How Foreseeing Product Obsolescence Reduces Risks & Costs

The impact of circular economy principles on waste reduction

 

Managing obsolescence of products enables to extend the product life cycle and retain product or resource value that would have otherwise been lost. It reduces the environmental impact of products and components to achieve the global goal of decarbonising the industries. Indian and European partners work together on this matter by implementing principles of new business practices arising from the Circular Economy concept.



A lightbulb’s story of durability and obsolescence

A lightbulb is often correlated to change and innovation and yet it’s one of the best examples of planned obsolescence. In Livermore, California a fire department is home to a peculiar lightbulb, which has become sort of an ironic symbol: The ‘world’s longest burning light bulb’, burning since 1901 has only been turned off a few times (due to human interference), exhibiting the potential of science & technology, being designed to last. A drastic change emerged in the form of planned obsolescence at the same time as the consumer society. Described in the Norwegian film The Lightbulb Conspiracy, between 1924–1940 the secretive Phoebus cartel ensured that light bulbs were designed to fail, functioning only for a limited time, for the economic advantage of the cartel founders. At that time the world was looked at from an abundance perspective: how much it had to offer and how much we, as a society, could profit from it.


Fast-forward 80 years later, the opposite is happening. We are currently seeing increasing awareness among consumers and companies, and policy initiatives by governmental bodies on sustainability. A great example is the EU’s plan to make the economy more sustainable, and the solidification of the action plan into a legal obligation in the form of the European Climate Law. Going back to designing products that last as a resource efficiency strategy can contribute to achieving a more sustainable economy.


The root cause of product obsolescence is under the control of the producer

Even though as a society we are currently fighting for a more sustainable world, built-in or planned obsolescence still occurs to this day. A well-known example of planned obsolescence


can be given in the form of mobile phones. Several cases have come to light involving big smartphone brands incorporating software to slow down certain functions after a period of time, compromising the performance of the mobile phones. Additionally newer versions of smartphones are released on a frequent basis, thus making the older versions go out of style, technically and aesthetically. The life of the smartphones is limited by design or engineering and thus in a way it is planned for them to become obsolete. The planned obsolescence of these products contributes to the depletion of non-renewable resources, not to mention the end-of-life journey of the electronic products.


A product can become obsolete through lack of early management

A product, whether fast-moving consumer goods or industrial, can also become obsolete unintentionally, through lack of early management and consideration in the product development stage. Product obsolescence can be tackled by using various approaches, the most appropriate one being case-dependent.

Intentional obsolescence by designing products to have a limited functionality and lifetime is finding resistance. Increasing regulatory pressure is forcing producers and manufacturers to re-think their strategies on product design, linked to product life extension and waste management.


Foreseeing obsolescence at early stages of product development mitigates investment risks

An industry example for common obsolescence management (OM) is the design of railway rolling stocks: A locomotive or a train is composed by different equipment that themselves encompass many electronical subsystems whose lifecycles are different and evolve at different speeds. The electronical subsystems’ technology scales up very fast, illustrated by the increasing number of used transistors that double every two years (Moore’s law). Although the planned operational life of locomotives is about 30 to 40 years, the equipment and component life are significantly shorter. Respectively, 10 to 15 years and 3 to 5 years. Railway rolling stock producers thus face a challenge: If the sub-system or equipment is not replaced once it loses its function, the locomotive would become obsolete. Say that the locomotive producer or its operator is aware of this: The so-called health of the product is continuously monitored and the sub-system or equipment is replaced before the product’s component becomes obsolete. This approach is the first step of a proactive methodology. The step forward is to anticipate the obsolescence from the product’s design phase, by developing a product (system or sub-system) considering that some of its components will inevitably become obsolete before the end of the product’s life. This way making it much easier to replace these components when obsolescence occurs.


The step forward is to anticipate the obsolescence

The proactive approach aims at mapping and reducing the risks, thinking about obsolescence risks right from the beginning of the product’s lifecycle. In contrast, a reactive approach is more of an emergency approach, aiming at solving the issue as fast as possible when it is already occurring. Proactive and reactive approaches are different, but they are complementary ways to manage obsolescence. The relevance of both approaches differs according to the complexity of the obsolescence issue but the more proactively obsolescence is managed, the lower the costs will be.


Proactive and reactive approach to obsolescence management, ©eolos GmbH


Managing obsolescence of products enables to extend the product life cycle and retain product or resource value that would have otherwise been lost. This concept of product life extension and waste prevention or reduction is in line with the Circular Economy (CE) concept. The CE concept has regained significant attention in the past decade and has been framed in various ways by supporters and enablers in order to envision it as a comprehensive concept for achieving a more sustainable economy.


Managing obsolescence as a business solution according to circular principles

The approach and the possibilities of retaining product or resource value can differ per product and per stakeholder within the product value chain. Researchers at the University of Utrecht, the Netherlands, produced a typology to unify the most common views on resource value retention options, with the aim of circularity. The typology is comprised of ten resource value retention options: eight reutilisation options and two preventive options. In the presentation of the value retention options are categorised into short-, medium- and long loops, based on distance covered by the product/resources before returning to the consumer.


The value retention options mentioned in the typology such as Repair, Refurbish and Re-manufacture, embody how product obsolescence issues can be addressed and gives a great opportunity to implement and run OM very systematically.


Future efforts should focus on a systemic and proactive approach of OM. It is to the advantage of the industry to foresee upcoming obsolescence of product parts and it enables business to save costs. A good and important start is a proper recording of relevant data regarding the parts and resources, to create transparency for yourself into the product and allowing you to plan ahead. Automation and digitalisation technologies enable the development of efficient solutions for this. Additionally, staying aware of current as well as upcoming regulations that may be applicable to your business is key.


Finally, the #ProductasaService (#Paas) business model changes the perspective on Obsolescence Management immediately. Retaining the ownership of the product re-enforces your product responsibility on one hand. On the other hand, it enables businesses to generate greater profits on the long run, which is a win-win for both the consumers and the industry, and the necessary incentive to start doing this differently.



Contributor:
Pierre-Yves COHEN | eolos CEO & Co-founder

 

For more information:

_ Dannoritzer, C. (2010). Film: The Light Bulb Conspiracy. Norway. 2010.

_ The European Commission (2019).The European Green Deal.

_ The European Commission (2020). The EU Climate Law

_ Acciona. The CE battle against planned obsolescence

_ McVeigh, M. K., Dalhammar, C. and Richter, J.L. (2019). Planned obsolescence — Built not to last. Stockholm: European Liberal Forum and Fores.

_ Closing the Loop (2019). New research about smart phone recycling.

_ Pouikli, K. (2020). Concretising the Role of Extended Producer Responsibility in European Union Waste Law and Policy through the Lens of the Circular Economy. ERA Forum, Vol. 20, pp. 491–508, 2020

_ European Parliament (2020). Press Release: Parliament wants to Grant EU Consumers a ‘’Right to Repair’’

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