Extending product value model: Refurbishment
Developing a product that can be refurbished can be beneficial when considering increasing brand loyalty. A customer that has a positive experience after a broken product is repaired will be more likely to buy again. At the same time, it is a way to take more responsibility over the end-of-life stage and to prevent unnecessary use of raw resources. Refurbishment can be achieved in different ways, the most straightforward options are repair and component replacement, while remanufacturing requires disassembly and reassembly before the product can be used again. Not all products are suitable, it makes the most sense to focus on products that are intended to have a long life span and have greater value to your customer.
Product design choices
|Refurbishment choice||The kind of refurbishment option you intend to offer will be central to your product design, organisational set-up and business proposition. Component replacement is least operationally intensive (as long as the components are standardised), while repair is more flexible in regards to dealing with a range of different faults and issues, but requires longer refurbishment times and considerably more in-house capabilities. While the remanufacturing option works best with an extremely standardised process for disassembly which is accommodated by product that consists of components that can be (partly) repurposed in the reassembly process. In this case quality control becomes quite important as you want to make sure that your repurposed components are not creating new issues in the short to medium term.|
|Durability||Focusing on durability increases the longevity of your product, even when you offer the opportunity for refurbishment. If the product will be returned once it breaks down, it is better if your product last longer and suffers less damage overtime, reducing the costs per product for replacement, repair or switching out broken components.|
|Modularity||A modular product allows for changing out parts, while maintain the integrity of the product. This increases the ease of repair, replacement or maintenance. It is a prerequisite for using interchangeable components, and is very beneficial for remanufacture operations.|
|Fault detection||Making sure that faults, damage or wear can spotted easily will help fault isolation and speed up refurbishment. This will reduce the costs per processed refurbishment, but it will require upfront investment to implement.|
|Changeable exterior||Adding a changeable exterior can help your product maintain its relevancy and attractiveness for your customer. Changing the exterior can change the look and feel of the product, and maintain alignment with developing design trends that emerge over the course of multiple years. It will also make it easier to increase the overall durability of the product, if only the exterior needs to be replaced after being damaged.|
|Limit component amount||By limiting the number of components, the product is easier to maintain and has less chance to break. It is also easier to recycle after it is no longer possible to either revise or repair the product (i.e. when they reach their end-of-life stage).|
|Limit material types||Limiting the amount of materials helps to create products that can be easier recycled at their end-of-life stage. Using a limited amount of materials will make sure that the future waste streams associated with your product will be more homogeneous and therefore more valuable for recyclers.|
|Reduce material use||Efficient material use can be achieved by considering why materials are needed and how the amount of material used can be reduced. It should be an elemental part of the design requirements. Within boundaries it will help reduce raw material costs and makes the product lighter and consequently requires less energy for transportation.|
|Reduce energy use||Reduce the amount of energy that is used for manufacturing by carefully reviewing your manufacturing process and over time keep optimising your process. If possible, use renewable energy to reduce the overall environmental impact of your product. It is also relevant to consider this aspect for the dis- and reassembly process.|
|Connection selection||It is preferrable to reduce the amount of (movable) connections between components, but if this is not possible the aim should be to use the same materials in the connections, as the materials used in each of the components that are included. Doing so will make future recycling and refurbishment efforts easier. However, given that ownership over the product is retained, the connections can also be made from different materials if this increases overall durability, but in that case additional care should be given to find a suitable end-of-life solution for the materials used in the connection.|
|Structural design||With an increased emphasis on durability the structural design of a product requires serious consideration. A structurally strong product is more likely to be durable and thus less costly to refurbish. Keep in mind that for connection points and movable components it will be challenging to make them more structurally sound. It might be difficult to achieve this without impacting the desired functionality of these components.|
|Appearance and consumer appeal||Appearance and consumer appeal are important for capturing the consumers attention and fulfilling the promise of the product. This is more important for a product that can be refurbished. Spending time on appearance will translate into higher perceived value, which enables the consumer to connect to it on a deeper level. The consumers brand loyalty can increase as a result of the deepening of the connection.|
|Simplification||Consider to simplify the individual components as this makes the components more durable, easier to replace and lowers production costs.|
|Interchangeability||Interchangeable component design supports a modular design strategy for the overall product. It will make switching out individual components easier.|
|Keying||Keying uses matching geometric features on a component to ensure easy matching with other components and connectors during assembly.|
|Sacrificial elements||In some case it might not be possible to create long lasting components, in these cases it could relevant to consider how these components can be sacrificed, retrieved and replaced.|
|Function integration||Consider designing components that can deliver on the different functional needs within your product. In this design strategy an individual component can change function depending on where it is used in the overall product. This can be difficult to pull off, but if successful this will reduce costs for component replacement. It will also enable economies of scale through standardised component production.|
|Renewable materials||Consider using renewable materials. However, renewable material should only be chosen when the materials extraction rate is equal to or lower than its replenishment rate. Further, next to its properties, materials need to be selected based on their expected end-of-life treatment to avoid unintended consequences.|
|Recycled materials||When using recycled materials, it is important to be aware of the variance in quality. This variance can occur between different production batches, but also between materials in the same batch. The variance can exceed the tolerances that are expected from virgin materials. Another aspect is understanding the composition of the recycled material as it can contain residual contamination of unknown origin.|
|Non-toxic and low impact materials||Aim to use non-toxic and low-impact materials. Toxic substances tend to accumulate in the biosphere and cause negative health effects for humans and other species. Design products with materials that are safe for the environment and that require less land, energy and water.|
|Technical characterization||The regular aspects of product design still apply when considering material selection for reusable products. Consider questions like:
– What are the main technical properties of the material (e.g., its strength, fire resistance, etc.)?
