Product life cycle management is one of the most effective tools at our disposal to hasten a transition toward the circular economy. With more consideration during each stage of a product's life, businesses can relieve the pressure on earth's natural resources while reducing the harm caused by waste and pollution. This article will explore life cycle management's role in the move toward the circular economy.
Product life cycle management (PLM) refers to the management of goods as they move through different phases of their life cycle. [1] PLM covers the development, marketing, and retirement of products. With this in mind, it will form an essential part of a transition to a circular economy.
The circular economy will prioritize sustainable development over productivity and profit-seeking. Two essential components of this battle involve reducing waste and pollution and our overreliance on natural resources through recycling, reuse, repair, and restoration of existing products and materials. [2]
In the following sections, we'll explore in detail how the product lifecycle management process can influence change across the economy.
The circular economy is an economic system that seeks to address the problems inherent within our existing linear model. Since the Industrial Revolution, economic growth and resource depletion have gone hand in hand. Our "make, use, waste" economic model sees precious natural resources drawn from the ground and used for products destined for the landfill or the incinerator.
Interest in the circular economy grew from a desire to operationalize the ideas of sustainable development. Since the early 2010s, a growing number of academics have criticized sustainable development as overly theoretical and challenging to implement. [3] The conceptual framework of the circular economy offers a clear set of business practices that are easy to visualize and communicate.
Per the Ellen MacArthur Foundation, the circular economy is formed of three core pillars. [4] They are:
We explore each in more detail before looking at the overall system from a product life cycle perspective.
The Ellen MacArthur Foundation is a leading voice in the circular community. They define the circular economy as being:
"...underpinned by a transition to renewable energy and materials. A circular economy decouples economic activity from the consumption of finite resources. It is a resilient system that is good for business, people, and the environment."
Achieving this transformation will require rethinking our relationship to the development, production, and consumption of goods in three key areas. For practical examples of a circular economy, you might want to check out our other article.
The first guiding principle of the circular economy involves imagining a shift from our current linear economy. That will require eliminating waste and pollution by transitioning away from our "take, use, waste" mindset, where raw materials are stripped from the earth, used temporarily, and then sent to be burned in incinerators or left in landfills, both of which negatively affect the surrounding ecology.
These practices are not sustainable because our planet has finite resources. Circular design offers a critical avenue to escape the predominant mode of production.
Our overreliance on single-use materials "leads to excessive carbon dioxide emissions and leakage into the environment." [5] Most of these materials cannot be reused or recycled, which is tantamount to a timid acceptance that waste is an inevitable part of the process.
We must adapt the product development process to design with the entire life cycle in mind, including the end. Materials must be compostable or recyclable.
Circular economy implores designers to see product waste as a grave design flaw. Products must be built to be shared, maintained, and reused. Emphasis must be placed on repair, refurbishment, and remanufacturing. When products reach the end of their lifecycle, their raw materials should be recycled so they can re-enter the economy as new products.
The next essential principle of circular economy involves a commitment to keeping products in use and providing value. Manufacturers should build products to last and be easy to repair and refurbish. This process will involve design that utilizes standardized and accessible parts to facilitate longer life cycles.
Discussion about material use in the circular economy often distinguishes between the technical and biological cycles. [6]
Another way to think about the distinction is between renewable and finite resources.
The technical cycle suggests we should keep items at their highest value. So, for example, a laptop or a bicycle is at its most useful as a synthesis of its components. As such, we should attempt to prolong the lifecycle as much as possible through repair, refurbishment, reuse, sharing, and so forth. When it has reached the end of its life cycle, it should be stripped for parts and components, and anything left should be recycled.
Biological cycle objects are items that cannot be reused or repurposed in the same way. However, because they are biodegradable, they can be composted. Of course, several goods straddle the divide between these two cycles, like cotton or wood. They can and should be reused, but when the time comes, they can be returned to the earth.
Again, preparing for this phase can be done during the product development process. Goods can be designed for durability, long life cycles, repair, and, ultimately, recycling. The aim is to eliminate waste entirely.
