The third trend relates to Corporate Social Responsibility. Many millennials expect businesses to have a higher purpose than profits alone, and they are especially concerned about the environment. In a recent Deloitte survey, 87% of respondents agreed that “the success of a business should be measured in terms of more than just its financial performance.” This generation is supportive of the goals of the circular economy, which call for a major shift from the linear ‘take, make and waste’ model to one where goods are designed to be taken back and recycled, refurbished or reused.
The convergence of these trends makes the argument for usage-based business models even more powerful. Servitization – facilitated by the IoT – makes it easier for manufacturers to establish circular, take back and reuse systems. By selling the ‘use’ of something, manufacturers remain responsible for the product and can ensure that it does not wind up in a landfill following its first life cycle. The usage data obtained via sensors further enables the manufacturer to adequately prepare for the product’s second life. All of this is unlocking new revenue streams for manufacturers and distribution partners alike. In fact, both McKinsey and the Ellen MacArthur Foundation have projected that circular economy methods could unleash a trillion dollars a year in cost savings.
At DLL, we are helping our partners reach this new level of Servitization via our Life Cycle Asset Management (LCAM) program. Our team works with manufacturers and dealers to develop second and third life revenue streams, thus ensuring the refurbishment and reuse of equipment, while simultaneously promoting usage-based models.
As more and more companies embrace the potential of IoT, customer centricity and circular thinking, I am hopeful that we’ll see the rise of a new era of sustainable economic growth across the globe. With that in mind, I encourage you to ask yourself whether your business is poised to meet these changing demands. I am convinced that together, we can create a brighter future for businesses, customers and our planet.