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Procedia CIRP 64 (2017) 43 – 48

The 9th CIRP IPSS Conference: Circular Perspectives on Product/Service-Systems

Reshaping the washing machine industry through circular economy and

product-service system business models
Gianmarco Bressanellia,*, Marco Peronaa, Nicola Saccania
a
RISE Laboratory, University of Brescia, Via Branze 38, Brescia 25123, Italy

* Corresponding author. Tel.: +39 030 3715760. E-mail address: g.bressanelli002@unibs.it

Abstract

Although circular economy is usually indicated as a way to reconcile economic growth and sustainability, circular business models and related
product-service systems are not implemented on a large scale yet. Providing information about how to develop circular business models and
methods to evaluate their expected impacts, can support stakeholders to embrace this transition. To this regard, the aim of this paper is to propose
and discuss the actions required for reshaping the washing machine industry towards a circular economy scenario. The paper, based on a recently
launched research project, describes a set of actions and develops very preliminary computations of their expected impact. Results show that
customers could benefit from an average yearly saving of almost 30% of the current washing cost, while country total electricity generation and
water consumption could be reduced of about 0.6% and 1% respectively. Albeit they are only preliminary estimates and further research and
empirical validation are certainly needed, these outcomes gives an idea about the order of magnitude of benefits gathered by a circular economy
transition for a mass durable consumer goods industry such as washing machines.
©©2017
2017TheThe Authors.
Authors. Published
Published by Elsevier
by Elsevier B.V.is an open access article under the CC BY-NC-ND license
B.V. This
Peer-review under responsibility of the scientific committee of the 9th CIRP IPSS Conference: Circular Perspectives on Product/Service-
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Systems. under responsibility of the scientific committee of the 9th CIRP IPSS Conference: Circular Perspectives on Product/Service-Systems.
Peer-review

Keywords: Circular economy; Product-Service System; Washing machine; Circular business model.

1.
Introduction
Circular economy has received increasing attention in recent
years, from both companies and policymakers. For instance,
China has issued a circular economy law in 2008 with a top-
down approach, based on the “command and control” principle
rather than market instruments, as in the European, American
or Japanese policies [1].
In general, circular economy is indicated as a way to
reconcile economic development and sustainability and, thus,
as a major trend for the future. [2] However, real circular
economy projects are not always taking off so far, especially
due to limitations like risk of cannibalization, fashion
vulnerability, financial and operational risk, customer
irrationality and lack of supporting regulation and knowledge
[3][4]. Despite these barriers, the circular economy potential is
high in several sectors. For instance, O’Connel et al. [5] have
demonstrated how a reuse policy for white goods and
especially for washing machines adheres to all the three pillars
of sustainability, since it brings advantages to the environment
(e.g. lower pressure on raw materials), the economy (e.g. usage
cost reduction thanks to lower energy and water consumption)
and the society as a whole (e.g. job opportunities and an
increased quality of life by providing low-price refurbished
appliances to low income households).
In order to foster the circular transition, this paper proposes
and discusses the actions needed for reshaping the washing
machine industry towards a more circular scenario. The
research presented in this paper is still at a preliminary stage
and will be further deepened by a three-year study. However,
the aim of this paper is to highlight and to provide insights
regarding: (i.) the washing machine industry suitability to move
towards a circular model, (ii.) the actions needed to trigger this
transition, and (iii.) the main expected impacts.
To this purpose, section 2 provides a literature review on
circular economy and product-service systems, based on a