The final core principle of the circular economy involves regenerating nature. The last 250 years of hyperproduction have devastated our land, air, and sea. Excessive carbon emissions have caused climate change that scientists have convincingly linked to extreme weather events like cyclones, floods, drought, and more. [7, 8]
The circular economy will transform our models from extractive to regenerative. Large-scale food production, in particular, has destroyed biodiversity. The circular model will allow soils and ecosystems to recover and heal, with compositing returning vitamins and minerals to the earth.
Indeed, this approach supports a growing belief that industrialized farming is not the answer to solving world hunger. Russia's invasion of Ukraine has highlighted the vulnerabilities of our existing supply chain process. Compelling local and sustainable options are growing in popularity as we rethink the models we use to provide sustenance across our nations. [9]
In the linear economy, PLM was focused on a type of design that was about speed and low costs. What materials were extracted from the earth and where they would eventually go was of little concern to shareholders and business leaders. However, chasing the most efficient business operations is no longer an option due to evolving public and regulatory concerns about sustainability.
Life cycle thinking is growing in the PLM space. Businesses are considering the economic and social values of circularity and thinking about design, development, service, and, crucially, what happens afterward.
PLM has traditionally been about the efficiency of both costs and processes. However, it has a new function in helping us design and build products that can meet circularity goals.
PLM systems typically involve four stages: design, production, distribution, and retirement. The following section will explore how each phase can adopt circular principles and help lead to a more sustainable future.
Product inception is the first phase of the product life cycle. It's essential to embed the principles of circularity within the design phase.
Eco-design is a discipline that accounts for the environment and every aspect of design. For example, it uses low-impact, recovered, or recycled materials. Using the principles of eco-design will ensure that products get off to the right start.
Another vital element will involve extending the life cycle of goods by making them easy to repair. For this, parts should be modular and, where possible, standardized. This will make repairing and upgrading products far easier.
Finally, products should be designed for easy disassembly. When goods are built in this way, recycling becomes more accessible because each modular component can be reused or returned to the earth.
Life cycle management can do a lot at the production and manufacturing stage to achieve core circular principles.
Environmentally conscious design and manufacturing is a long-standing production philosophy that provides environmental benefits by embracing clean energy, low carbon emissions, and low-impact materials. However, it also prioritizes working conditions, reduces costs but not product quality, and aims to turn waste into profit. [10]
Academics have advised the broader community that moving to sustainable models is a valid business strategy for years, which makes the slow uptake of the circular economy all the more puzzling. [11]
Committing to waste reduction and using renewable or recyclable materials can help businesses gain a competitive advantage over their rivals. The perception that sustainable production necessitates financial compromises is not supported by research. [12]
Distribution and consumption will ultimately be where the battle for a circular economy will be won or lost. While businesses must adapt and meet sustainability regulatory compliance, consumers can hasten the transition towards circularity by voting with their feet. Achieving this transformation in consumer habits will involve offering business models providing services that offer convenience on top of economic and social values.
A sustainable transition will need circular business models.
Support for the "sharing economy" has grown in recent years. According to a report from Ernst & Young [13], the sharing economy can be broken down into four categories, which are:
While not all versions of the sharing economy are laser-focused on sustainability (i.e., Uber, Lyft), they do hold the principle that "every underutilized resource is a wasted resource." [14] Depending on your perception, this maxim can be seen as arch-capitalism or a way to ensure any material extraction is justified.
The true power of the sharing economy will lie in the development of sharing platforms that can facilitate the circulation of goods across communities. These platforms can connect users and help them access goods and services within innovative models that replace the existing consumerist ideology based on private property.
The product-as-a-service model is closely linked to the circular economy. It involves a transformation in how consumers access goods because it moves consumption from "buy and own" into renting, leasing, or pay-per-use business models. The idea here is that companies will produce fewer goods but at a higher quality. Then, these products can last longer and be used by more people.
