Futures 32 (2000) 289–299www.elsevier.com/locate/futures

Sustainable product-service systems

Robin Roy*

Department of Design and Innovation, Faculty of Technology, The Open University,Milton Keynes MK7 6AA, UK

Abstract

The concept of sustainable product-service systems has emerged recently, and is distinctfrom the ideas of cleaner production, eco-design and design for the environment. The conceptgoes beyond the environmental optimisation of products and processes and requires radicaland creative thinking to reduce environmental impacts by a factor of between four and 20times while maintaining an acceptable quality of service. Sustainable product-services consideralternative socio-technical systems that can provide the essential end-use function, such aswarmth or mobility, that an existing product offers. Four types are outlined—result services;shared utilisation services; product-life extension services; and demand side management. Sus-tainable product-service systems attempt to create designs that are sustainable in terms ofenvironmental burden and resource use, whilst developing product concepts as parts of sus-tainable whole systems, that provide a service or function to meet essential needs. 2000Elsevier Science Ltd. All rights reserved.

1. Introduction

With growing awareness of environmental issues—from global climate change tolocal waste disposal problems—business and government have come under increas-ing pressure to reduce the environmental impacts involved in the production andconsumption of goods and services. Until quite recently the usual response toenvironmental problems involved measures to reduce pollution and wastesafter theyhad been produced; for example, by installing flue gas desulphurisation equipmentin a power station or waste water treatment plant in a factory. However, from thelate 1980s onwards some companies began to shift their attention from these ‘endof pipe’ approaches towards developing ‘cleaner’ manufacturing processes, which

* Tel.: +44-(0)1908-653970; fax:+44-(0)1908-654052.E-mail address:r.roy@open.ac.uk (R. Roy)

0016-3287/00/$ - see front matter 2000 Elsevier Science Ltd. All rights reserved.PII: S0016 -3287(99 )00098-1

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generate less pollution and waste in the first place or make more efficient use ofenergy and materials. Then, with the realisation that major environmental impactsarise from materials choices and from the use and disposal of products, some engin-eers and designers began to think in terms of developing ‘greener’ products. Thisinvolved developing products which, for example, were more energy efficient, avo-ided toxic materials, or which could easily be disassembled for recycling [1]. Follow-ing an influential US Office of Technology Assessment Report [2], several multina-tionals made green product design part of their corporate strategy. Some smallerfirms also began to consider environmental factors in product development, althoughwork by the Design Innovation Group [3] and others [4] showed that such attemptsat green design were typically just reacting to environmental regulation or in pursuitof commercial aims and tended to focus on single environmental issues such asmaterials choice or waste disposal.

Green design, therefore, has its limitations. In particular, an environmentally ben-eficial change in one aspect of a product’s design may have adverse environmentaleffects elsewhere in its life cycle which may outweigh any benefits. For example,the avoidance of potentially toxic materials may reduce a product’s durability andhence require it to be replaced more frequently, thus increasing resource use; orrecycling the product may consume more energy and generate more pollution thanit saves.

Thus systematic approaches to designing for the environment emerged in the1990s, known as ecodesign or life cycle design (LCD) [5,6]. These aim to reduceand balance the adverse impact of manufactured products on the environment byconsidering the product’s whole life cycle—from raw materials acquisition, throughmanufacture, distribution and use, to reuse, recycling and final disposal.

Ecodesign is a relatively new approach to product development, but which is gain-ing acceptance in an increasing number of companies, especially in the electrical,electronics and domestic appliance sectors. These include multinationals, such asElectrolux, Philips, AT&T and Dow, many of which have adopted the aim of improv-ing ‘eco-efficiency’, that is supplying new or improved products that perform at leastas well as previous designs but with fewer environmental impacts over their lifecycle [7]. EU regulation on ecolabelling and energy labelling and a Dutch govern-ment Ecodesign programme aimed at small and medium-sized enterprises [8] havealso encouraged the use of life cycle design approaches.

Ecodesign involves a combination of strategies to minimise total environmentalimpacts over the whole life cycle of a product. These include:

1. the selection of low-impact (e.g. renewable, recycled) materials;2. reducing the weight or volume of materials in the product;3. using cleaner (e.g. less wasteful, polluting) techniques for product manufacture;4. reduction of environmental impacts arising from the packaging and distribution

of the product;5. reduction of environmental impacts arising from the use (e.g. energy consumption)

and maintenance of the product;6. optimising the life of the product (e.g. by creating durable, ‘classic’ designs); and

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7. reuse, remanufacture, recycling or disposal at the end of the product’s life1.

