How product-as-a-service models can help manufacturers and equipment suppliers strengthen and diversify their business 

The European Union’s ambitious goal of becoming the first climate-neutral continent by 2050 has spurred industries to transform their product offerings, leading to the development of numerous green technologies, from electric vehicles to battery-powered solar storage systems. As a significant contributor to greenhouse gas (GHG) emissions, the manufacturing sector plays a pivotal role in driving the transition to a low-carbon future. 

In this challenging environment, product-as-a-service (PaaS) models can empower manufacturers to strengthen their businesses, diversify their revenue streams, and deliver more sustainable outcomes for both their customers and the planet. 

A rich and diverse service offering 

The energy transition is driving significant business transformation, with organizations across industries adopting smart, green tech solutions on a large scale. From wind and solar power systems to energy-efficient heat pumps and electric vehicle charging infrastructure, businesses increasingly require sustainable solutions to future-proof their operations. 

PaaS models enable manufacturers to shift from single-product sales to a service-based approach. This encompasses multiple customer touchpoints throughout the asset’s lifecycle, including deployment, maintenance, and product renewal. 

A prime example of this approach is Schiphol Airport’s partnership with Signify (formerly Philips Lighting) to implement a circular lighting solution. This comprehensive lighting-as-a-service contract includes design, installation, maintenance, replacements, and sustainable end-of-life handling. The connected lighting system allows for immediate identification and repair of failures, enhancing efficiency and improving the customer experience. 

By adopting PaaS models, manufacturers gain numerous opportunities to engage with customers throughout the contract period, fostering trust and loyalty. Instead of shouldering the upfront investment, customers pay for the service they use or the agreed-upon outcomes. This creates a more dynamic and continuous sales cycle, reducing reliance on one-time product sales. 

Fulfilling producer responsibility 

The EU has implemented several regulations establishing Extended Producer Responsibility (EPR) frameworks, requiring producers to manage the entire lifecycle of their products, including end-of-life disposal. 

PaaS models are valuable tools for fulfilling EPR requirements. They allow manufacturers to retain ownership and track their assets. When an asset reaches the end of its useful life, it is returned to the manufacturer, enabling them to close the loop on materials and contribute to a circular economy. By retaining ownership and accountability, manufacturers are better positioned to meet their sustainability commitments. 

In a world increasingly focused on sustainability and circularity, PaaS models not only make sound business sense but also help pave the way for a greener, more resilient future.