There are many intriguing aspects of product-as-a-service. One of the most interesting, in terms of accelerating the advance toward a circular economy, is the potential of taking some of the responsibility of sustainability away from the consumer and placing it in front of manufacturers.
If consumers owned the majority of products, their conduct would need to be governed by strict regulations for recycling, reusing, repairing, etc., these goods. The laws would be hard to implement and enforce. Instead of managing each individual citizen, businesses could be held accountable.
Models like product-as-a-service, as mentioned above, would allow manufacturers to implement life cycle thinking en masse. This change could ensure more products are kept in circulation. However, for the circular economy to work, the entire life cycle must be considered.
A central part of life cycle management involves planning for what happens when products reach their end. The practices and materials in the design and manufacturing stage would ensure that products could be reused, refurbished, and remanufactured by the company and not just the end user.
Getting to this point would require a well-thought-out system to ensure responsibility over goods. Again, product-as-a-service is a great candidate. However, some consumers will insist on ownership of goods, so provisions need to be built into the life cycle to ensure it's easy to return items to the manufacturer for safe disposal.
Product manufacturers would need to build waste management and valorization into their life cycle management models. Direct recycling has a lot of promising applications, with particular progress made in recycling lithium-ion battery cathodes. [15] However, limitations exist when it comes to the safe disposal of heavy metals and organics.
One interesting approach is to upcycle these materials, i.e., "the transformation of waste/biomass to valuable materials and energy." [16] Building this capacity into life cycle management would provide significant benefits for society and our ecosystems.
The life cycle management processes required to reach a circular economy model are clear. However, achieving these targets will require a mix of the right tools, techniques, and best practices.
Moving to a circular model will require significant collaboration. Life cycle management will necessitate an integrated approach across the business and its network. Development, distribution, and service departments will need to work together tightly.
Integrating cross-functional teams for circularity will take strong leadership, organization, and a breaking down of corporate silos. However, when teams have a clear, unified goal to work toward, that motivation and energy will provide a powerful drive. [17]
Digital technology will be crucial for achieving circularity. AI and data analytical tools can facilitate sophisticated life cycle assessment and forecasting, while other software can be used to measure sustainability performance. Product data management tools can support and monitor the life cycle of products and goods.
Again, collaboration is key, and tools that help with life cycle costing will help businesses meet regulations and gain a competitive advantage across areas. Finally, project management tools will form the backbone of achieving circularity.
Best practice dictates engaging with partners and stakeholders to create buy-in. While many parties will be resistant to change, strong communication of the benefits and the necessity of circular systems will be necessary. Where possible, business relationships should be made conditional on sustainability.
Implementing circular business models through life cycle management will require advocacy in the boardroom. While regulations and consumer pressure can affect some of the changes necessary, businesses must show shareholders and management how they can gain a competitive advantage while also improving society and the environment.
Here are some of the more compelling benefits of implementing circularity across product lifecycle management.
We have reached a critical juncture in our stewardship of the earth. Centuries of mass production have led to deforestation, higher global temperatures, and pollution of our air, seas, and land. Without urgent action, future life on Earth hangs in the balance. The public has been largely perceptive to this fact, but with increasing industrialization happening across India and China, we must learn the lessons from our past.
Circularity offers significant environmental benefits, such as reduced waste and pollution. Additionally, it provides a path to hold on to and even replenish our precious natural resources.
In its current incarnation, PLM is "an operation, visibility, and cost management tool." [18] However, it has the potential to be so much more. Getting buy-in at a boardroom and shareholder level will require more than just a shared commitment to a more sustainable future.
Thankfully, there are major economic benefits to implementing a more circular type of product lifecycle management. When combined with its economic and social values, it forms a formidable argument for adoption.
Cost savings are central to life cycle management. As such, the circular economy represents a good fit because it reduces material costs, which allows for cost-effective production. Further, embracing circular economy principles will create new revenue streams and business opportunities. In many ways, the transition will reset the deck, allowing disruptive technologies to enter a wide range of spaces and sectors. Producers who respond early to the change will have a first-mover advantage and a chance to establish sustainable connections and partnerships.
