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Procedia CIRP 64 ( 2017 ) 31 – 36
Available online at www.sciencedirect.com
2212-8271 © 2017 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the scientific committee of the 9th CIRP IPSS Conference: Circular Perspectives on Product/Service-Systems.
doi: 10.1016/j.procir.2017.03.041
ScienceDirect
The 9th CIRP IPSS Conference: Circular Perspectives on Product/Service-Systems
Lifecycle management of product-service systems: a preliminary
investigation of a white goods manufacturer
Thayla T. Sousa-Zomera*, Lucas Magalhãesb, Eduardo Zanculbc, Paulo A. Cauchick-Miguelb
aPost-graduate Program in Production Engineering, Federal University of Santa Catarina, Campus Universitário Trindade, Caixa Postal 476, 88040-970,
Florianópolis, SC, Brazil
bPost-graduate Program in Production Engineering, University of São Paulo, Av. Prof. Almeida Prado, 128, 05508-070, São Paulo, SP, Brazil
cProduction Engineering Department, University of São Paulo, Av. Prof. Almeida Prado, 128 - 05508-070, São Paulo, SP, Brazil
* Corresponding author. Tel.: +55 48 3721-7039. E-mail address:thayla.ts@gmail.com
Abstract
Product-Service Systems (PSS) have been discussed as promising business strategies towards a circular economy (CE). However, PSS
solutions are not necessarily more sustainable. PSS lifecycle management may play an important role to improve the offering and achieve
sustainability benefits. Nevertheless, bottom-up issues for CE implementation in the industry such as lifecycle management are still little
discussed in the literature. In this sense, this paper aims to explore a PSS business strategy adopted by a large white goods manufacturer that
transitioned from a linear to a circular business, and the practices applied throughout the entire lifecycle that may be valuable to achieve CE
requirements. A case-based approach was employed in this study and multiple sources of evidence were considered. Data were analyzed in the
light of the literature, considering an inductive approach. The main preliminary findings suggest that resources consumption reduction and cost
savings can be obtained through lifecycle management practices that take into consideration CE issues since the beginning of life of the PSS
offering. Design practices, the adoption of different strategies at the end of life (reuse/remanufacturing or recycle), and the implementation of
cleaner production practices are some of the identified practices that can contribute to achieve resource efficiency and CE requirements. This is
a work in progress and further work is going to focus on a quantitative analysis of the environmental and economic performance of this PSS. In
addition, as this study focused on a use-oriented PSS, future research may compare lifecycle management practices adopted by other and
distinct PSS categories, and how different lifecycle management practices may contribute to achieving resource efficiency.
© 2017 The Authors. Published by Elsevier B.V.
Peer-review under responsibility of the scientific committee of the 9th CIRP IPSS Conference: Circular Perspectives on Product/Service-
Systems.
Keywords: sustainable product-service systems; circular business models; lifecycle management.
1. Introduction
Tackling global sustainability challenges requires a more
holistic view of doing business, and new sustainable business
model archetypes are emerging [1]. Business model
innovation for sustainability can be defined as innovations
that create positive and/or reduced negative impacts on the
environment and/or society through changes in the way the
organization and its value-network create, deliver value, and
capture value or change their value propositions [2]. The
development of more sustainable business models provides
the bases for companies to better contribute to a circular
economy (CE) [3]. In a circular economy system, production
is circular, i.e. raw materials and products re-enter into the
environment or are reused in successive production cycles [4].
Circular business models represent an opportunity for
companies to profitably achieve an increase in resource
productivity [5].
A concept that helps to explain value-focused, more
sustainable business models is product-service systems (PSS),
which may allow reducing the total environmental burden of
consumption and may contribute to the more efficient use of
© 2017 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the scientifi c committee of the 9th CIRP IPSS Conference: Circular Perspectives on Product/Service-Systems.
32 Thayla T. Sousa-Zomer et al. / Procedia CIRP 64 ( 2017 ) 31 – 36
resources [3]. These business models allow slowing resources
loops by encouraging long product life and reuse of products
[6]. In fact, collaborative consumption models such as PSS
are recognized as one of the best available options to shift
from the present business-as-usual model towards CE [7].
