Keywords

1 Introduction

For a long time, our economy has been linear. We have taken material resources from our planet; used them to make products; and disposed of them as waste. Within this system, consumerism and population growth have propelled a use of resources that has outpaced the sustainable capacity of the ecosystem and led to the accumulation of waste (Stahel 2010). The depletion of material resources is making their prices volatile and creating uncertainties in resource markets (Ellen MacArthur Foundation 2015). Importantly it is increasingly acknowledged that if we do not intervene now to preserve our material resources, we risk compromising the ability of future generations to source and use materials to address their manufacturing needs.

At present, consumption is predominantly based on one-off payments made by consumers to own products and dispose of them at the end of use. Despite the present recycling infrastructure aiming to close resource loops, acquisition and recovery of products and materials is poor. Disposed products largely end up in landfills because either the infrastructure for recovery does not exist or is not suitable for many types of products; and because not all consumers are willing or able to access the infrastructure (Steg and Vlek 2008). The products and materials that are intercepted for recovery are generally cascaded to lower level applications as the collected streams remain contaminated. This is due both to the way products are designed (Mestre and Cooper 2017; Bocken et al. 2016) and the ability to revalorise material resources, which is limited by sorting and separating technologies, material properties and material recovery technologies.

To transition to an economy that is circular, products can be designed in conjunction with use and result oriented services to offer value to consumers, while efficiently using fewer resources. These product-service systems (PSSs) offer consumers access to products, while ownership of the products remains with or returns to producers (Ellen MacArthur Foundation 2015). Rather than paying to obtain ownership of products, consumers are charged for the time spent with products as they ‘pay per use’. A notable application is the ‘Pay-per-lux’ intelligent lighting service introduced by Philips (Rau and Oberhuber 2016). In this product-service system, Philips retain control over the products that they produce enabling better maintenance, reconditioning and recovery. The producer, therefore, is incentivised to increase its control over resources that are consumed to deliver the performance of resources and dematerialise the performance where possible. Increased control over the flow of resources offers two main opportunities for the circular management of materials. First, producers would be expected to design products according to circular design principles (Mestre and Cooper 2017), e.g. easier to disassemble, sort, identify and separate. This improves the ability to produce pure or purifiable resource flows. Second, centralised ownership of products encourages to develop product-specific recycling infrastructure and activities. This permits companies to reduce the risk of contamination of the collected resources and optimise the recovery and reuse of products, components, and possibly materials. Despite the opportunities to flow materials continuously using this model, the resources in these models will eventually become obsolete and producers still have to dispose of them (Zink and Geyer 2018). The issue of whether resources are revalorised and returned to materials suppliers to function as a continuous feedstock remains dependent on the response of producers to obsolescence; and the roles to be fulfilled by collectors, recovers and recyclers.

This paper introduces preliminary research to investigate the concept of offering materials, not products, as a service. Material-service systems (MSSs) are positioned as new business models for the circular economy where material suppliers shift from the selling of material resources to the provision of material services. With these systems, material suppliers are in control of resources and therefore have significant incentive to revalorise them in collaboration with collectors, recoverers and recyclers. After introducing the concept of MSS, the paper explores the expected benefits, enablers and challenges of the proposed service systems. In this research we take a resource-centric view of materials and the outcomes of their transformations over the production, use and end of life phases. We pose that resources have multiple states including raw resources, produced resources, wholesale resources, operative resources, obsolete resources, recoverable resources, recovered resources and revalorised resources. We define materials as raw resources and products as produced resources.

2 Literature

2.1 Materials as a Service

This research on materials as a service has been influenced by two main concepts: Material Matters (Rau and Oberhuber 2016); and Chemical Looping (Stoughton and Votta 2003). Materials Matter is the title of a book by Thomas Rau and Sabine Oberhuber capturing their vision that it is service, not ownership, the answer to facilitate an unlimited use of materials and the elimination of waste in the construction sector (Rau and Oberhuber 2016). To enable this shift, they have proposed an online registry of material passports, which allows to know where materials are located, and preserve and reuse materials while saving costs. With this information, obsolete buildings become a mine of materials.

Research on chemical leasing (Stoughton and Votta 2003), referring to the selling of the function performed by a chemical, is also related to offering materials as a service. However, this work has mainly focussed on effective use of chemicals for cleaning and coating purpose in manufacturing (e.g. charging customers by m2 of coated surface rather than Kg of paint). Hence, it does not address the proposed vision to manage material resources throughout the entire supply chain.