Although the above strategies can substantially reduce the environmental impacts ofproducts, ecodesign also has its limitations. Ecodesign is essentially an attempt toenable existing patterns of production and consumption to continue into the future,at least in the industrialised North, without destroying the environment. However,ecodesign alone is unlikely to be enough to deal with the pressures on the environ-ment posed by global economic development and population growth, especially inthe developing South. To begin to tackle such issues and move towards a sustainableworld, it has been estimated will involve reducing energy and resource flows, aswell as waste and pollution generated, per head in the industrialised countries byanything from four to 20 times [10]. Such a reduction, it is calculated, will allowthe developing world to increase its energy and resource consumption per head toa more equitable level. The aim is to evolve a sustainable system of production andconsumption that offers a decent quality of life to the world’s population within thelong-term carrying capacity of the earth [11].

This enormous challenge has led, among other strategies, to the concepts of sus-tainable product design (SPD) and technology for sustainability, in which the func-tion of products are considered and alternative, environmentally more sustainable,means for providing those functions are examined [12]. These sustainable designstrategies include the creation of leading edge ecodesigns, such as buildings heatedentirely by solar energy; furniture made from materials that are normally wasted,such as almond shells; clockwork-powered electronic products, and very lightweight,highly fuel-efficient automobiles [10, p. 7; 13]. These strategies may also involveorganisational and social innovations, including: new patterns of ownership, such asleasing, to give manufacturers an interest in designing for durability and to enableproducts to be returned for refurbishing or recycling; radical changes such asshared/communal use of products, thus requiring fewer physical goods to providethe same amount of services; replacing a product, such as a telephone-answeringmachine, with a ‘dematerialised’ answering service; or even questioning whether theproduct or function is really needed [14]. For example, a sustainable transport systemfor an industrialised country is likely to involve changing from private car-basedtravel to improved public transport systems, vehicle sharing schemes and environ-mentally benign forms, such as hybrid electric vehicles and bicycles, together withthe replacement of some travel with electronic communication. In addition the grow-ing demand for travel would have to be curbed, and eventually reduced, throughsocio-economic and cultural changes.

1.1. The materialisation and dematerialisation of services

In the post-war period there has been a major shift from public or commercialservices, such as domestic servants, laundries, theatre, cinema, public transport and

1 A practical discussion of ecodesign strategies may be found in [9].

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so on, to ‘self-service’ systems, often based in the home, following the developmentand widespread diffusion of consumer products such as washing machines,television/video, private cars and personal computers. That is, in the past 40 yearsthere has been a trend for services to be ‘materialised’ [15,16], hastened as the priceof physical products relative to services has fallen. However, at the same time inthe industrialised countries, there has been a general economic shift from makingproducts to providing services, information and knowledge. Thus, between 1950 and1990, manufacturing declined from providing 25 to 15% of employment in the USand from 35 to 20% in the UK, while distribution, finance and services increasedfrom 40 to 62% and 32 to 57% respectively [17]. In addition products and servicesare converging and products are increasingly offered as parts of total service systemsthat includes how the product-service is specified, delivered, explained, installed,repaired, replaced, and recycled. For example, car leasing represents 25% of the UScar market and office furniture suppliers increasingly sell ‘space’ to provide comfort,flexibility and to reduce floor space requirements rather than selling just furniture.

Many commentators have observed that the transition to an increasingly ‘demateri-alised’ economy is happening already. Tim Jackson refers to the emerging ‘newservice economy’ in which profitability is based not on material production andconsumption for its own sake but on the provision of services to meet essentialhuman needs for health, mobility, entertainment, and so on [14, p. 12]. Some haveargued that the parallel shift to innovative product-service mixes, which can providesimilar functions to those previously offered by conventional goods and services,offers the potential for factor four or greater reductions in environmental burden andresource use [18].