PSS business strategies, however, are not intrinsically
sustainable [8]. Sustainability is affected by lifecycle
considerations [9]. A successful offering and realization of a
PSS extends the involvement and responsibility of the
provider throughout the entire lifecycle, from [10]: the design
and realization (beginning of life - BoL), through the use and
maintenance (middle of life - MoL), ending with the
dismission (end of life - EoL). Sustainability can be improved
by applying optimal BoL, MoL and EoL planning [9]. Design
strategies in the BoL focused on circular economy concerns,
for instance, are important to achieve environmental benefits
[6]. Issues regarding disassembly, ease of distribution and
return, and customer reliability in the MoL are also relevant
for sustainability improvements in the context of the circular
economy [7]. Indeed, the shift towards circular business
models affects the design, production, use, and disposal
processes [11].
PSS complete lifecycle management, in fact, may play an
important role to improve the offering and achieve
sustainability benefits [9]. However, bottom-up issues for CE
implementation in the industry such as lifecycle management
are still little discussed in the literature, and more research is
needed [12]. In this context, this paper aims to investigate
how lifecycle management of PSS business models may
contribute to achieve environmental and economic benefits
that have been highlighted in the circular business models
literature (e.g. [5]) and to achieve CE requirements. Some
methodological features of case-based research were applied
to examine how some lifecycle management practices adopted
by a large manufacturing company that implemented a new
business strategy - by transitioning from the conventional sale
of products towards a business model focused on satisfying
consumer needs by the provision of ʻfunctionsʼ - may
contribute to environmental and economic gains. Although
circular business models have been discussed as promising,
there is not yet a widespread adoption of circular business in
industry [5].
In fact, the understanding of the effects of circular business
and consumption models implying the selling of an integrated
service and products or its leasing, refurbishment and
remanufacturing has been pointed out as a research gap in CE
literature [7]. Thus, this paper aims to explore a PSS business
strategy adopted by a large white goods manufacturer that
transitioned from a linear to a circular business. Its purpose is
also to provide some insights regarding benefits that can be
achieved by adopting lifecycle management practices in a
business model focused on the provision of services through a
leasing scheme. In addition, few studies have investigated
PSS in emerging economies [13], and since the business
model under analysis is located in the context of a developing
country (Brazil), this study intends to make contributions in
this sense as well. Indeed, sustainable business models such as
PSS that focus on the reorientation of current consumption
and production patterns may bring benefits for developing
countries, since sustainable production and consumption is a
major challenge for emerging economies, especially in fast-
growing regions such as the BRIC countries [14].
The remainder of this paper is structured as follows.
Section 2 presents a brief literature review on sustainable PSS
business models and circular business concepts. Section 3
describes the methods applied for gathering and analyzing
data. This is followed by the findings and a discussion of the
PSS business under analysis anchored in the literature.
Finally, concluding remarks are drawn in section 5, since this
is still a work in progress, as well as the study limitations and
further work.
2. Product-service systems as circular business models
In the context of circular business models, a PSS can be
seen as a business strategy for slowing resources loops; the
product life is extended, the product is reused, and companies
can capture financial benefits from going circular, which they
would not be able to achieve in a linear model [6]. The
retained ownership in PSS facilitates the return flow of used
products to the producer [5]. Circular businesses such as PSS
allow a range of benefits, including cost savings in
manufacturing, enhanced customer relations, improved
customer behavior understanding, improved margins, reduced
environmental impact and increased brand protection [5].
The major components of a sustainable business model are
[2]: (i) value proposition, (ii) value creation, and (iii) value
capture. According to the business models archetypes
proposed by Bocken et al. [2], in a PSS business strategy, the
value proposition focus on providing services that satisfy
consumer needs without users having to own physical
products. The business focus shifts from manufacturing goods
to maximizing consumer use of products, reducing production
throughout of materials and better aligning manufacturersʼ
and consumersʼ interests. The value creation and delivery
require significant changes within the firm and incentivize
redesign for durability, reparability, and upgradability. The
value creation also involves more direct consumer contact and
consumer education to shift away from ownership. The value
capture model is focused on the payment for the use of the
service, not for ownership of products. This can enable
consumers to access previously expensive products [2].