2.2 Ownership and Business Models

Ownership is the state or fact of exclusive rights and control over property including objects such materials and products, and land, real estate and intellectual property. In traditional business models, the property of objects and the rights over them are exchanged as a result of financial transactions between sellers and buyers. Consumers, for example, buy goods from producers or retailers and as a result own new products. Use and result oriented product-service systems are business models where producers grant consumers access to products or offer consumers the performance of products as experiences. Ownership of products in these business models is retained by producers. Futures have been proposed where business models based on access, not ownership, will become the dominant market offering and the idea of ownership is perceived as old fashion (Rifkin 2000). In a market where consumers are granted access to goods that they feel theirs though they do not legally own them, research has emerged to understand how to design to satisfy psychological ownership using a human centred approach (Baxter et al. 2018, 2015).

In recent reviews of business models for the circular economy and sustainability (Pieroni et al. 2019; Lüdeke-Freund et al. 2019; Bocken et al. 2014), models are reported where access to products is granted by paying-per-use instead of paying per-ownership (i.e. by delivering functionality rather than ownership), but there is no reference to a model where materials are offered as a service.

3 Approach

This research is based on literature review and the experience of the authors in the fields of ownership, design, product-service systems, the circular economy and business along with insights gathered during research projects with industrial partners. The paper presents a theoretical exploration of the concept of materials as a service. Two scenarios are used to explain how a material-service system would work. In the first scenario we explore its interaction with a product-service system. In the second scenario we review its independent use in the resource lifecycle system.

4 The Concept of Material Service System

The concept of MSSs revolves around the fact that the principle to ‘pay per use’ can be moved up the supply chain. In a MSS, suppliers of materials offer producers the use of material resources through services. MSSs can be thought of as marketable sets of materials and services capable of jointly fulfilling the needs of producers. They offer producers access to the performance of materials, while ownership of resources and corresponding responsibility of material management remains with suppliers. A MSS, therefore, implies a new role for producers, as they shift from consuming, to using material resources, which remain owned by material suppliers. Producers enter a business relationship with suppliers based on a ‘pay per use’ model rather than traditional purchasing of material resources. In Table 7.1 a MSS is contrasted to a PSS. As it can be seen the fundamental difference between the two models is that in a MSS material suppliers retain ownership of material resources and sell the function of materials, whereas in a PSS producers retain ownerships of produced resources and sell the function of products. It is noteworthy that material suppliers retain ownership of resources, not of the intellectual property resulting from the downstream transformations made to resources by producers or other stakeholders. Two scenarios are envisaged to deploy a MSS, namely a MSS used in conjunction with a PSS and a MSS used on its own. The scenarios are explored in the next two sections.

Table 7.1 Main differences between a MSS and a PSS
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4.1 Use of a MSS with a PSS

A MSS can be operated in conjunction with a PSS, see Fig. 7.1a. In this scenario a material supplier markets materials as a service to a producer, and in turn the producer markets products as a service to consumers. Consumers have an obligation to return obsolete products to the producer, while the producer has an obligation to return them to the material supplier. This scenario is now explored using the case of energy storage through lithium-ion batteries. A material supplier of lithium cobalt oxide (i.e. cathode material) or lithium titanium oxide (i.e. anode material) offers to the producer of e-vehicle batteries the possibility to use its materials as a service. The material supplier requests that its materials are used on standardised battery designs, which follow predetermined design for disassembly rules. The material supplier also requests that the materials are returned at the end of the contract stipulated with the producer. After entering this contractual agreement, the producer manufactures battery cells, modules and packs for e-vehicle applications thinking carefully about the life of its battery products. The battery producer, conscious of the requirement to return the batteries to the material supplier, offers the batteries to manufacturers and consumers of e-vehicles as a product-service system. This means that consumers lease batteries from the producer and have a requirement to return them to the producer at the end of life as they have to be returned to the material supplier. Depending on the contractual agreement with the material supplier, the producer could decide to keep the batteries longer before returning them to the material supplier for recycling. For instance, the producer could repurpose the batteries for less energy intensive applications or operate a refurbishment service and offer them for appropriate applications.

Fig. 7.1
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a MSS and PSS versus b MSS only over the resource lifecycle and stakeholders

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4.2 Independent Use of a MSS

A MSS can also be operated independently of a PSS, see Fig. 7.1b. In this scenario the material supplier markets materials as a service to a producer, and the producer markets products to consumers. Consumers, however, have an obligation to return obsolete products to the material supplier. This scenario is now explored using the case of energy storage through lithium-ion batteries. A material supplier sells lithium cobalt oxide or lithium titanium oxide to a producer to manufacture batteries for e-vehicles. The battery producer then markets batteries to manufacturers and consumers of e-vehicles with an obligation to return them to the material supplier at the end of life. The collection or take-back service is, however, offered by the material supplier. In this scenario the battery producer is free from the responsibility to recollect obsolete batteries as this is transferred to the material supplier.