2212-8271 © 2017 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the scientific committee of the 9th CIRP IPSS Conference: Circular Perspectives on Product/Service-Systems.
doi:10.1016/j.procir.2017.03.065
44 Gianmarco Bressanelli et al. / Procedia CIRP 64 (2017) 43 – 48
preliminary research conducted on Scopus and improved with
cross-references analyses. Section 3 describes the set of
envisaged actions, while a short discussion of the expected
impacts is detailed in Section 4. Lastly, concluding remarks and
future research are reported in Section 5.
2.
Literature review
2.1.
Circular economy
The dominant economic model, based on growth and
throughput, reflects linear material flows [6] in which resources
are taken from natural finite stocks, products are manufactured
from these resources, sold to consumers and then disposed as
waste after use. The principle underlying this linear flow is a
cradle-to-grave concept through industrial systems [7], where
these cycles of production-consumption inevitably transform
resources into waste. Moreover, the economic growth is
directly connected to material and energy flows, in what might
be called the “river economy” [8]. The classical linear economy
paves the way for the so-called “throwaway society”, based on
manufacturing of short-lived products, planned obsolescence,
economies of scale and a consequent growing demand for new
products by consumers [9]. In particular, economies of scales
reached in the last 150 years are the most significant barrier that
prevent the emergence of reuse activities [9] and, above all,
new sustainable economic models. This linear model relies on
large quantities of cheap and easily accessible materials and
energy: during the last century the total material extraction has
exponentially increased by a factor of 8 and there is no
evidence that this growth will slow down or eventually decline
[10]. Yet, with 3 billion more consumers expected to enter the
market by 2030 [11] this model is deemed to be not sustainable.
Consequently, a transition towards an economy able to
decouple economic growth from resource throughput is
needed, and an answer for this issue is circular economy, since
it pushes the frontiers of sustainability by implementing
production systems in which products and materials are used
over and over again [1][2][12][13].
Circular economy is restorative and regenerative by design,
because it aims to keep products, components and materials at
their highest utility and value at all times, distinguishing
between technical and biological cycles [2]. In fact, materials
are turned into nutrients by enabling a perpetual flow within a
biological metabolism – composed of biodegradable materials
– or within a technical metabolism – composed of synthetic or
mineral materials that have the potential to remain in a closed-
loop system of reuse, remanufacture, refurbishment or recycle
activities [7].
Three major changes can help the transition towards circular
economy. First, resource and material prices are on a constant
rise and are becoming more volatile than in the past, making
more attractive the recovery of raw materials from products at
the end-of-life [4]. Second, new information technologies (e.g.
Internet of things, 3D printing, etc.) are enabling the creation
of new business models [14] that enhance products utilization
and enable reuse, remanufacture, refurbishment and recycle.
Third, green consumers are rapidly growing [15] and an
“access instead of ownership” attitude is increasingly taking
shape among customers [2].
2.2.
Product-service systems
Following [16], we define a product-service system (PSS)
as an integrated bundle of products and services which aims at
creating customer utility and value. Despite the fact that
customer value generation is the ultimate purpose of a PSS, it
is commonplace that PSSs must fulfill other goals, especially
sustainability ones. For instance, Mont [17] defines a PSS as a
system of products, services, supporting networks and
infrastructure that is designed to be competitive, satisfy
customer needs and have a lower environmental impact than
traditional business models, pointing out the need to support
PSSs with a business model evolution.
Tukker [18] identifies three main categories of PSSs:
•
product-oriented, where the business model is still mainly
geared towards selling products but some additional
services are added (e.g. maintenance contracts);
•
use-oriented, where the product’s ownership remains with
the provider who makes it available in various forms (e.g.
leasing, renting, sharing or product pooling);
•
result-oriented, where the client and the provider agree in
principle on a result, with no pre-determined product
involved (e.g. catering service, pay per use).
While in traditional product-oriented business models firms
have the incentive to maximize the number of products sold, in
solution-oriented ones companies are paid for the services they
provide. Thus, the materials involved in the product become
cost factors and firms have the incentive to minimize them by
extending their lifespan, reusing, remanufacturing or recycling
them. According to Tukker [19], the result-oriented PSS is the
most effective category for shifting to circular economy.
2.3.
Circular economy and PSSs
More specifically, Linder and Williander [3] define a
circular business model (CBM) as one in which the conceptual
logic for value creation is based on utilizing economic value
retained in products after use in the production of new
offerings. Thus, a CBM entails a reverse logistics able to return
products from users to producer, involving activities such as
reuse, repair, remanufacturing, refurbishment and recycling.
When feasible, a hierarchy among these activities should be
followed: reuse is preferable to recycling, since much of the
value still remains with the components [20].
Previous considerations show to which an extent circular
business models are aligned with the provision of PSS.
According to the literature, in fact, a transition towards circular
economy entails four building blocks [2] [4] [21]:
•
circular design: in order to be restorative and regenerative
by design, circular economy addresses the recovery of
materials not only at the end of use. Consequently,