The management of PSS offerings lifecycle considering
CE concerns may be valuable to improve their sustainability
potential [9]. Design strategies for the value creation and
delivery should be addressed in the BoL, when the PSS design
is performed [10]. Consumer contact and education in the
business model value creation should be considered in the use
phase of the MoL. Production and materials consumption
reduction may be achieved through maintenance and EoL
strategies management (remanufacturing, reuse, and recycle).
Nevertheless, the provision of integrated products and
services is not inherently more resource efficient than
traditional production and consumption systems, so more
research is needed to explore how trajectories of service
innovations may be managed to improve resource
productivity [15]. Lindahl et al. [16], for instance, have
demonstrated that environmental and economic benefits can
33
Thayla T. Sousa-Zomer et al. / Procedia CIRP 64 ( 2017 ) 31 – 36
be achieved with reuse and recyclability in integrated product
service offerings. Chun and Lee [17] analyzed the
environmental impacts of a use-oriented PSS in comparison
with the traditional business model and demonstrated that
maintenance services should be planned in order to improve
the environmental performance of the offering. Although
some studies have been conducted, more research regarding
PSS environmental performance is still needed [18]. In fact,
there is still a lot to be learned regarding circular business
implementation in practice and metrics to analyze sustainable
business models in the context of CE [19]. Thus, lifecycle
management practices and their value to obtain environmental
and economic gains in the context of circular business
implementation are explored in this study. Next section
outlines the research procedures to analyze the PSS business
model investigated in this paper.
3. Research design
Due to its nature, this study presents some methodological
characteristics of case-based research [20]. As the purpose
was to explore how lifecycle management practices may be
valuable to achieve sustainability benefits aligned with CE
requirements, guidelines for case-based research (e.g. [20])
were considered suitable and followed.
The first step in the research design was the development
of a conceptual framework. Thus, an analysis of PSS and
sustainable business model literature was carried out (refer to
section 2) to establish a suitable lens for the analysis. Firstly,
the business model elements of the investigated PSS were
analyzed, using the sustainable business model framework as
proposed by Bocken et al. [2]. The analysis of the business
models elements was useful to understand how CE principles
are integrated into the value proposition, value creation, and
value capture. Afterward, the lifecycle management practices
were identified from the data collected in order to explore
how practices adopted in the BoL, MoL, and EoL may be
valuable to achieve environmental and economic gains, in the
light of the literature.
The unit of analysis (PSS) was selected by following the
information-oriented approach recommended elsewhere [21].
In this approach, units should be selected based on the
expectations for the information content. As mentioned
earlier, this study was conducted in an emerging economy.
The investigated company is a larger manufacturer of
household appliances that implemented a new circular
business strategy as part of its business. This is valuable
because most of the manufacturing industries still adopt the
linear business model strategy [5]. For manufacturing
companies the development of new innovative business
models that fit the CE context is vital [12].
The business model is a use-oriented PSS (according to the
categories proposed by Tukker [22]) focused on leasing
appliances for filtering drinking water in households, small
firms and large companies to some extent. Use-oriented PSS
potentially intensify the use of material products and hence
could reduce the need for materials [23], being a suitable PSS
category for analysis in the context of CE. In addition, as
emphasized earlier, studies of PSS solutions located in
emerging and developing economies are relevant because in
those regions a PSS may contribute to sustainable
consumption and production goals [13]. Since this PSS has
potential to present outcomes about the aspects investigated, it
was selected for analysis.
Multiple techniques for collecting data were used,
including primary and secondary sources. Some semi-
structured interviews were conducted with managers from
different functional areas (product engineering, sustainability
management, production, marketing, and customer service) to
gather data regarding the business model operation as well as
practices of lifecycle management they adopted. Internal
company reports were also accessed and examined to
understand specific aspects of the business model and product
development processes from a longitudinal point of view.
Data were triangulated to derive the findings.
The analytic strategy involved working on the data from
the ground up [20], with some concepts emerging by
examining the data, using an inductive approach. The findings
were analyzed anchored to the literature (no specific
constructs were used in this exploratory stage of this work).