4.3 Expected Benefits to the Whole System

Leaving the ownership of resources at the top of the supply chain, MSSs have the potential to allow suppliers to exert more control on the flow of resources and consequently to use resources more efficiently (Allwood et al. 2011), for example, by collaborating closely with collectors, recoverers and recyclers. Specifically, MSSs would allow to reduce the dependency on virgin resources and permit to bring to life the concept of pure and closed resource flows, i.e. less contamination.

4.4 Expected Benefits for Material Suppliers

The following benefits and incentives have been identified for material suppliers, see Table 7.2.

Table 7.2 Expected benefits for material suppliers
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4.5 Expected Benefits for Producers

The following benefits and incentives have been identified for producers, see Table 7.3.

Table 7.3 Expected benefits for producers
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4.6 Expected Benefits for Consumers

If the time spent with material resources is charged, producers or consumers respectively will have incentives to optimise the time spent with them (Stahel 1982). The incentives include using only what they really need, for the time they need it. Similar to the effect of slowing loops of PSSs (Bocken et al. 2016), resources will consequently be flowing slower as they will become available quicker to consumers e.g. no hibernation of resources.

4.7 Expected Enablers of MSSs

A concept such as MMSs would benefit from the following enablers to come to life, see Table 7.4.

Table 7.4 Expected enablers
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4.8 Expected Challenges for the Adoption and Implementation of MSSs

The following challenges have been identified for MSSs, see Table 7.5.

Table 7.5 Challenges
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5 Discussion

At present, material suppliers make business by sourcing, processing and selling virgin material resources extracted from our planet. Producers buy these material resources and manufacture products that are sold to consumers. At the end of product life only a small proportion of these resources are recovered and recycled. PSSs are business models through which producers sell the performance of products. PSSs can help control the flow of material resources as product ownership is shifted from consumers to producers. MSSs depict a future where resource usage is transformed and where business models, design and manufacturing processes, and product value and ownership are redefined compared to both traditional business and PSS models. MSSs have the potential to disrupt the current linear economy by shifting us faster towards a circular economy in which resources are more effectively managed and reliance on new resources is reduced. In particular, MSSs can extend the circular economy as a regenerative system to the material level (as opposed to the component level) contributing to increasing the recycling of technical materials. MSSs can transform the future manufacturing landscape by:

  • Introducing new business models and performance offerings. Material suppliers will sell the performance of material resources as a service to producers, who in turn will sell access to products.

  • Helping secure material resources. Material suppliers will retain ownership of the materials embodied in products contributing to treating resources as banks; this will be useful to guarantee that material suppliers have their own future supply, and facilitate resource management between material suppliers, producers and consumers.

  • Supporting new partnerships. Collaborative production of products and services between suppliers, producers, consumers, collectors, recoverers and recyclers will emerge with the aim to achieve pro-environmental outcomes.

  • Propelling the development of a new industrial sector. Robust reverse supply chains have to emerge to recover value from obsolete material resources.

  • Incentivising new approaches to material development and product design. Material suppliers have to introduce better recyclable materials and producers have to design products that perform effectively in the whole lifecycle.

5.1 Limitations and Future Work

This research has shown how repositioning ownership of material resources has allowed to introduce and explore a novel concept such as material-service systems. The work presented in this paper is based on a theoretical exploration of the concept and its relation to a construct such as product-service systems. Empirical work is necessary to deepen current understanding of material-service systems and shed light on their feasibility and viability.

To advance the concept of MSSs it would be beneficial to work in collaboration with industrial organisations including material suppliers, producers, collectors, recoverers and recyclers. Specifically, there is a need to identify what material and product types are more likely to benefit from MSSs; demonstrate the feasibility of MSSs as new business models for materials that need circular management; map and address the technical, social and business challenges posed by resources in supply chains based on MSSs; and understand how MSSs would disrupt current business models and supply chains.

6 Conclusions

MSSs introduce new business models, in which material suppliers sell material performance as a service to producers, who, in turn, sell access to products to consumers. MSSs can help secure resources as material suppliers retain ownership of the materials embodied in products contributing to treating resources as banks and guaranteeing a future supply. MSSs have the potential to contribute to a paradigm shift in existing thinking about material resource management, leading to new and disruptive business models and accelerating the shift towards a structural change in consumption systems for a circular economy. Research on MSSs is ambitious and risky, but it has high potential to produce findings that could be transformative for industrial ecology and our society.