Designing Product Service Systems for a Circular Economy

Circular Economy (CE) is increasingly seen as a key approach to supporting the transition to a more sustainable society by enhancing competitiveness and economic growth. When properly planned and implemented, CE can lead to improved sustainability, improved innovation ability, decreased costs, and thus improved competitiveness (Ellen MacArthur Foundation, 2015). This also leads to the ability to turn challenges related to currently experienced increases in raw material costs and price volatility (which are projected to continue), into opportunities for companies that systematically engage CE in their business and asset management strategies (Ellen MacArthur Foundation, 2013). Creating a CE requires fundamental changes throughout the value chain, from innovation, product design and production processes to the end of life, new business models and shifts in consumption patterns (EEA, 2016). Large and established, as well as small and start-up companies are increasingly recognising the need to develop and commercialise solutions that go beyond traditional product manufacture and sales, and instead focus upon the delivery of so-called product/service-systems (PSS), defined as “a marketable set of products and services, capable of jointly fulfilling a user’s need” (Goedkoop et al 1999). Among the PSS strategies being addressed are: expansion of high value-added services; focus on total cost of ownership over the product lifetime; outsourcing agreements and rental offerings; technical leadership; and optimised product quality (Baines et al., 2009). The activities and knowledge associated with PSS lead to the need for more holistic design processes, which includes the design of both products and services and which takes a much broader life cycle perspective. Such design processes are also key for the establishment of a CE. The question is, how to organise the design of combined products and services, over expanded time periods and new stakeholder boundaries within a CE context? This chapter presents a systematic framework to support the design and development of PSS that takes account of circularity. Its main elements, stages and characteristics are presented in the following sections, followed by a discussion on the development of PSS in a CE context.