An analytical description was obtained, which is outlined in
the next section.
4. Results and discussion
4.1. Business model structure and context
The PSS under analysis is offered by a leading home
appliance company in Latin America. The analyzed business
has been in operation since 2003. This business was
developed and implemented as a novel strategy for entering a
new market, and it is now operated throughout the country.
The introduction started with an analysis of the market, which
detected some trends and opportunities. Those included the
emergence of several types of services based on subscriptions
in addition to a fast growth of the mineral water market in the
region where the company is located. Those issues motivated
the advancement of the business idea as a new business unit.
The company leases a water purifier appliance and
provides product installation and maintenance services. Long-
term contractual agreements are established between
customers and the company. The customers are citizens or
other firms (i.e. the business operates in the business-to-
business - B2B - and business-to-consumer - B2C - markets).
The provider retains ownership of the product, and the
customer pays a monthly charge for its use. The company has
the full control over the product lifecycle. It collects the
product through a reverse logistics process at product end-of-
life. The product can be remanufactured and reused or
discontinued (and its components recycled). It is considered a
pioneering concept in the Brazilian market.
Regarding the business model elements, the value
proposition of this sustainable business model consists on the
provision of “safe drinking water”. This is particularly
important because the quality of water from the supply
networks in many regions of the country is questionable. In
addition, the consumption of bottled water has increased
considerably in the country, which may generate
34 Thayla T. Sousa-Zomer et al. / Procedia CIRP 64 ( 2017 ) 31 – 36
environmental impacts associated with plastic bottles
consumption.
The interests of the manufacturer and customers are
aligned; the former aims to offer a more sustainable solution
to drinking water provision while increasing its market share
in the home appliance industry. The system satisfies a
population need and also may focus on reducing the
environmental effects associated with bottled water
consumption. A non-governmental organization (NGO) is one
of the partners involved in the business and it encourages,
through marketing campaigns, the reduction of water
consumption in plastic and glass bottles through the adoption
of filtered water in restaurants and bars (which are some of
the consumers in the B2C market).
Value is created from the integrated collaboration of the
service provider, consumers, suppliers, and a recycling
company and associated recyclers involved in the product
end-of-life. The value capture is structured in a way that
affords customers access to the service provided, and it is not
oriented toward product ownership. Companyʼs practices
adopted throughout PSS lifecycle that may be valuable to
achieve environmental and economic gains are outlined next.
4.2. PSS lifecycle management
Some of the practices adopted by the company across
lifecycle phases were identified from the collected data. They
are summarized in Table 1. Fig. 1 provides an overview of the
full lifecycle and the main activities involved.
Table 1. Some practices adopted along PSS lifecycle.
Lifecycle phases Practice adopted by
the provider
Environmental/economic
benefits aligned with CE
requirements1
BoL - Design Design for maintenance
and repair
Increasing of value durability
of products
BoL - Design Careful selection of
materials
Increasing of value durability
of products, reducing valuable
materials losses, reducing
input and use of natural
resources
BoL - Product
manufacturing
Implementation of a
waste minimization
program
Reducing valuable materials
losses
BoL -
Implementation
Assessment of the local
conditions before the
product is installed
Increasing of value durability
of products
MoL -
Maintenance
Running of mechanical,
chemical and biological
tests
Increasing of value durability
of products, reducing valuable
materials losses
EoL - Recycling Primary recycling of
components
Increasing of value durability
of products, reducing valuable
materials losses
EoL -
Remanufacturing Remanufacturing of
components
Increasing the value durability
of products, reducing input
and use of natural resources
1 Requirements to be measured in a paradigm shift towards CE involve [ 24]:
(i) reducing input and use of natural resources, (ii) reducing emission levels,
(iii) reducing valuable materials losses, (iv) increasing share of renewable and
recyclable resources, (v) increasing the value durability of products.