– What are the constraints/opportunities of the material?
– What are the most convenient manufacturing processes to form the material?
– What about other manufacturing processes? How does the material behave when subjected to other processes?
|Surface treatment||Surface treatment will increase overall durability and resistance to damage, but will also impact the ease of recycling at the products end-of-life stage. It might be worthwhile to consider other options to increase durability.|
|Design for recycling||Through recycling, the loop between post-use (end-of-life) and production is closed, resulting in a circular flow of resources. Design a product that can be recycled, even if it is meant to be reused. Apart from exploring technical feasibility it is also relevant to check if the preferred end-of-life solutions can handle the expected waste volumes you will generate in the future. Find reliable partners that can help you during your expansion process and when you reach your desired market share. The design choice regarding recyclability should not compromise the product’s ability to ensure the product’s shelf life, safe use, etc. Avoid oxo-degradable and biodegradable plastics since these “contaminate” the other, main polymer types (PE, PP, PET) plastic streams that are earmarked for recycling.|
Supply chain impact
|Supply and logistics||Guaranteeing enough supply to the market is instrumental to selling products, but for a product that can be refurbished additional consideration should be given on how to supply the product back to customer after revision. This will likely require setting-up a secondary logistical system to support these efforts. Keep in mind that it might take a while before a clear picture emerges on the scale and volumes associated with refurbishment operation. This should be monitored careful to keep operational backlogs limited and is even more important if the refurbishment is contracted to a third-party. In that case contractual obligations determine what is feasible, and having a good view on your logistical needs prevent paying for third-party time that is not effectively utilised.|
|Recollection||Retrieving products from your customer will be a new addition to your company’s operational processes, but will be instrumental for managing an efficient refurbishment process. In order to organise this system, the recollection method needs to be designed as an integral part of your company. Considerations will be:
– Method of collection (through mail delivery, in-person collection, or drop-off at third-party site)
– Incentives for returning the product
– Separate collection system or using a reverse logistics system from a third-party
|Distribution distance||The distance between your customer (or retail outlet) and your distribution centre impacts the environmental performance and potentially the cost of your product, with longer distances resulting in higher emissions and transportation costs. Finding the right balance between the need for delivery and recollection, and reducing the travel distance is tricky. This should be taken serious as the associated logistical costs will need to be properly accounted for. Similarly, if third-party cleaning is required this additional travel should be factored in too.|
|Storage||Storage becomes more important as relying on turn-key on-demand logistics will be less suited to the refurbishment part of your operations. Refurbish volumes are likely to vary from month to month. So, having a dedicated stockpile of replacement components will be instrumental to deal with variations in demand without creating operational bottlenecks and long waiting times. At the same time your storage needs will also increase to accommodate for broken products waiting for refurbishment.|
|Cleaning||As products (or their components) are returned they will need to be cleaned before it can be safely and hygienically handled by your staff for maintenance or repair tasks. Cleaning can be done in-house or contracted out to a specialised third-party supplier. Do keep in mind that cleaning can have a negative impact on the environment due to detergent and water use.|
|Repair and replacement operations||Repair and replacement will be central to the operational set-up of the refurbishment business. It will require either setting-up an in-house department with skilled personnel or will need to be contracted to a third-party supplier. In both cases it will be instrumental to forecast refurbishment volumes accurately to capture capacity needs.|
|Secondary market for components||The end-of-life stage for the components in your product will be reached at different stages. Each component will be subject to other forms of wear and tear and has different levels of inherent tolerance against it. The result is that some components will be broken, but others might still be serviceable, which can lead to excess components. These excess components allow for a secondary market to develop (this happens for instance car components), where individuals and other companies can sell your components to home repair your products. You can choose to support this development to reduce the amount of in-house refurbishment, but this will mean you will lose some control over the quality of the refurbishment. However, if you support it a growing market of secondary components can also create new opportunities for your company to market your components separately.|
|Identification||Product identification (for instance through barcodes) in supply chain operations is central to organising efficient recollection and to streamline refurbishment operations. An identification system connects the physical product with your internal IT systems, creating records that can be referenced in the future. This should be done both before sending the product out to a customer and once it is retrieved. Keep in mind that some products might be difficult to identify after heavy use.|
