How technology will drive the next wave of circular and service-based economics
New technological advancements provide a unique opportunity to drive forward both customer engagement and the circular economy, rooted in the shift to a service-based economy. The use of sensors in billions of products, whereby suppliers will get minute by minute data on their products whilst in use, could generate up to $11.1 trillion a year by 2025, according to McKinsey. In this new world, data becomes a core asset of the corporation, says Harvard professor Michael Porter.
At the same time, there is a need for a global economic model that allows for growth while tackling the two great challenges of our times: climate change and resource scarcity. The circular economy offers a powerful route forward, in which goods are designed to be recycled, reused, refurbished or remanufactured, extending their product life cycles, all based on a low carbon economy.
The new technology is helping to create the right conditions for the circular economy based on the shift to a service based economy Billions of sensors embedded in products will feedback information to suppliers, enabling them to maintain and optimize their equipment on behalf of their customers. Selling the use of the product rather than the whole asset is the best way to offer this kind of service. At the same time, it enables suppliers to maintain control of the asset and prepare it for return and the next product lifecycle. Therefore, technology which supports greater customer engagement, is also facilitating the shift to the circular economy. And this new shift is made possible by new complex service-based agreements, in which goods are used and not sold, designed and supported by asset based financial solutions companies such as DLL, acting as partner and collaborator. DLL’s Lifecycle Asset Management division, for example, enables its partners to gain revenue from second and third life refurbishment business models.
The service-based model, enabled by new technology and financial solutions support, is helping end users reduce the costs of ownership, get more efficient usage of their assets, and is beneficial for business and the environment. It is transforming business and helping to protect the environment.