Product as a service
Most products that are designed to be reused can also be offered to the customer through a service (provision) model. The product as a service model provides a product that is offered as a service, providing either access (i.e. X number of uses, use until end of durability) or performance (i.e. delivers to the intended use of the product). The model can be supported by a deposit system. The main two differences that set a service model apart from a regular transaction model are that a reoccurring service fee is charged and that ownership is retained by the service provider during the duration of the service contract.
Product design choices
| Reuse choice | Reusability can have many forms; it can mean you intend create a product that can be used by different users (after cleaning and refitting) over the course of its lifetime, or it might be that you focus on developing a compartmentalised product with reusable components. It could also be a hybrid between a single-lifecycle product that can be reconfigured into a reusable option. In any case the choice made around the type reusability will not only inform the rest of the design, but will also impact the set-up of your business, logistics and your future communication strategy around your new product. |
| Durability | Focussing on durability increases the longevity of your reusable product. If the product is offered as a service it will be returned once it breaks down. It is therefore better if your product last longer and suffers less damage over time, reducing the costs for replacement, repair or switching out broken components. |
| Dis- and reassembly | Make sure to consider the potential of dis- and reassembly of your product seriously in the design phase. This will help you later on when you retrieve your product to dismantle, revise and put it back together with ease. Doing so reduces costs for regular product maintenance activities or for repurposing broken products. As you offer a reusable product as a service this is an instrumental aspect for keeping your costs for repair and refurbishment manageable and your subscription fee lower. |
| 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 long-lasting reusable product that is offered as a service. Spending time on appearance will translate into higher perceived value, which enables the consumer to connect to it on a deeper level. The consumer is therefore less likely to cancel the service agreement, or to disregard, discard or dispose the product. |
| 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. As you will retain ownership of the produced items, 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. |
| 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 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 maintain. 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. |
| Modularity | A modular product allows for changing out parts, while maintaining the integrity of the product. This increases the ease of repair, replacement or maintenance. It is a prerequisite for using interchangeable components allows for easy dis- and reassembly. |
| Quality and safety | Products that are used for human consumption activities or have frequent contact with the human body require specific consideration in regard to health and safety aspects. Make sure to include this in design and adhere to the relevant regulation on this topic. |
| 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. |
| Decoration | Decorative covers and labels should be entirely removable or easy to dismantle and preferably made from the same materials, in order to assure homogenous material streams for recycling after the end-of-life. In case of using plastic for covers and labels, keep in mind that coloured plastic affects the products recyclability. Uncoloured or clear plastic is preferred because it has a better range of possibilities for recycling than coloured or black plastic. |
| 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 volume | Guaranteeing enough supply is instrumental to selling products, but for a product as a service model maintaining supply levels is even more relevant. As you offer a service you will need to be able to provide functional products when they are needed. Your supply system also needs to account replacements of broken products (or components), beyond the delivery of new products to prospective customers. It is best to consider your supply system as the backbone operation for providing an accountable service to your customers, for the duration of their service contract. |
| Recollection | Your customer (often) needs to be able to replace the product on short notice, for instance when regular maintenance is required, or when your product is broken and needs repair. It can also be that the service contract is disbanded. Retrieving products from your customer will therefore be a new addition to your company’s operational processes as you contractually maintain ownership over the product. 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 (see deposit section) – Setting-up a 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 when providing a service, as relying on traditional turn-key on-demand logistics will be less suited to the management of a service that retains product ownership. Both in-house storage of replacement components and products will require dedicated space to have sufficient inventory stocks available, while at the same time your storage needs will also increase to accommodate for broken products waiting for repair or end-of-life processing. |
| Cleaning | As products are returned, the product (or its components) will need to be cleaned before it can be safely and hygienically handled by your staff for maintenance or repair. 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 service provision business. As your service depends on providing a reusable product, it will require either setting-up an in-house department with skilled personnel or the repair will need to be contracted to a specialized third-party supplier. In case of contracting it is important to clearly outline the repair requirements and service times. |
| Identification | Product identification (for instance through barcodes) in supply chain operations is central to organising efficient distribution and recollection. 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 and inventory. This will drive your understanding of where your products are, what is needed to meet customer demand and helps to plan cleaning, repair and replacement. It might be worthwhile to connect 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 factors to include in your registration system records. For instance, the records on the materials that have been used are useful when the product 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 come back will be damaged beyond repair. Therefore, your stock of products will be reduced as you suffer this attrition, and this attrition translates into replacement costs. Managing attrition rate is important, as it will help you reduce your costs by planning accurately for replacement of older products and components. By actively engaging your customers you can make sure they actually return faulty products or return it when they end their service contract. A higher attrition rate generally also leads to a worse environment performance for your reusable product. |