Supply chain risk is a considerable concern within the PLM discipline. We are living through a period of economic and political supply chain risk. The cost of food and other materials has shot up, and various industries have experienced shortages. Circular supply chains would appeal to PLM leaders because they would break the reliance on global suppliers and reduce the possibility of ethical or environmental risk within the supply chain.
There are several social benefits that go along with the sustainability and economic aspects. For starters, moving to a circular model will create more jobs, many of them local. European Commission estimates that the circular economy will grow the EU's GDP by 0.5% and create around 700,000 new jobs by 2030. [19] New production techniques, hi-tech recycling plants, and repair, refurbishing, and remanufacturing plants will all provide opportunities.
Another boon for businesses will be enhanced brand reputation and customer loyalty. As consumers shift towards sustainability, they will seek out companies that resonate with their ideals. This presents an opportunity for product lifecycle management leaders to contribute to the overall perception and performance of their brand.
A study of over 400 Italian firms found that "waste treatment and recycling practices positively affect financial performance through the impact of brand reputation, while reduction practices, acting directly on the costs of the firm, directly affect financial performance." [20] This research is clear evidence of the potential that exists for firms.
While product lifecycle management and the circular economy provide a path towards a more sustainable type of production and development, as highlighted earlier, the practices are rooted in different origins and expectations. As such, any transition will have the expected growing pains associated with significant change.
PLM has many characteristics that make it a suitable candidate for translation to a circular economy. The discipline is already focused on collecting and managing data across complex interacting entities. Life cycle thinking is embedded with the PLM framework, which can provide a jump start.
However, while many elements of PLM are amenable to the circular economy, with proper planning and research, the shift will encounter friction. Here are some of the challenges and roadblocks that business leaders will need to address to ensure their PLM operations can adjust to a more sustainable future.
There is a wealth of excellent research on organizational culture and change management in the context of sustainability. As outlined earlier, the linear economy has been the standard operating model for some 250 years. The processes are deeply ingrained into business systems, thinking, and practices.
Indeed, one of the apparent challenges of adopting a circular economy is that it requires fundamental systemic changes. The circular economy is not a slight variation on the linear model. It's an upending of how we think about resources, materials, and the environment. Furthermore, current linear PLM models are built to achieve speed, efficiency, and ease of manufacture. Circular life cycle thinking, on the other hand, would involve objectives like natural resource depletion and environmental degradation.
Change management is a well-understood concept. We can define it as "the process of continually renewing an organization's direction, structure, and capabilities." [21] Placing a circular economy within this context can illuminate the possible points of friction. In theory, a change in organizational direction and goals should lead to a restructuring, which in turn will transform capabilities.
However, according to Mat Larson's book Circular Business Models: Developing a Sustainable Future [22], moving to the circular economy will require a significant amount of change management. The scope and speed of the necessary transformation will have some fallout, the author argues. In particular, it will require large shifts in the way people think about work, which means it will inevitably meet some resistance.
Resistance to change within the organization is another well-understood concept. There are several sophisticated models and strategies capable of smoothing this transition, including increased participation, strong organizational support, healthy communication between leaders and teams, and education. [23, 24]
Implementing life cycle thinking will require "understanding how an organization's elements (such as culture, management, procurement, and operations) interact with each other and with external forces (such as socio-economic or political contexts)." [25, 26] Furthermore, any attempt at change must reckon with the fact that while organizations have control of internal policies, they can have limited control over external factors.
Considering the influence of external factors, institutionalizing paradigm shifts, such as circular economy, requires consideration of social and human elements as well as initiatives to improve technology and resource efficiency.
Unlike previous attempts at establishing sustainability frameworks, a circular economy has clearly defined goals and objectives. The consequence of this clarity is that the core pillars of a circular economy are non-negotiable. Fully aligning PLM with the circular economy's stated principles will require some work.
