-art tools without making a large investment. To be profitable, the OEM implementing PaaS has to offer strong and durable products that will satisfy the users for as long as possible.
There are five great economic advantages to PaaS for OEMs:
- Capture recurring revenues
- Increase margin
- Increased customer loyalty
- Increased stakeholder value
- Increased service quality
The goal of PaaS from an OEM point of view is for the product to be used for the longest time possible by a variety of clients while providing the best user experience possible. This then results in an optimized return on investment. The durability of the product is crucial: a solid and dependable product will be used for a long time, whether it is with the same user or with a new one. With PaaS, the components are reused as much as possible.
PaaS means the centralization of the ownership of the product’s life cycle lies in the hands of one OEM. The OEM is responsible for the after-use step, whether it is remanufactured, recycled, reused, etc., ensuring better control over waste management and avoiding unnecessary waste.
Which industries can employ the PaaS model?
The PaaS model can be effectively implemented in a broad range of industries, but the following are especially well-suited for this approach.
- Electronics: The lifespan of IT assets is short, and the second hand market is strong. These two elements make it perfectly suited for PaaS. It offers maximum reusability of devices, reducing users’ reliance on newer equipment, which may not be required most of the time. Devices are used, reused, and then refurbished for the same or another purpose. If not, technology enables us to extract components that can be fed back into the supply chain.
- Healthcare: MedTech suppliers are increasingly renting their equipment to health organizations. Why? Because MedTech is central to hospitals' core business, a key condition for effective PaaS.
- Robotics: Robots are high-value, tangible, and movable assets that can easily be combined with services, making the robotics industry perfect for PaaS.
- Industrial Equipment: Industrial manufacturers are shifting their focus from selling physical equipment to services. Product-As-A-Service models allow them to provide outcome-based solutions and participate in the circular economy.
- Construction: Building technology, including HVAC, lighting, and security, uses sensors to collect millions of data points. PaaS needs data to unveil its full potential, so recurring revenue models are ideally suited for this industry.
What happens when the first use-life of a device is over?
Electronic waste, or e-waste, presents a pressing environmental challenge in today's day and age. Since the start of 2023, we have produced over 37 million tons of e-waste. With rapid technological advancements, the lifespan of electronic devices diminishes and is getting shorter by the day, resulting in a mounting volume of discarded electronics. This proliferation of e-waste has far-reaching environmental implications, including hazardous components, resource depletion, and carbon emissions. With innovative means to extend the lifespan of electronics, we can contribute to a longer shelf life for each device.
Improper disposal of e-waste leads to devices ending up in landfills, posing environmental and data security risks, not to mention the loss of reusable components through parts harvesting. To tackle this issue, there has been a concerted effort to establish initiatives focused on effective e-waste management, including ITAD (IT Asset Disposition) services and sustainable recycling. ITAD initiatives prioritize the collection, sorting, data erasure, and reuse of devices or parts harvesting. If a device is not reusable, it is then subjected to recycling. This end-of-life strategy integrates seamlessly with the PaaS model, ensuring the maximum usability not just of the device but also of the components it is made of, through reuse, recycling, and resource recovery. This approach completes the cycle of sustainable device management.
What is ITAD (IT Asset Disposition)?
ITAD services play a crucial role in the management of end-of-life electronics. These services focus on maximizing the value of retired IT equipment while minimizing the associated risks. Here’s a closer look at the value of ITAD for businesses and the communities they serve.
How ITAD Services Benefit a Business
Extending the Life of Device Components
One important aspect of ITAD services is parts harvesting and remarketing. When electronic devices reach the end of their lifespan, not all components are necessarily obsolete or non-functional. Skilled technicians employed by ITAD providers carefully dismantle these devices and salvage any usable components that can be repurposed. These salvaged parts are then made available in the market, reducing the need for new manufacturing and contributing to a more sustainable electronics ecosystem. Remarketing refurbished devices is also a significant component of ITAD services, offering cost-effective options for consumers while reducing electronic waste.
Safeguarding Personal Information
One key aspect of ITAD services is data security. Improper disposal of electronic devices without adequate data sanitization can lead to the risk of data breaches and identity theft. With the ever-increasing concern for protecting sensitive information, ITAD services employ robust data sanitization and destruction techniques to ensure that all data is securely erased from the devices. This involves employing advanced data wiping methods or physical destruction of storage media to prevent any unauthorized access. As a result, any personal or sensitive information stored on the devices is completely wiped or destroyed, safeguarding individuals and organizations from potential security breaches.
Recycling and Resource Recovery
While ITAD services focus on maximizing the value of retired IT equipment through data security and parts harvesting, they also align with the broader goal of recycling and resource recovery. After salvaging usable components, the remaining materials from the devices are properly recycled. Through responsible recycling processes, valuable metals such as gold, silver, and copper as well as other recyclable materials are extracted from e-waste. These recovered resources can then be used in the production of new electronics, reducing the need for raw materials extraction and minimizing the environmental impact associated with mining.
By integrating ITAD services into the e-waste management process, the lifecycle of electronics can be extended, valuable resources can be recovered, and the environmental impact of electronic waste can be significantly reduced. It is imperative that we prioritize responsible e-waste management to protect the environment and promote sustainability."
Could this be the ultimate solution for a sustainable circular economy?
While the Product-As-A-Service model holds great potential for a more sustainable future, it's important to consider certain aspects that may hinder its effectiveness.
One such aspect is the tendency for fashionable equipment to become less sustainable when following a PaaS model. Users often feel the need to upgrade or change their equipment as soon as a new version hits the market, even if their current version still meets all their needs. This consumer behavior can lead to increased waste and environmental impact. Therefore, it becomes crucial to incorporate circular models for these products and establish a robust take-back strategy. By eco-designing such products and ensuring their high recyclability, manufacturers can reuse certain components in new models and easily give them a second life. This approach would contribute to reducing waste and promoting sustainability.
Additionally, the take-back strategy employed in PaaS models can have its own set of challenges. The return logistics, including transportation systems, recycling processes, and energy usage, need to be carefully calculated to minimize pollution and maximize efficiency.
However, by implementing strong eco-design principles for both the equipment and packaging, these negative impacts can be mitigated. By focusing on sustainability and fulfilling the needs of users, the PaaS model has the potential to transform these challenges into positive impacts for the circular economy.
Unlock the circular economy with Product-As-A-Service and harness the power of robust ITAD to salvage and repurpose components from IT equipment, ensuring these valuable elements stay in the production loop. Product-As-A-Service with ITAD is the future!