The beginning of life involves requirements generation and
analysis, the design process, product manufacturing and PSS
implementation [25]. As described earlier, this business model
was structured based on the need of a more sustainable way of
providing drinking water. The requirements were identified
through the market analysis carried out when the business was
planned. Regarding the design process, the product in the
system was designed to extend its utilization period in order to
increase its durability and reduce the use of resources. It is
designed to facilitate its maintenance and repair. The internal
components that are replaced periodically (e.g. the filter) are
strategically positioned allowing the easy access during the
maintenance process. This allows the product life extension
and slowing resource loops, corroborating with CE concerns
during the design process [6]. In fact, the design of circular
products needs to be ‘fit for purpose’ according to the chosen
business model [26], and the design strategy adopted is in
accordance with the value proposition strategy developed by
the company.
Fig. 1. Overview of lifecycle and main activities involved [27].
Moreover, the materials used in the purifier are cautiously
selected during the design process to ensure the durability of
the product, reducing input and use of resources, and to
provide consumer safety. The materials are thoroughly
analyzed concerning their resistance against corrosion and
degradation. The selected materials must be resistant because
during the productsʼ life a wide range of assembly operations
and maintenance services are performed. In fact, reusability
puts higher requirements on quality regarding durability [16],
and the correct materials selection allows increase the
durability. In addition, the careful selection of material is
important because in the context of CE the design strategies
should include decision points to be made during the course of
product design which is linked to the criticality of materials
[12].
With regard to product manufacturing, the company applies
cleaner production practices such as the implementation of a
zero waste program in manufacturing that have contributed to
reduce materials losses. According to collected data, more
than 150 tons of waste from the water purifier production
process was recycled so far due to the implemented waste
reduction practices.
Regarding PSS implementation, the provider offers the
installation services. A technician firstly visits the location
35
Thayla T. Sousa-Zomer et al. / Procedia CIRP 64 ( 2017 ) 31 – 36
where the water purifier is going to be installed in order to
conduct a preliminary assessment of the technical conditions
of the place (e.g. hydraulic pressure of the supply network
which may vary across the cities all over the country). This
practice allows the provider to adapt the product according to
the specific conditions of the place and use, and also can
reduce the risks of failures in operation. This consequently
contributes to increasing the product durability. After the
water purifier is installed, information about the system use is
delivered to the consumer. This proximity to customers is
valuable to understand consumersʼ behavior. In fact, building
and maintaining relationships with customers is one of the
essential principles of the circular economy implementation
[28].
The middle of life involves the use phase and maintenance
services. During its operation, a PSS has to be supported to
retain its functionality, availability, and operational results
[22]. Preventive maintenance is performed by the provider
every six months during the equipment use phase. A
technician goes to the place where the water purifier is
installed and performs a number of quality tests. The quality
of the water filtered is verified to comply with the national
health standards. If the water quality is not in accordance with
the chemical and biological parameters established by a
national law, the filter is replaced. In addition, the equipment
is cleaned by the technician and mechanical tests are done to
verify equipment components integrity. Besides enhancing
consumer relations, those activities performed in the MoL
allow cost saving. Since the filter is replaced only when
necessary, this consequently reduces resources consumption.
In fact, maintenance aspects should be carefully planned in
order to improve the environmental performance [17], and the
operational practice regarding maintenance adopted by the
company allows reducing resource consumption by increasing
the durability of the product and avoiding waste.
In addition, the mechanical tests are important to reduce the
risks of failure and to extend the componentsʼ life. If some
repair is necessary, the technician can perform it in loco, when
possible. In the case of complex problems, the equipment is
fully replaced, and returns to the company for examination. A
complete assessment and test of equipment conditions are then
conducted.
Two main strategies are adopted in the EoL. After a careful
evaluation, the product and its components can be
remanufactured or discontinued. If a high failure rate is
detected, the equipment is discontinued. Then, the components
are separated in a waste treatment center and are sent to
recyclers who are partners in the business. Complex systems
are disassembled and separated into single components.
Although there might be considerable challenges associated
with creating the required understanding and incentives for
key partners [5], the stakeholders involved at the EoL in this
circular business are engaged and have economic benefits with
the recycling process. The provider manages the recycling
process (a specialized company was established to deal with
EoL recycling) and the recyclers that work as partners should
provide evidence that the materials are recycled through the
provision of a document certifying the components correct
final destination. A primary recycling is performed, aligned
with the recycling methods proposed by Bocken et al. [6],
closing the resources loop. All companyʼs subsidiaries are
certified as ʻzero wasteʼ and all materials consumed in the
company are recycled. This collaborative relationship between
the service provider and recyclers at the EoL was observed as
relevant to reduce waste and to achieve resource efficiency.