Various studies have explored this issue seeking to find ways that PLM can be adapted to meet the strict requirements of circular economy, and in particular, extending the life cycle of each product. Some of the literature suggests that "extending the traditional perception of manufacturing processes in a production plant towards product lifecycle management" will play a crucial part in any adoption.
Indeed, life cycle design and management have emerged as critical strategic elements in adopting a circular economy framework. This point of overlap is particularly promising. That said, there are potential kinks that will need to be ironed out.
Despite support and investment from some prominent companies, there is an absence of a solid framework that demonstrates how firms can adapt their existing business models into a circular state. Indeed, some research suggests that "there is yet no harmonized method to assess whether a specific circular economy strategy contributes towards sustainable consumption and production." [27]
Another element to consider is the spotty uptake from small to medium-sized businesses. While there are SMEs that have embraced circular economy principles, for now, they are the exception rather than the rule. That said, regardless of organic appetite for the circular economy, robust regulatory frameworks would hasten the transition. Coupled with the financial benefits and business opportunities offered by the circular economy and the emergence of several disruptive startups, SMEs' lethargy will be a suboptimal business strategy.
The final barrier is not insignificant and refers to the lack of existing technology to implement circular systems across the organization. While the technology is there, it must be adopted by companies and aligned with the circular economy principles.
Product lifecycle management tools will facilitate the digitization of product design, development, support, and retirement. Data collection capabilities will allow for information at each phase about products, suppliers, and use. The entire value chain can be transformed with information on material use, recycling, and smarter use of products and components.
While traditional uses of PLM were more focused on efficiency, the discipline is adaptable enough to support important circular economy principles, such as clean production, efficient use of raw materials and natural resources, and environmental protection and waste disposal.
As established above, digitization of the life cycle will provide the surest path toward a circular economy. Of course, adapting software to consider sustainability will happen at different paces, with some PLM software providers proving more committed than others. This situation will pose a problem for manufacturers, who may be loyal to particular developers but underwhelmed by their commitment to meeting the requirements of a circular transformation.
Existing PLM software solutions have proved instrumental in product development and introduction. In particular, they help with distribution in fields with exacting quality standards and compliance, such as defense and medical devices. PLM tools are already concerned with managing a product over its lifetime. As business goals shift more toward sustainability, vendors will get on board.
Regulation and policies are evolving quickly. However, the global policy landscape can be regarded as fragmented. For multinational companies, this poses a challenge, especially in the developing world.
The European Union and its members are powerful drivers of the move toward a circular economy. The union has implemented legislation that shows a strong commitment towards sustainability across product development and waste.
The circular economy was highlighted as a crucial pillar in the European Commission's Green Deal Proposal in 2019. [28] Further clarifications and commitments were made the following year with the Circular Economy Action Plan. [19] These provisions explain why the EU, along with China, is considered the most mature region for CE legislation (see graphic below). [29]
While the EU's evolved circular economy legislation is good news for the environment, it poses a challenge for businesses. For starters, it sets a bar that could be a potentially awkward fit with existing business models. However, adopting these standards will be critical to avoid liabilities and litigation in the future.
PLM processes are already focused on the life cycle of products, including resource procurement, design, and distribution. With this in mind, PLM can be adapted and adjusted to consider horizons beyond profit and efficiency.
As recycling, reuse, and upcycling become standard considerations for product manufacturers, life cycle thinking will change. The end of the product life cycle is not when goods are sold. Rather, that point is when the item is returned to the retailer for reuse or responsible recycling.
PLM can drive a circular economy by focusing on sustainable or low-impact materials, vendor score carding, and prioritizing design that is built to last. Extending product responsibilities via product-as-a-service offerings opens the door to a business model that can extend the life cycle of products and ensure resources are maximized.
A well-planned sustainable PLM strategy will provide benefits for the environment and society. However, it also affords considerable business opportunities through cost-saving, branding, and new revenue streams. Finally, regulatory and consumer demands will soon mean that sustainable PLM becomes a necessity and not just a business strategy.