Beyond Recycling 2020: Buying Services not Products

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Beyond Recycling 2020 Buying Services not
Products

• Dr Matthew Cook
• Cranfield University

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Economic Activity

• Waste arises from economic activity production
  and consumption
• The nature of economic activity changes over
  time, things havent always been this way
• Three sector Model
• Agricultural sector
• Manufacturing sector
• Service sector (residual)

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Service Economies

• USA first to become a service economy
• State when majority of employment provided by the
  service sector (Fuchs, 1965)
• Service sectors account for two thirds of
  employment and economic activity (measured in
  GDP) in western economies

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Service Economies

• Service economies are income elastic
• Service economies are price inelastic

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Service Economies

• Can service economies provide sufficient wealth
  to support a population?
• Could a service economy survive without
  manufacturing employment?
• Is international trade in services leading to
  foreign direct investment possible?

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Service Economies

• What are the environmental impacts of service
  economies?
• How do they differ from manufacturing and
  agricultural economies?
• What are the new regulatory requirements?
• What opportunities to improve environmental
  performance are provided by the development of
  service economies?

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Product Service Systems

• Tangible technological artefact combined with an
  intangible service
• All products
• Key difference move away from self service to
  services provided by public and private sectors,
  or communities

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Examples

• Document handling services
• Power by the hour
• Cooling services
• Voicemail
• Meals on wheels
• Car sharing

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Product Service Systems

• Types of product service systems
• Product Orientated
• Use Orientated
• Result Orientated

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Product Orientated

• These offer additional services for the product
  sold such as maintenance, upgrading, repair,
  guarantee product take back to extend its
  useful life
• The customer still owns the physical good
• Enhances the utility that ownership of product
  delivers
• From an environmental perspective these services
  extend the useful life of the product
• Maintenance service for a washing machine over
  time fewer machines are needed materials
  energy saved
• Provides additional steady income to company with
  clients tied in

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Use Orientated

• The service provider no longer sells the product,
  but only its use, like leasing, renting, sharing
  , and pooling.
• Ownership of product resides with service
  provider.
• Customers have use of products but maintenance
  etc responsibility of service provider
• Increased eco-efficiency achieved through high
  use intensity of products, results in reduction
  of products needed
• Producers paid per unit of service delivered
  have an economic incentive to reduce resource use
  in production of each unit
• Car Sharing is an example

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Result Orientated

• The purpose is the satisfaction of customer needs
  regardless of the material product.
• This means that the service provider guarantees a
  certain result
• Product is owned run by the supplier so
  incentive to optimise operation, increase service
  life and thus durability of technological
  artefact
• How needs are satisfied is irrelevant as long are
  they are satisfied
• Significant reduction in material energy
  consumption per unit of service can be achieved
• Examples include washing services, power by the
  hour, voicemail

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PSS Environmental Benefits

• if the material artefact remains in the ownership
  of the producer there is a financial incentive to
  direct innovatory activities to produce more
  durable goods and the producer has responsibility
  for disposal.

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PSS Environmental Benefits

• a smaller stock of products is needed to satisfy
  demand and if customers use these sequentially
  intensity of use increases as does the
  probability of a higher service yield before the
  product becomes outdated due to outdated
  technological characteristics, e.g. fashion.

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PSS Environmental Benefits

• in result orientated services, producers use
  their competencies to ensure the correct use of
  material artefacts to provide service as well as
  to select the appropriate artefact for this
  purpose.

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Service adoption as of consumption
??
Material Usage (Waste)
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Products
Services (BAU)?
Material consumption (Solid Waste)
Services with intervention?
Income
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Product Service Systems

• How can we use the product service systems
  approach in business to consumer markets to
  achieve household waste prevention?
• Funded by Defra
• Waste and Resources Research Programme

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Developing Experimental Product Service Systems

• Working with Taylorwoodrow
• Focus on new housing developments
• To consider if it is possible to provide PSS that
  satisfy various aspects of household demand using
  fewer resources and giving rise to less household
  waste, e.g. washing services, gardening services.

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Substitution Effect
T
What are the performance criteria that affect
this substitution?
Conventional Products
Q
A
C
Indifference curve
R
S
Substitution Effect
Product Service Systems
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Criteria Affecting Substitution

• Demand Side Criteria
• Price/ cost
• Time
• Perception of ones own ability to perform
  service tasks
• Reliability
• Accessibility
• Control

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Criteria Affecting Substitution

• Supply side
• Corporate competence
• Institutional arrangements
• Market conditions
• Strategic orientation

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Further findings

• Research shows that provision of PSS does not
  necessarily stimulate technological change
• Research suggests that PSS may stimulate
  selection of more durable technologies
• Private/ public sector ownership of technology
  may provide opportunities for policy

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Final Remarks

• This is not a silver bullet
• It may provide opportunities to improve
  environmental performance