From linear to circular: an urgent and necessary transition
Circular economy models reduce the need for new products, increase product utilization and efficiency, and encourage reuse. In doing so they deliver immense economic and environmental benefits.
However, today circular operating models are still emerging and lack maturity in most sectors. To accelerate the transition from linear to circular, organisations need practical tools to help them create change. This is where service models, like Product-as-a-Service (PaaS) come in.
Benefits of PaaS
PaaS contracts simplify asset ownership for businesses, by bundling procurement, usage, and decommissioning services into a single, predictable contract payment. For manufacturers, PaaS contracts create a shift away from one-time sales to regular revenue across a product lifecycle, as well as helping to full Extended Producer Responsibility requirements and meet sustainability goals.
PaaS fast facts
PaaS is a key enabler of the circular economy
New financial and operating models that prioritize servitization will be crucial to driving the transition to a circular economy.
ESG legislation presents new opportunities for PaaS
Increasing ESG regulations are placing challenging demands on organizations, while also creating opportunities to meet growing market demand for sustainable products, services, and partnerships.
Shifting behaviour from ownership to access
Education is crucial to shifting behaviour from single-use practices to a service-based, lifecycle approach. Governments and private enterprises are ideally placed to promote the case for change.
Incentivizing eco-design and production could drive progress
While new regulations ensure manufacturers prioritize eco-design, incentivization could also encourage more R&D investment to achieve breakthroughs in green technology.
Capacity building is needed to support circular value recovery
As manufacturers take more responsibility for the lifecycle impact of their products, new infrastructure will be needed to close the loop on material use. Today, most industries lack the refurbishing and recycling capacity to process end-of-life assets.
More data capabilities are needed to measure the PaaS impact
As new circular business models emerge and mature, there is work to do to understand and communicate their impact. Collecting, interpreting, and sharing data across the value chain will require new legal, technical, and operational capabilities.
The challenges and opportunities by sector
The ‘Harnessing the Power of Product-as-a-Service’ report explores the challenges and opportunities of PaaS in two key sectors – agriculture and green tech. It also offers additional insights into four other sectors, including heavy vehicles, healthcare, IT, and construction. These industries have been identified due to their significant economic impact and the possibility of integrating PaaS models into their operations.
Access our sector specific reports to see how PaaS models are evolving by industry.
Insights
Explore our latest blogs on PaaS
Report highlights
The PaaS ecosystem
Ownership vs. PaaS
Why circular economy?
What the experts say
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