|Registration system||Your IT registration system is central to managing the product cycle, refurbishment volume and inventory. This will drive your understanding of where your products are, what is needed to meet customer demand and to plan cleaning, repair and replacement. It might be worthwhile to consider connecting it directly to your invoicing system, but its main purpose must be to keep track of product over its entire life cycle. Registration of materials and the status of individual components are relevant aspects to include in your registration system records. For instance, the records on the materials that have been used are relevant when the product has reached its end-of-life state and is sent to the recycler. Knowing which materials are used will increase the ease of recycling and might increase the value of the waste.|
|Attrition rate||Not all products will be returned and some that do will be damaged beyond repair. Therefore, your stock of products will be reduced as you suffer this kind of attrition, and the attrition translates into replacement costs for your business. Managing attrition rate is important, as it will help you reduce your costs by planning accurately for replacement of older products and components, and to account better for unexpected losses. Be aware that a higher attrition rate also generally leads to a worse environment performance for your product.|
|Ease of return||Your product needs to be returned to your company or the a third-party for refurbishment if it breaks down. If this is easier for the costumer to return it, it will lead to lower attrition rates and reduce the costs of replacing lost products. The ease of return should be considered in conjunction with the product market introduction strategy, the set-up of the recollection system, and if you outsource refurbishment or plan to do it inhouse.|
|Community model||A community model can be beneficial for bringing your customers together to amplify your message around your refurbishment offer. Do consider upfront how such a community ties into the way you market your product. Depending your views around enabling a secondary materials market, it can be an option to partner with a Makers cafe and other types of bottom-up initiatives around community-based refurbishment.|
|Understand customer needs||Always design products that actually deals with a problem or pain-point that is experienced by your target customer. Sustainability or reusability is in itself not enough to entice customers to opt into refurbishment. However, if the product services a clear customer need, then the sustainability and refurbishment angle offer additional value, and provides extra incentive to buy into your proposition.|
|Contractual arrangement||The contractual arrangements for the refurbishment process should be made easy to read and understandable. It is important to make sure that potential liabilities are covered, but make sure that it doesn’t overshadow the contractual obligations relating to refurbishment offer you provide.|
|Understand sales environment of customer||Your customers (like a retail outlet) act within a set of constraints resulting from how they service their own customers. Understanding clearly why they make certain choices helps creating a product that is responsive to their needs. If this is done correctly your product helps to offer more value to your customer.|
|Impact on the business of your customer||Be aware that implementing a refurbishment model might have impact on staff routines and other operational aspects of your customers business, for instance if you require their support for recollection through utilising their reverse logistics. Try to find ways to accommodate your customers as best as possible, but to do so, you need to know your customer intimately. Aim to increase your understanding of their processes and build thrust to get the necessary information. In case you are also considering recollection at their Point of Sale it is important to scope space availability for storage, certainly in inner-city environments this might be challenging.|
|Cost of recollection||If your plan to use the reverse logistics of your customers for your recollection efforts it will likely require some financial compensation. To increase adoption, it will be beneficial to aim to make your product not cost your customer more than an alternative that can’t be refurbishment. By offering a compensation this can be alleviated, but it will impact your margins.|
|Plastics recycling (if plastics are included)||When using plastics in your product there a number of things you can do to increase the ease of recycling:
– Mono polymer design
– Prevent layering different polymers
– Avoid dark pigments and fillers
– Mark large plastic parts to facilitate sorting
– Avoid thermoset materials
– Avoid using coatings on plastic
– Avoid using composite materials
|Recycling processes||There a different types of material recycling that can be considered for your end-of-life. Consider the following processes for fit with the chosen material and environmental impact:
|Upcycling||Upcycling means recycling in which resources retain their high quality in a closed loop industrial cycle. When thinking of your end-of-life solution it is important to consider the possibility of upcycling. The idea is that your waste stream ends up creating a new product with new value added to it, that ideally goes beyond low value applications for recycled material.
rPET can for example be used for new bottles, food trays and food tubs.
rPE and rPP can for example become pipes, buckets or containers for non-food products.
|Circular Clockworks||A circular watch that can be disassembled and repaired. It is supported by a community model based on a circular coin and a recollection scheme.|
|Fairphone||A modular phone that can be refurbished and is supported by a takeback scheme. The materials used in the phone are sourced with consideration for environment and people.|
|Philips Circular Equipment||Refurbishment of medical imaging machines produced by Philips Healthcare.|
If you want to know more about design methodologies that can help make your design responsive to your customer’s needs, read our page about design thinking & user-centered design.
Developing a reusable product can lead to lower environmental impacts. Many of the aspects listed below will provide you with insights on what to consider to reduce your future impact. A Life Cycle Assessment (LCA) can help you understand the environmental performance of your new product, which can support you in developing appropriate communication messaging. Here you can learn more about LCA.