companies need to build skills in circular design to improve
product reuse, remanufacturing, recycling and cascading.
 Gianmarco Bressanelli et al. / Procedia CIRP 64 (2017) 43 – 48
Some important areas for success in this field are material
selection (e.g. mono-material products, or at least
components), modular products, standardized components,
design for disassembly and design-to-last;
•
new business model: changing from ownership to usage-
and/or performance-based payment models is essential to
give a boost to companies in design-to-last products. By
prioritizing access over ownership, consumers become users
and manufacturers retain the goods’ ownership, selling the
function (solution) instead (servitization). In a service
economy, materials are treated as capital assets rather than
as consumables. Consequently, they are designed for
durability or more intensive use [9];
•
reverse cycle: in order to create value from materials after
their use, reverse logistics allows the collection of used
products. In several cases reverse supply chains and second
hand markets do not exist yet and they must be developed
from greenfield for circular economy to happen;
•
enablers and system conditions: financing, education, cross-
cycle and cross-sector collaboration but especially digital
technologies are needed in order to help the transition.
Since circular economy envisages a shift from a sales-
oriented business model to a function (or solution) oriented
one, a switch in the PSS offering is required. For instance, car
sharing is usually indicated as a circular economy solution for
the mobility sector [22], where firms do not sells cars but
instead offer turnkey solutions through a use-oriented PSS
scheme [23]. Car2go is a practical example of a B2C car
sharing business model in which cars can be taken and left at
any place within the city area (point to point model) and users
are charged with a price-per-minute fee [23][24].
3.
Reshaping the washing machine industry
The research project discussed in this paper focuses on the
washing machine (WM) industry for several reasons. First,
WMs reflect all the characteristics that make a product suitable
for a PSS: they are relatively expensive and technically
advanced; require maintenance and repair; relatively easy to
transport; used infrequently by customers and fashion
insensitive [19]. Second, PSSs are the sustainable strategy
suggested when the usage phase of a product is predominant
[25]: for WMs, the utilization phase affects more than the 60%
of the Total Cost of Ownership [26] and its environmental
impact is much higher than the production and transportation
stages [27]. Third, WMs have large chances of environmental
improvement: even though customers’ choice is mainly driven
by price (instead of energy or water consumption) [28],
publicizing information about WMs Life Cycle Costs to
customers brings them to opt for products with less energy and
water consumption [29]. However, this seems not to increase
the sales volume, making this disclosure potentially
unattractive from a business perspective.
The suggested actions to develop a circular economy
business model for WMs, built around the four building blocks
mentioned in section 2.3, are presented below.
45
3.1.
Circular product redesign
According to Bocken et al. [30], manufacturers can (1) slow
the resource flow through the design of longer-life products or
the extension of the product-life, but can also (2) close the
resource loop, through the design of products easy to reuse and
recycle. Consequently, one or more of the following strategies
can be chosen:
•
design for attachment and trust, which aims to create WMs
that will be loved, liked or trusted longer by users,
encouraging them to be careful with the product and thus
postpone its replacement, since they will feel personally
attached to it [30];
•
design for reliability, which aims to enhance the ability of
the WM to perform its function over a longer period of time
without failing [31], e.g. through the performance of failure
mode and effect analysis [32];
•
design for durability, which aims to develop WMs that will
last as long as possible [30], for instance by designing all
components with the same expected life and thus avoiding
the discard of the entire WM when only one component fails
[32];
•
design for serviceability, which aims to enable or facilitate
the provision of WM related services during its usage phase,
especially maintenance, repair or software and technical
upgrading [30][31], for instance by locating the parts with
the highest risk of failure (or requiring upgrade) in easily
accessible place [32];
•
design for standardization and compatibility, which
encompasses the creation of WM with parts or components
that fit other products as well [30];
•
design for disassembly and reassembly, which ensures an
easy separation of the WM parts and components,
particularly with the aim to make refurbishment,
maintenance, remanufacturing and recycling an easier,
quicker and cheaper option to waste [30][33], e.g. through
the reduction of the number of components or separate
fasteners [32];
•
design for End-of-Life, which aims to reduce the
environmental and the economic impact of the WM end of
use and to facilitate its reuse or recycle activities [30] [31],
for instance by manufacturing WM subassemblies with the
same or a compatible material [32].
3.2.
Establishing a new business model: Sharing, Pay per use-
performance, Leasing of refurbished WMs
Considering an average utilization of domestic WMs of 165
wash cycles per year [34], with an average duration of 2 hours
per cycle, a WM is utilized less than 4% of its available time.
Likewise, considering that an average European household
washes around 700 kg of laundry per year [35], the average
capacity utilization is around 60% (compared to a theoretical
output of 1,155 laundry kg per year obtained multiplying 165
cycles/year with the average load drum capacity, 7 kg/cycle).
Combining the two results above, an average WM produces
each year a laundry output below 2.5% of its theoretical output.
In order to increase this poor utilisation rate, one (large and top
46 Gianmarco Bressanelli et al. / Procedia CIRP 64 (2017) 43 – 48
