Are Product Service Systems Our Sustainable Future?
Some companies are engaging the customer throughout the product’s lifecycle by not selling the product, but by selling its utility. Extending the relationship between a company and its customer, beyond point of sale, opens up new opportunities for brands to interact with customers to understand customer demographics, gather important performance and usage feedback, and deepen the customer relationship by better responding to their needs. Furthermore, internalizing the various stages of a product’s lifecycle, from manufacture to disposal and recycling, provides companies the ultimate power to influence how that product relates to the world around it, including what it’s made from, how it’s designed, how consumers interact with it, and how it makes it to the next life.
A Product Service System (PSS) like Netflix, ZipCar, bike-sharing, and online software, focuses on the purchase of utility via a lease or monthly payment – fulfilling customers’ needs and reducing material and energy requirements. One example we are all familiar with is the copy machine, which is typically leased, not purchased. Companies like Xerox, Konica, and HP lease their copy equipment and issue managed print services whereby customers pay per copy. Technicians are available for repair and troubleshooting and the customer is not burdened with replacing expensive equipment when it breaks.
The product-as-a-service arrangement lowers the financial threshold that customers must meet to acquire expensive equipment, increases customer access to the company, and eliminates consumer burden of end-of-life disposal and recycling. This model also presents an opportunity for companies to design the product for disassembly, single part replacement, and recycling.
In the carpet industry, Interface boldly blazed the path in leasing and recycling modular carpet tiles before the concept of the circular economy was even a blip on the radar. The modular design of the product allows the company to replace the minimum amount of carpet necessary when damage occurs. Because the carpets are leased, the customer is not buying the carpet, but buying installation, maintenance, removal and recycling services. Since 1995, Interface has recycled over 300 million pounds of carpet. More recently, they adopted technology that incorporates recycled content fibers from reclaimed carpets and fishing nets into new carpet.
Philips’ pay-per-lux intelligent lighting program is another PSS example. In this service model, the entire lighting system is installed by Philips who retains ownership of the hardware and contracts out usage (light) to the customer. This model prolongs the product’s lifespan and reduces waste through Philips supplied maintenance and reuse of fixtures during renovations. Going a step further, energy usage can be recorded and monitored, allowing decisions to be made about energy conservation, lighting levels, user preferences, and contract pricing.
Smart technology – sensors, data tracking, cloud computing – advancements are enabling a more accessible and seamless relationship between brand owners and consumers. Does this mean that PSS will become the prominent business model in the future? Is this the road to greater producer stewardship and sustainability?
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