1.2. What are products and services?

Before looking at some examples of sustainable product-service systems, it isworth distinguishing between a product and a service. Physical products—anythingfrom a pen to an aircraft—are artefacts that can be touched, stored and owned byspecific individuals or groups. A service, on the other hand, has been defined as“any act or performance that one party can offer to another that is essentially intan-gible and does not result in the ownership of anything. Its production may or maynot be tied to a physical product” [19]. Of course some services, such as an airline,are heavily dependent on many complex products such as aircraft, computers andso on. Other services, for example a solicitor’s practice, require relatively few orsimple product inputs. Generally, services display enormous variety, ranging fromphysical services, such as transport and pollution control, and human services, suchas health, education and finance, to information services, such as telecommuni-cations, broadcasting and consultancy. These services depend to a greater or lesserextent on physical products, but most services have become, or are becoming,increasing dependent on information and communications technology [20].

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2. Sustainable product-service systems

The key to sustainable product-service systems is that they are designed and mar-keted to provide customers with a particularresult or function—clean clothes,mobility, warmth, etc.—without them necessarily having to own or buy physicalproducts, such as a washing machine, a car or fuel, in order to get that result. Inaddition the design of new product-service systems may involve the development oruse of ‘eco-efficient’ products that are more efficient in their use of energy andmaterials and generate less pollution and waste.

For example, to provide clean clothes may mean using a new type of laundryservice instead of domestic washing machines. A laundry service requires fewermachines and hence reduces the amount of materials consumed in manufacture aswell as reducing the number of machines requiring distribution and disposal. Moreimportantly, a laundry can afford more energy-efficient commercial washers which,for example, use gas to heat the water, while a larger market for such products mayencourage the development of machines that have heat recovery to provide drying[10, p. 93]. Moreover, thinking in terms of designing a system to provide afunctionrather than designing a product quickly shows that there are often many alternativeways of providing that function. Clean clothes, for example, could also be providedby a self-service laundry, a community wash facility, or a dry-cleaning system. Inmany cases new organisational, financial, legal and social arrangements, as well asinnovative design and technology, may be required to make such new product-servicesystems practical or economic. A community wash facility, for instance, may involvethe provision of subsidies to housing associations to buy commercial washingmachines.

German, Italian and Dutch thinkers in this area [18,21,22] suggest there are fourmain types of product-service system that contribute to sustainability by reducingthe total quantity of materials and energy required per unit of service rendered. Theremainder of this paper considers these four types in turn.

2.1. Result services

Result services (sometimes called demand services or service products) aim toreduce the material intensity of existing systems by selling a ‘result’ instead of aproduct—for example selling a ‘clean clothes’ service rather than a washing machine.The service provider typically takes responsibility for supplying, maintaining, takingback and recycling all physical aspects of the system.

One of the best known examples is the large US company, Interface, which aspart of its mission to become the world’s first ‘Sustainable Corporation’, providesa floor covering service as well as making and selling carpet tiles. According to thecompany’s Sustainability Report:

Interface has taken the ‘service products’ concept to heart. The EvergreenLease is Interface’s first attempt to transform a durable commercial product (carpettiles) into a service. Whereas carpet tiles are usually sold and installed, Interface

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has implemented a program to lease the services of the carpets to the buildingowner. As carpet tiles wear out and are replaced, the old ones would be brokendown and remanufactured into new tiles as part of the lease fee. The customerwould not pay an installation cost, only a monthly fee for constantly fresh lookingand functional carpeting. Over time the amount of raw materials would drop...the product becomes part of a cycle, either decomposing or breaking down... inan organic cycle, or being synthetically broken down into a technical nutrient fora new product [23].

Another good example of a company that is shifting from making products toproviding result services is Xerox Corporation. Xerox had long been involved inleasing instead of selling its copiers, for commercial rather than environmentalreasons. During the 1980s, in its mission to become a ‘Waste-Free Company’, Xeroxintroduced several environmental measures, including management of toxic wastes,cleaner production techniques and designing its copiers for energy efficiency andease of disassembly for re-manufacture and recycling [24]. Then in 1993, as wellas producing wholly new products, Xerox introduced a range of copiers that includedre-manufactured components from machines taken back from its leasing service.These were guaranteed to be of equal quality and performance to new copiers, toovercome customer resistance to the ‘second-hand’ image of re-manufacturedmachines. The next step has involved the launch in selected countries of a complete‘duplication’ service to companies, involving provision and maintenance of copiersand collection, copying and delivery of documents [25].