quality) WM could be shared among various households. For
instance, a block of flats could install a common washing area,
where WMs could be used by all condominium inhabitants.
At present, almost 100% of WMs are sold in a traditional
way [2]. However, the ownership of a physical good requires
to take it home, install it, purchase detergents and maintain it
when it breaks down. A new pay-per-use or pay-per-
performance business model can be set up, in which the output
generated is billed instead of the product ownership. This
approach is commonplace in other sectors, such as business
printers and multi-function photocopying machines [3][36]. To
be successful, this approach requires the supplier to provide a
full set of services “included in the bill”, like consumables
(energy, water, detergents), a full lifecycle 24-7 machine
service and customer support, with an end-of-life or end-of-
service product recycling or disposal.
Given the low utilization mentioned previously, WMs are
still available for use after 10 years in operation (a standard life
at the customer’s [35]), hence parts or entire products could be
reused. Unfortunately, it is acknowledged that in the European
market, while 30-40% of end-of-life WMs is collected, not
more than 10% of them gets refurbished [2]. As an alternative,
a top quality WM could be leased, following the pay per use
scheme, for 4 sequential 5 years terms [2]. After each term, the
machine could be reconditioned by checking and changing the
2-3 most critical (or worn-out) components, if needed, and
upgrading the control firmware with the latest version, in a way
to incorporate up-to-date energy and water saving washing
programs.
3.3.
Reverse cycle: supply chain redesign
The actions described in 3.2 require a redesign of the WM
supply chain, in order to facilitate and encourage the return of
products from the user to the manufacturer. To do so, three
main processes must be established [36]: the (1) acquisition
process, in order to collect the right volumes of products or
materials of the right quality and for a reasonable price, the (2)
recovery process, which aims to refurbish, remanufacture or, at
least, recycle the products and materials collected and the (3)
remarketing process, in order to find markets that want to buy
the recovered products.
Moreover, also spare logistics can be redesigned, given
demand lumpiness and point of use geographical dispersion.
For these reasons, the level of service frequently fails to meet
the final customer’s expectations, while stocks (and connected
inventory costs) skyrocket. Harnessing big data and related
analytics (see 3.4) together with more focused logistics tools
can sharply increase the spare parts supply chain’s efficiency
and effectiveness. These tools could be:
•
spares classification, which aims to identify different classes
that should be planned in a customized way [37];
•
spares demand planning and forecasting, which could be
obtained both by extrapolating data from past demand
dataset [38] [39] or by establishing fault models that link the
components’ probability of field failure to appropriate
drivers [40];
•
spares geo-localization and stock in transit planning, which
enables the monitoring of spares in each supply chain tier
and enhances the planning of spares-in-transit, especially
through algorithmic approaches like [41].
3.4.
Technology as enabler: Internet of Things, Cloud
support, Big data & analytics
WMs and other white goods are typically conceived as static
pieces of stand-alone hardware. However, the Internet of
Things (IoT) [42] allows several opportunities such as
diagnostic data generation, remote control and service, single
user access, metering, payment and firmware updating.
Moreover, the current way to support WMs in field is
through a (direct or indirect) network of service providers.
Although well-established, this operating model has several
limitations, such as the requirement of repairmen close to
customers or the inadequacy of small operators due to a lack of
competence. By generating and sharing in the cloud the
analytic machine technical data, a community of professional
repairman can be established. Thus, when a failure occurs,
users or directly machines can place a service request in the net
and, after the intervention, the service quality of the involved
repairman could be rated by the user through an appropriate
platform. This community could encompass both professionals
as well as part-time practitioners with appropriate competence,
increasing the job opportunities e.g. for workforce previously
active as blue collars in manufacturing firms that have laid
them off.
Once a large amount of smart and connected WMs is in
operation, a vast volume of data will be generated, regarding
machine type, ownership and location, utilization and
functioning status, diagnostic data, metering of main
consumables (energy, water, or detergents), login access and
usage by single users and their respective bills, repairmen or
service providers connected. These data should be stored in an
appropriate data repository in the cloud, from where they can
be retrieved in order to support the development of predictive
analytics, for instance to forecast the future statuses of the
WMs, and consequently the future needs of maintenance and
repair activities, as well as spare parts.
4.
Results and discussion
The actions envisaged in Section 3 should not be considered
individually, since major benefits come from a combination of
them [2]. For instance, the IoT technology can enable a pay per
performance business model where the manufacturer leases top
quality WMs and retains their ownership. Thus, the
manufacturer has the incentive to design long lasting and
highly efficient products and to collect them when they reach
the end of use. Consequently, the competition shifts from price
to value.
Although several combinations of actions are possible, this
paper tries to give a preliminary idea about the potential impact
of a circular economy transition. Few among the possible
benefits of the actions described above are roughly estimated
hereafter, based on very preliminary data. For instance,
households can indirectly benefit from (1) a reduction of the
 Gianmarco Bressanelli et al. / Procedia CIRP 64 (2017) 43 – 48 47

