Applying Circular Economy to Product Management

The circular economy has effects on all the product management phases.

1. Product Strategy

The product strategy describes how to achieve the vision of the product. It is, along with product vision itself, customer feedback and business goals, a primary reference point for product development.

A circular product needs to have circularity as part of the product strategy. A clear circular product vision gives team members a shared basis for circular product development.

2. Materials

Physical products consist of components made of materials. Ideally, renewable, recycled, or already-used materials are used to produce the components of the product. Virgin material should be avoided.

The mining and processing of materials should cause no pollution of air, water, soil and other disturbances like light contamination or noise pollution.

Materials need to support the circular goals of avoiding waste. Therefor, materials need to be used effectively. Given the purpose of a product, virgin resources might yield better results when it comes to the overall environmental impact and resource need of a product.

All kinds of materials must be used efficiently. Material - no matter the origin - must not be wasted.

Additionally, material choice can be viewed through the lens of supply chain risk. Some essential materials may only be sourced from a limited number of suppliers or countries, which can create cost and availability risks. Replacing these materials and focusing circular economy efforts on critical materials can lower supply chain risks.

Recommended Tools:

• 🔎 Life Cycle Assessment (LCA)

3. Design

Product design is the strongest influence factor on a product’s sustainability. It defines material requirements, reuse, repair, remanufacturing, and recycling possibilities. A product designed for circularity has the potential to keep resources in use and avoid waste.

A popular way to bring circularity into product design is through circular design principles. These principles describe the desired characteristics of the product, allowing designers to find a suitable implementation for the product at hand. Designers can use existing circular design principles or create individual ones for their company or product scope.

Recommended Tools:

• 📐 Circular Design Principles

4. Production

The production process is affected by many aspects of a product and the company. Many material sustainability choices impact production.

Sustainability plays five different roles in the production process:

1. Passive: Material choice, product design, and R-strategies influence the production process. Materials need to be processed, and product designs need to be executed. A product that is easy to repair has likely less glued and more screwed connections. A product that can be remanufactured must fit into a production process that allows for automatic disassembly, cleaning, exchange and reassembly.

2. Active: Changes in the production process may influence the product's sustainability. New techniques allow unprecedented constructions. IOT-infused processes enable a higher product variety necessary for decades of product remanufacturing.

3. Pollution: The production process should run without hazardous chemicals and the generation of any polluting byproducts.

4. Energy & resource consumption: Energy for production should come from renewable sources. Energy use should be efficient to avoid wasting energy regardless of the source.

5. Embodied material: Production facilities are products that should be designed and used according to high sustainability standards.

5. Distribution

Products need to be distributed to customers. They might circulate to subsequent customers, collection points, repair stations, or even back to the factory.

Generally, distribution should avoid any carbon emissions and pollutions. This requirement applies not only to circularity but to sustainability in general.

Moreover, the distance between the factory and customers should be short. The shorter the distance, the less energy is needed to transport the product. Even if transport runs on renewable energy, the circular economy aims to use as little energy as possible.

The distance between the factory and customers does influence the feasibility of a closed-loop strategy. A closed-loop strategy requires all materials to circulate within one material loop controlled by one company. On the contrary, an open-loop strategy allows various companies to use one another's material streams for further production. A company that wants to reuse components, practice remanufacturing or use recycled material from its products needs to consider the distances between the supply of these reused input streams and the place of production. Brands produced on one continent and shipped to another will have a long distance to bridge.

6. Use

Products are the centre of all companies. They solve customers' problems. Products can either be consumed or used. If a product is consumed, its problem-solving capacity diminishes with its consumption (like an apple that is gone at the end of the consumption). If a product is used, its problem-solving capacity remains intact throughout the use phase. Consumption and use mark two extremes of a range with various mixes in between (rubber brakes of bicycles).

Resource consumption: Some products require energy, water, or other materials. First, the resources a product needs during its use phase should be renewable, reused, or recycled. An electric car charged with renewable electricity is preferred over a combustion engine car fuelled by fossil resources. Second, resource efficiency during the use phase should be as high as possible. A more efficient electric vehicle is preferred over a less efficient vehicle. Third, the product should not pollute the environment during its use phase, e.g. by releasing hazardous materials or harmful packaging.

Longevity: A product should be made to last as long as possible. The longer a product is in shape, the lower the need to replace it with a new product. Longevity can be supported by product design and maintenance instructions and supplements.

Repair & maintenace: A product should be easy to repair. Using a product can put stress on its components and materials. Maintaining this condition and having repair options ensures a longer product lifetime. Product design is pivotal for repair options. Spare parts need to be accessible.

Sharing: Products tend to be underutilised. Most of the time, a car is parked and not driven, and barely any power tool is used 24/7. Sharing is a way to increase the utilisation rate of products. Companies can facilitate sharing, sometimes by modifying products and sometimes by coordinating behaviour or specific business models. While one customer remains the owner of the product, it can be used by someone else for a defined time period.

Reuse: Not all customers need a product forever. Enabling the reuse of products prolongs their lifetime. While most products are not restricted to being reused by other customers, product registration or software hardware pairing can sometimes incur limitations on product reuse. Moreover, companies can facilitate reuse through specific traits, like refurbishment service, quality checks, or second-hand platforms.

7. Post-Use

At some point, customers stop using a product. But companies have the means to restore it to use.

Refurbishment: A product can be functionally restored to the state of the original specification. Failed components are repaired or replaced. The idea is to extend the lifetime of the original product by bringing parts of it to an as-new condition.

Remanufacturing: A product can be disassembled, completely cleaned, some of its parts renewed or upgraded and reassembled again. This equals a complete & comprehensive overhaul of the product bringing it to the same or even better quality level as the original product.

8. No Use

Products and components can reach their end-of-life and are not used or restored anymore. But, the inherent material has value and can be recovered.

Materials used to build components can be reused to manufacture other components and products. Therefore, materials need to be separated from each other. This can be done by:

• Mechanical recycling: Materials are sorted, grinded and cleaned to keep their chemical composition intact.

• Chemical recycling: The chemical structure is changed so that the original or new mixed materials can be (re)generated.

• Organic recycling (e.g. composting, biogasification): The materials are exposed to microorganisms that transform them into other materials, gases and liquids.

• Thermal recycling (burning): The materials are burned, and the thermal energy is used to create heat for electricity and heating infrastructure.

Ideally, the recycled materials meet the same standards as the original materials. Down-cycling happens if the recycled materials are of inferior quality and cannot be used for the same products anymore.

Product design is essential for a product's recycling potential. The easier it is to separate materials from each other automatically, the higher the value of the recycled material.

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