Lengthen the life, strengthen the relationship
Image credit: Chernetskaya/Dreamstime
Legislation requiring manufacturers to maintain support for their products and make is easier to repair will help reduce the environmental impact of short lifecycles, but doesn’t go far enough.
The UK Government’s recent ‘right to repair’ law may be a step in the right direction for consumers and for the environment, but should the legislation have been wider reaching in order to further incentivise the transition to circularity and servitisation? To require manufacturers to become providers not only of products, but of outcomes, experiences and ongoing services too?
The regulations, which cover domestic white goods, televisions and some non-consumer products including electric motors and commercial refrigerators, mandate that manufacturers must provide spare parts in order to extend the lifespan of products for up to ten years. Parts deemed ‘simple and safe’ to replace are to be supplied direct to consumers, with spares for more specialist repairs made available to qualified technicians.
There are fears that this will fuel price rises, and concerns over the possible cost of the spare parts and the repair work, both of which will be out of the control of both the Government and the consumer. However, such a stand against ‘built-in obsolescence’– goods designed to need replacing after a relatively short period of use – should be applauded if only for the environmental gains in the reduction in non-recyclable waste. Yet comparatively few products are subject to the new laws and it is those not covered that could have turned a baby step into a major stride forward. In particular, the absence of computer and communications technology from the ruling seems a significant omission.
We have come to accept, if reluctantly, the forced replacement of our personal and workplace computers, laptops and smartphones, sometimes every two or three years. It is here where the legislation could have had a far more meaningful impact. While the major software players, for example, have long eschewed box-selling in favour of subscription models, tech hardware manufacturers rely heavily on their ability to sell their newest, shiniest, most advanced offerings, clearing a revenue path for new releases by ensuring lack of support, upgrades and parts for previous models.
A 2019 report by the European Environmental Bureau that quantified the climate cost of ‘disposable smartphones’ revealed that extending the lifespan of smartphones and other electronics by just one year would save the EU the equivalent in carbon emissions to taking two million cars off the roads annually.
Apple is among manufacturers in the field that remain opponents of right to repair, citing security and safety risks to consumers. The tech giant has built a worldwide service infrastructure and offers a recycling scheme for its products, but its core sales model for hardware still revolves around relatively short product lifecycles. Apple enjoys unparalleled brand loyalty and clamour to purchase its new models, but this is not typical throughout the sector. Built-in obsolescence in consumer technology means many devices end up in landfill simply because they are no longer fashionable, or are beyond repair.
Widening the scope of right to repair to include such technology would only accelerate an already growing trend amongst forward-thinking manufacturers towards servitisation. This is the transition from delivering a single transaction to providing outcomes and ongoing services to customers and, in doing so, cultivating ongoing consumer relationships.
The need for such evolution among manufacturers has been accelerated by the supply chain challenges posed firstly by Brexit and then Covid-19. A recent IFS study suggested that 90 per cent of companies have either undergone or initiated a reengineering of their business models in the past year to reflect the need to ‘design for service’. This is being driven by the confluence of difficult trading conditions and the expectations of consumers whose behaviours have, in turn, changed during the pandemic. Amazon in particular has helped to normalise consumers’ expectations in terms of rapid home delivery and streamlined aftersales.
Servicing of high-tech products tends to be outsourced to third parties and expensive for the consumer. While many brands do offer in-house repairs, this is rarely more than an add-on in terms of marketing and customer relations. Extended warranties are typically viewed more as insurance schemes than real benefits to promote brand loyalty.
Bringing all elements of the customer journey together means offering a reassuring, long-term solution to customer needs, encompassing not only the original purchase but planned and understandable after-sales and service, and pathways to future-proofing investments in the products. Manufacturers need to move away from the linearity of short product lifecycles and the associated downsides of increased environmental waste, poor value and short-term customer relations.
Adding service to a product, offering ongoing repairs and upgrades, longer warranties, subscription or leasing models and, critically, keeping all this under one roof, would surely better align with today’s consumer demands while providing manufacturers with better long-term stability and new, consistent revenue streams.
Moving to this model requires gaining a much more detailed knowledge of the full lifecycle costs of producing, using and maintaining a product, so the outcomes being sold can be priced accordingly. This often means investment in the right technical foundations to underpin this new business model is needed, but the advantages – both financial (higher margins and more consistent revenues) and reputational (customer loyalty) significantly outweigh any capital expenditure.
By providing such moments of service and adopting a more circular resources model at the design stage, manufacturers can more than mitigate loss of revenues previously driven by planned obsolescence by entering longer-term, outcome-based relationships with their customers. The growing 'right to repair' movement, and the legislation we’ve recently seen, are significant steps in turning back some of the damage to our environment and transitioning to a circular economy, but more can and should be done by both industry and Government to further stimulate this transition.
Antony Bourne is the SVP of industries at enterprise software firm IFS.
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