Designing result services is not necessarily just an organisational matter. Oftenintroducing them requires redesigning the products involved. For example, Inter-face’s Evergreen Lease required choosing materials for the carpet tiles that are bothvery durable and easy to recycle, while Xerox’s document service, since the copiersremain the under the company’s control, can use machines with a high proportionof remanufactured parts.

2.2. Shared utilisation services

Shared utilisation services (sometimes called product use services or communityproducts) aim to increase utilisation of the material parts of a system by sharing theproducts required. For example, in clothes cleaning this would involve sharing facili-ties in a community wash centre or commercial launderette (Laundromat) instead ofhaving washing machines in individual households.

The Netherlands Government programme on Sustainable Technology Develop-ment (known by the acronym DTO in Dutch) has sponsored research on technologiesand systems for the sustainable washing of clothes in the period up to 2050 [26].The project examined whether a ‘factor 20’ improvement in eco-efficiency could beachieved through innovation in clothes washing technologies alone or through a shiftfrom individually-owned products to shared utilisation services. The services con-sidered were either a neighbourhood wash centre or large commercial laundry. Themeasures of eco-efficiency were the amounts of primary energy, water and detergentconsumed per kilogram of washed clothes.

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The study indicated that improvements in domestic washing technology (forexample, sensors to optimise machine loading and low temperature detergents) werelikely to produce factor three improvements in eco-efficiency, in terms of energy,water and detergent consumption, up to 2025. The neighbourhood wash centre, smalllocal laundry or large laundry could also achieve a factor three reduction in energyconsumption by 2025 through use of renewable sources, combined heat and powerand improved machines. That is shared utilisation services are likely to producesimilar reductions in energy consumption to those at the household level, becausesome energy savings in laundries are offset by the need for higher wash temperatures,more artificial drying and energy for transport. However, the large laundry service,due to the efficiencies of scale and availability of skilled operators, could achievefactor 10 reductions in water consumption and perhaps factor 16 reductions in deter-gent use by 2025, through measures such as water and detergent recycling. The localwash service was only likely to achieve some of the scale efficiencies of the largelaundry and therefore would only be slightly more eco-efficient in water and deter-gent use than household washing machines.

Thus, factor three reductions in environmental impacts per unit of service offered(in this case, resource use and pollution per kilogram of clean clothes) were achiev-able in all three scenarios. But none of the systems examined managed to achievethe desired factor 20 improvements, although the large laundry seemed to offer factor10 or more reductions in water and detergent use by 2025.

Similar ideas are now being explored for the household services of heating, coo-ling, lighting, shopping, cooking and eating, as well as clothing care, in a five-countryproject called ‘Sushouse’, funded by the European Union Environment and ClimateChange Research Programme. This project is attempting to identify scenarios andstrategies through which European households might become more sustainable by2050 [27].

Another category of shared utilisation service is transport, which covers new sys-tems such as car sharing or bicycle pooling [28] as well as existing systems suchas public transport services. Researchers have studied car sharing in the Netherlands,in the form of a locally-based vehicle rental service, as a potential sustainable trans-port system [29]. This showed that on average participants in car sharing schemesreduced their car mileage by a third, with former car owners reducing mileage bytwo-thirds and non-owners by nearly 30% (although those who used the scheme toprovide an additional car maintained their mileage). At the same time all participantsincreased their use of bicycles and public transport. Similar results have been foundin German studies of car sharing [10, pp. 128–129].

As well as the benefits of reduced car use and the need to manufacture and parkfewer vehicles, car sharing schemes allow full use of the life of the mechanical partsand more rapid replacement of older models with the latest, most efficient designs.Such schemes also offer the potential of sharing the cost and risk of introducingnew technologies, such as electric vehicles, and thus provide a market for eco-efficient innovations.

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2.3. Product-life extension services

Product-life extension services (sometimes called duration products) aim to sub-stantially increase the useful life of products or materials through maintenance,repair, reuse and recycling, thus reducing the amount of energy and resourcesrequired to provide a given function. A simple example would be a company thatsupplied personal computers, maintained and upgraded them, and took them backfor recycling at the end of their life.

Other forms of product-life extension services are appearing. One is a US chil-dren’s clothes retailer which will take back its clothes when outgrown, give a creditto the consumer towards future purchases, and donate the outgrown clothes to charityfor reuse. Since 1986 the scheme has generated a million dollars in credit to cus-tomers and more than 200,000 items of clothing have been redistributed. Anotherexample is the US electronics retailer, Radio Shack, which recently started a newbusiness repairing out-of-guarantee consumer electronic products from any manufac-turer [22].

