(Image above from Product service system landscape. by Jeremy Faludi, TU Delft; inspired by Tukker 2004.)
Designing for the circular economy requires new business models to make designs viable. How do ten people share the product? When do they pay, how do they get access, etc.? Or if your products last ten times as long, how do you stay in business? You might charge more, or add profitable upgrade, repair, and maintenance services. You might also change the business model: perhaps you own the product instead of the user, and charge subscription fees for use, rather than a one-time purchase every few years. A similar business model also works for sharing the product across many people. If none of these are possible, you might at least use a business model that takes back old products and remanufactures them, or reuses material. Then you can design your products to enable these better lifetimes.
As mentioned above, sharing a product among ten people can reduce its material impacts per person by 90%. Product service systems redesign the product (and, more importantly, its business model) for sharing.
Usage
Product Service Systems, PSS, are emphasised as an approach to CE by reducing the resource use, without reducing the function of the product. PSS creates incentives for providers to increase resource efficiency, prolonging the product lifetime, optimise the use of products, and using remanufacturing strategies. Result-oriented PSS are the most promising, since the profit is connected to the result and not the product, stimulating resource efficiency. Implementation of PSS includes new ways of working both internally and with the supply chain, which can result in challenges and conflicts of interest. PSS has primarily been implemented in the private sector, but has a significant potential in the public sector as well (Lingegard, 2020).
Benefits
The following diagram contains many benefits identified by Product-service systems benefits and barriers: an overview of literature review papers by International Journal of Industrial Engineering and Management 11(1)
Limitations/Risks
There are various innovations and specific barriers recognised with the Product Service System as detailed in the diagram below.
Videos
This video describes categories of product service system business models for the circular economy, expanded from Tukker 2004. It was funded by an eCirp KIC grant.
This video describes how to choose a product service system or other business model for the circular economy. It was funded by an eCirp KIC grant.