Lack of channel control has been reported as a critical barrier
in CE literature [5], and the right collaborative networks at the
EoL and the management practices adopted by the company to
ensure correct destination of materials were observed as a
positive practice to obtain environmental benefits. In fact,
collaboration and arrangement between various stakeholders
are essential to implement new business models in support of
a circular economy [11], and to obtain successful lifecycle
management as well [29].
After product assessment, if the components can be reused,
those are remanufactured. As pointed out by Linder and
Williander [5], reuse and remanufacturing are often preferable
to recycling, for economic reasons. Although remanufacturing
requires considerable expertise, the company has specific
remanufacturing production lines. Besides economic benefits,
remanufacturing allows minimizing the consumption of
resources. Therefore, as already pointed out by Goyal et al.
[30], it becomes significant for the companies to design and
implement the business models, which maximize the gains
from the circular economy approach, not only with respect to
one paradigm (reuse/remanufacturing or recycle), but also
taking into consideration the combination of paradigms.
In summary, the activities performed during the lifecycle
were identified as valuable to orient actions that allow
environmental improvements through the reduction of
resources consumption and waste generation, in addition to
provide economic benefits to the provider. After presenting
the findings of this work, next section highlights its main
concluding points.
5. Concluding remarks
This paper investigated lifecycle practices adopted by a
manufacturer that transitioned from the conventional business
model of selling products towards as business model focused
on the provision of services to satisfy customer needs. The
company’s various environmental initiatives target different
parts of product’s lifecycle, from design to the product’s end-
of-life phase. All activities performed across the PSS lifecycle
are oriented and valuable to extending the product life and
reducing the consumption of resources, in alignment with CE
requirements. Cost savings can be obtained with the activities
carried out across the lifecycle stages, although this aspect was
not yet assessed, since this work is still in progress. Design
strategies aligned with the business strategy are adopted. A
close consumer relationship strategy during the use phase is
employed, allowing performing continuous improvements in
the business models. Partnerships with stakeholders at the end
of life and the adoption of distinct decision paradigms (e.g.
remanufacturing or recycling, depending on the product
conditions) are also employed, which may also contribute to
achieving resource efficiency.
36 Thayla T. Sousa-Zomer et al. / Procedia CIRP 64 ( 2017 ) 31 – 36
This paper intends to contribute to the current body of
knowledge in two different ways. Firstly, the findings suggest
that activities performed across the lifecycle, i.e. the lifecycle
management of a circular business may be valuable to achieve
resource efficiency. Some of the identified lifecycle
management practices are context related, but others such as
the design, adoption of cleaner production practices in the
product manufacturing phase can be applied in the lifecycle
management of other circular business models. From
practitionersʼ point of view, the findings provide an overview
of some practices that may be valuable to improve
environmental and economic performance, although this still
needs to be assessed. Since circular business models are still
little explored in practice, this investigation may provide some
contributions to the current empirical body of knowledge in
circular business implementation. Secondly, circular business
and PSS solutions have been explored mainly in developed
economies, and the literature claims for more studies in
emerging markets. Thus, this paper also offers a marginal
contribution in this sense.
The main limitation of this study is related to the
exploration of a single unit in addition the depth of the current
analysis. As a work in progress, further research will involve a
more in-depth investigation by considering the transition
process towards this novel sustainable business model. Further
work may also explore and compare lifecycle management
practices adopted by other and distinct PSS categories in the
context of CE as well as to understand how different lifecycle
management practices may contribute to achieve resource
efficiency.
Acknowledgements
The authors thank the company that made this study
possible. However, any analysis is the responsibility of the
authors and, thus, it does not represent the position of the
company. One of the authors is affiliated to the Federal
University of Santa Catarina (UFSC) so this institution should
be acknowledged as well. Finally, the authors also appreciate
the Brazilian research agency CNPq for the financial support.
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