User experience
| Adoption delay | Your customer needs to make a conscious choice when considering opting into a product as a service model. It requires familiarity to do so, therefore it might take time to build the needed exposure to the service concept before a new consumer decides to opt in to your service. Make sure to account for this uptake delay in your market introduction strategy. |
| Point of Sale communication | Creating consumer familiarity with a product of as services model starts with communicating about the options your service offers. This is best done at the Point of Sale. This can be either directly targeted to consumers or through offering supporting communication to your customers (like retail outlets) which they then can use to inform their own customers (most likely consumers). Even though this might not initially lead to a directly to a new subscription to your service, it does increases familiarity and plants a seed for shifting towards opting into the service model. Furthermore, the reusability aspect of your product increases the value of your service model versus a regular transaction associated with a non-reusable product. |
| Ease of return | Your product needs to be returned if it breaks down or if the service subscription is cancelled. If this is easier for the costumer to return it to you, it will lead to lower attrition rates and reduce the costs of replacing lost products for your company. The ease of return has a direct relation to the service model and the set-up of the recollection system, so it is best to consider them jointly. |
| Community model | Setting-up a community model can be beneficial for bringing your customers together to amplify your message around your reusable product and service model. Do consider upfront how such a community ties into the way you market your service and also consider the rewards for participation carefully. |
Business model
| Access model | The customer pays a service fee to get access to the product. This means that they get a product which they can use for as long as they pay the fee. If the product is in need of repair or is broken it can be returned for repair or switched out. Keep in mind that you will retain ownership over the product during the full lifecycle of the product. |
| Performance model | The customer pays a service fee for the use of the product (and its associated performance), with a specific amount determined for number of times the product is used. You retain ownership of the product and you ensure the desired performance. |
| Ownership | Your customer does no longer becomes owner of the product, but your product it is marketed as a service instead. This means that your company now retains responsibility (and at the same time control) over the full lifespan of the product. This ownership also extends to taking care of the end-of-life of the product. |
| Deposit setting | Your product needs to be returned and using a deposit system can help as it stimulates your customer to see the value of returning the product. However, it is worthwhile to take the time to experiment with different price points for the deposit. The deposit should not become too high in relation to the service fee itself as this adds an extra barrier, but should also not be too low either. If it is too low there is limited incentive to actually return the product. |
| Accountancy | Keep in mind that these service models are relatively new. It requires think through how to accurately represent the retention of ownership in your company’s annual accounts. Make sure to obtain insights from your accountants on how they will look at your new services and its associated financials |
| Non-payment risk | Contrary to a single transaction the risk of clients not paying their outstanding fee is a possibility in a service model. Due to unforeseen circumstances your customer might not be able to pay one or more instalments, which would require reaching a settlement. In other cases, they might not be able to continue at all and then your product needs to recuperated from a potentially unwilling customer. Consider these scenario’s while designing the service model for your product. |
| Impact on existing relations | Launching a new service model might mean you will start to market directly to customer instead of offering it through an existing relation, like a third-party distributor or preferred retail outlet. This might put a strain on your existing relationships, so it can be worthwhile to consider how they might fit in your service model and partner with them. |
| 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 subscription to a service model. However, if the product delivers on a clear customer need, then the sustainability angle offers additional value, and provides extra incentive to buy into your proposition. |
| Contractual arrangement | The contractual arrangements for the service should be made easy to read and should be 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 reusable nature of the product you offer as a service. |
| 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 (and the associated service model) helps to offer more value to your customer. |
| Impact on the business of your customer | Be aware that implementing a service model might have impact on staff routines and other operational aspects of your customers business. 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. |
| Aim for cost neutrality | Aim to prevent large cost disparities between your service provision model and the existing transactional model. Your customer will have to stay involved with your product over the full duration of the service contracts, and in some cases might need to invest to accommodate implementing your reusable product in their business. Considering how to make it cost neutral for your customer will increase the uptake of service. Therefore, it pays to build a good understanding of all of the costs that play into your service model, and make sure to understand how these costs contrast to the transactional model. It could be that there are hidden costs, that are currently not incurred as the transaction model externalises these costs. A good example is product waste that ends up in the environment, which represents a cost but which currently isn’t accounted for in the existing transactional model. |
End-of-life
| 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: – Remould – Mechanical – Thermal – Chemical |
| 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. |
Contact us
Eelco van IJken
Senior Consultant
Examples
| Gerrardstreet | Headset with a service subscription. The headphone is modular and parts can be exchanged when repair is required. |
| Bedzzzy | Circular matrass with a monthly subscription fee, offered by start-up Bedzzy using the evolve mattress from Auping. |
| Reflower | Artificial flower service to replace flower purchases by reusable flowers. |
Design methods
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.
LCA
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.