2.4. Demand side management

Demand side management (sometimes called least-cost planning or integratedresource management) originated in the field of energy supply. Following the oilcrises of the 1970s and subsequent regulatory changes, US electricity suppliersrealised that it was often more economic to reduce energy demand than build moregenerating capacity. This concept evolved into the idea of considering the end-useservice that electricity buyers wanted—illumination, cooling, thermal comfort, etc.—and working out the least-cost method of supplying it. ‘Least-cost’ could take intoaccount environmental and other social costs, or merely reflect the financial cost tothe end-user. Whichever definition was adopted, the least-cost solution might involveenergy conservation (for instance, supplying energy efficient washing machines at adiscount or handing out free compact fluorescent light bulbs); switching to alternativefuels such as gas; or buying in electricity generated from renewable sources suchas wind power. Occasionally least-cost may involve building new, more efficientpower stations.

The principle of reducing demand rather than increasing supply, or supplying atleast financial and environmental cost, spread in the 1980s and 1990s to other utilitiessuch as gas and water supply, first in the US and then in some European countries[10, pp. 155–158]. Similar ideas are beginning to take hold in other services suchas transport.

Demand side management/least cost planning projects are often similar to the firstcategory of ‘result’ services. For example, there are energy service companies inGermany that take responsibility for providing ‘heat’ to private apartments. The com-panies install, maintain and run the boilers on a long-term contract as well as buyingthe fuel and so, unlike the individual apartment owners who may have short-termconcerns, have an economic incentive to invest in heating and control systems thatare as efficient as possible [22].

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3. Conclusions

It is clear that many radical ideas are emerging in response to the enormous chal-lenge posed by the likely need to reduce environmental burden and resource use inthe industrialised world to between 25 and 5% of current levels for each unit ofservice rendered. That is, between factor four and factor 20 improvements in eco-efficiency will be required to move towards an environmentally sustainable worldwith a doubled population; if dramatic reductions in living standards in the industrial-ised North and continued poverty and low living standards in the developing Southare to be avoided. These sustainability ideas have developed from ‘cleaner andgreener’ improvements to processes and products [30] to socio-technical systemchanges and new product-service mixes. Some of these systems, such as publiclibraries and bus services, are similar to what exists now, but can be greatlyimproved, especially through the use of advanced information and communicationtechnologies. Other concepts, such as car sharing or heat supply services, are rela-tively new. Yet other ideas include transferring certain potentially more sustainableways of providing goods and services from the developing world to the industrialisedNorth, such as the use of rickshaws and shared taxis for local transport [12]. Allthese ideas for more sustainable goods and services pose major marketing and designchallenges as well as cultural and political obstacles [31]. Although sharing productsmay save resources, sharing is not necessarily acceptable to users. For example, oneof the main reasons why the car sharers mentioned earlier reduced their car use wasbecause they had less convenient access to a vehicle. At present, leasing productsis usually more expensive than buying, which is likely to deter many people fromadopting this option, despite the benefits in terms of regular maintenance and upgrad-ing.

It is therefore necessary to stress the social, environmental and other benefits ofthese new ecodesigns and product-service systems when designing and marketingthem. It is also usually necessary to devise market incentives, regulations and othermeasures to make them viable, for example providing tax incentives to conserve fuelor to switch to renewable energy. Innovative design and the latest technologies canalso be employed to make new services, such as shared transport, more user-friendlyand convenient. The rapid advance of information and communication technologies,from smart cards to mobile communications, are likely to make many types of sus-tainable product-service system more economic and practical.

Designing goods and services that reduce environmental impacts by a factor offour or more, and are at the same time economically viable and acceptable to users,will require the highest levels of creativity, the use of both traditional and advancedtechnologies, and the collaboration of many diverse organisations. But preservingthe environment for future generations seems like a good reason for being creativeand innovative.

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Masters thesis, International Institute for Environmental Economics, Lund University, Sweden, Sep-tember 1997.

Dr Robin Roy is Professor of Design and Environment and Director of the Design Innovation Group (DIG),in the Department of Design and Innovation, at the Open University. Both he and DIG are members of theCentre for Technology Strategy.