washing cost, while environment and society as a whole can (e.g. oil, carbon, gas) used for the electricity generation, in a
benefit from (2) total savings in water and energy consumption way that depends on the country energy mix. Moreover, the
and from (3) a reduction of the amount of scrap generated at total water saving can amount to 0.26 cubic kilometres per year,
the end of life. The expected impact of these three benefits was about 1% of the total water abstraction for public water supply
estimated for Germany, France, United Kingdom and Italy, of the selected countries [48]. The results, detailed for each
since these four countries boast nearly 60% of the European country, are depicted in Table 4.
household WM installed base [34]. Table 1 and 2 summarize
respectively an educated guess of the electricity and water data Table 4. Total yearly energy and water saving for each country
for the current installed base (based on [34]) and for the average Country Number Total Share of Total Share of
best in class WM (based on [43]) that a hypothetical dealer of WMsa energy the water the public
saving electricity saving water
could provide to households under a pay per performance generation abstractionc
scheme. Some adjustments were made to take into account the b

country average household size [44]. Detergents typically have x1000 Twh/yr % km^3/y %
a significant impact on costs too [26], but their consumption r
was not taken into account since it depends more on user habits Germany 37,165.9 2.50 0.49 0.071 1.40
rather than on the type of WM [27]. France 23,787.3 1.92 0.47 0.059 1.07
UK 23,774.5 2.71 0.89 0.059 1.01
Table 1. Detail of the WM electricity consumption
Italy 22,145.1 2.26 0.80 0.068 0.72
Country Wash Current Best in class Electricity
Source: own calculation based on a[34], b[47], c[48]
cycle per energy consumptionb pricec
yeara consumptiona
Finally, Table 5 shows the current collection rates of large
wash kwh/wash kwh/wash €/kwh
cycle cycle cycle
household appliances for the selected countries [49], under the
Germany 160 0.87 0.45 0.295 assumption of a purely replacement market. On average, only
France 165 0.94 0.45 0.165 30% of appliances put on the market are currently collected.
UK 165 1.14 0.45 0.215 Even though providing an accurate estimation of the collection
Italy 170 1.05 0.45 0.245 rate for the supposed circular scenario is difficult, we can assert
Source: own calculation based on a[34], b[43], c[45] and [44] that it may asymptotically tend to 100%, since manufacturers
retain the WM ownership.
Table 2. Detail of the WM water consumption
Country Wash cycle Current water Best in class Water Table 5. Large Household Appliances (LHA) collection rate (2013)
per yeara consumptiona consumptionb pricec
Country LHA put on LHA collected Current
wash cycle liter/wash cycle liter/wash €/m^3 the market from households collection rate
cycle
Tonnes Tonnes %
Germany 160 57 45 2.26
Germany 762,654 248,618 32.6
France 165 60 45 2.16
France 908,067 263,338 29.0
UK 165 60 45 1.63
UK 739,247 255,406 34.5
Italy 170 63 45 0.40
Italy 482,864 107,305 22.2
Source: own calculation based on a[34], b[43], c[46] and [44]
Source: own calculation based on [49]

