Sustainable Operations and Closed-Loop Supply Chains by Souza Gilvan C

Author:Souza, Gilvan C.
Language: eng
Format: epub
Published: 2014-04-24T17:55:21.479000+00:00

CHAPTER 6

Servitization and Leasing

Introduction: Is Leasing Green?

In the previous chapter, we discussed the difference between biological and technical nutrients. The Cradle-to-Cradle® design protocol indicates that biological nutrients (biodegradable items) can be safely returned to the earth and composted, whereas technical nutrients (such as steel, aluminum, plastic) should be upcycled—designed to be recycled in a way that the material doesn’t lose any of its technical properties, and can be used to produce the same product (or better) again. Thus, products are designed such that technical nutrients can be reused for (theoretically) an infinite number of times. McDonough and Braungart indicate one way for this scenario to be practically feasible: firms should have control of the product after the end of their use by consumers—that is, firms should sell the service the product provides, not the ownership of the product. In their words:1

In order for such a scenario to be practical, however, we have to introduce a concept that goes hand in hand with the notion of a technical nutrient: the concept of a product of service. Instead of assuming that all products are to be bought, owned, and disposed of by “consumers,” products containing valuable technical nutrients—cars, televisions, carpeting, computers, and refrigerators, for example—would be reconceived as services people want to enjoy. In this scenario, customers (a more apt term for users of these products) would effectively purchase the service of such a product for a defined user period—say, 10,000 hours of television viewing, rather than the television itself.

Thus, McDonough and Braungart posit that leasing is inherently green—as long as the product is designed in such a way that technical and biological nutrients can be easily separated, and there are no “monstrous hybrids.” The U.S. Environmental Protection Agency (EPA) has also recommended leasing as a way to reduce waste, as one of the different models of “green servicizing”:2

Thus, if we are to achieve meaningful movement towards a truly sustainable future economy, we must find a way to make a service- and information-led economy a green economy. Put another way, we must find ways that services can change—for the better—the ways that products are designed, made, used and dealt with at end of life.

Other organizations, such as the Minnesota Pollution Control Agency, and the New York City government, also consider leasing as a good alternative to disposal, considering that leasing companies reuse the leased equipment.3 Thus, the main argument for leasing as a green business model is that it promotes reuse: end-of-lease equipment is still functional, and can be reused as-is (as is the case with cars, for example), or can be refurbished for a new life. Xerox is an example of a firm that designs products for multiple generations. Products have a modular design, and “sturdy” frames that can be reused with little rework, after the end of the leasing period with customers. Thus, a Xerox copier returned from the customer after leasing expiration can be easily upgraded (through the modular design, which allows easy replacement of obsolete modules with new ones) to a newer product generation, after the remanufacturing process.

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