From a single household point of view, the estimations

projects a yearly saving ranging from 18.5% in France, where 5.
Conclusion and future research
the electricity price is considerably lower than other countries,
up to 40% in the case of Germany (Table 3). On average, This paper provides a set of actions aiming to reshape the
households can reduce their washing cost by almost 30%. WM industry and an estimate of some relevant impacts. These
results contribute to bridge the lack of knowledge and reduce
Table 3. Yearly saving for a single household the uncertainty that characterizes circular economy at least for
Country Current energy Best in class energy Single this particular case, helping stakeholders to start the transition
and water cost and water cost per year household towards a more circular scenario. For instance, WM
per year total saving
manufacturers may use the information about the washing cost
€/year €/year %
savings in order to define the pay per performance fee in a PSS
Germany 61.68 37.51 39.2
France 34.72 28.29 18.5
scheme. Moreover, policy makers may use the total electricity
UK 40.61 28.07 30.9 and water savings estimate in order to set supportive incentives
Italy 29.27 21.80 25.5 and legislation.
However, all the figures reported above are based on
From a national point of view, moving towards a circular reasonable but still preliminary assumptions, and thus can
scenario allows, under the condition that all households have provide only approximate information. Furthermore, aspects
chosen the new business model, to a total energy saving of such as the relation between wash cost, drum capacity and WM
almost 9.4 terawatt hour per year. This figure accounts for load size, consumer habits or simply what could happen to WM
around 0.62% of the total electricity generated in 2014 in these sales, are all factors that have not been fully considered and,
countries [47], reducing the pressure on non-renewable sources
48 Gianmarco Bressanelli et al. / Procedia CIRP 64 (2017) 43 – 48
thus, need to and will be addressed in depth by this research
programme.
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