Fair Repair Act could help spur circular economy model

Manufacturers are increasingly looking to the circular economy model as a way to drive sustainability goals by making products that last longer and can be easily reused.

Several factors are driving the surge in interest, including the organization’s internal motivation, consumer pressure, and regulations such as New York’s Digital Fair Repair Act, passed in June. The bill requires manufacturers of digital electronics to provide documentation, parts, and tools to third-party repair providers in a fair and reasonable timeframe. A similar bill, the Fair Repair Act, has been introduced in the US Senate and House of Representatives.

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However, changes take time. According to Cindy Jaudon, regional president for the Americas at IFS, an ERP provider, manufacturers largely make products in a linear model in which they are designed for use and disposal. Now data shows that manufacturers are consuming resources almost twice as fast as they can be regenerated. Regulations like the Fair Repair Act or New York’s Right-to-Repair Act can encourage companies to consider moving away from a linear model.

We need to think about how to get into the circular model where you can reduce, reuse, repair and recycle. The Fair Repair Act is one element of how we can do that.

Cindy JaudonRegional President for the Americas, IFS

“We need to think about how we get into the circular model, where you can reduce, reuse, repair and recycle,” she said. “The Fair Repair Act is one element of how we can do that.”

The environmental costs of in-line manufacturing and single-use culture are significant. The Repair Association, a non-profit organization dedicated to the repair industry, estimates that more than 20 million tons of end-of-life electronic products are produced each year, with America alone accounting for at least 3.4 million tons.

Regulations like the Fair Repair Act will not solve the waste problems, and manufacturers are beginning to realize that it can be profitable to make longer-lasting products that can be refurbished to some extent, rather than discarded, Jaudon said.

“Whether the government legislates it or not, as a manufacturer you want to make sure for your business that you can make things that don’t just get thrown away and end up in landfills,” she said. “You can repair them, or at least prepare them for reuse by taking back some of the parts so they can be reused.”

Circularity is not new

The Fair Repair Act and other regulations are part of a push toward a circular economy model, according to Susan Middleton, director of research at IDC. But the concept of circularity is not new, especially in IT, where there has always been a market for refurbished devices.

The difference now is that IT departments have the ability to incorporate device reuse into an organization’s overall sustainability goals, she said, and nearly every OEM has some sort of refurbishment or recycling initiative.

“The demand for used equipment has always existed,” Middleton said. “But now that people are very interested in the sustainability aspect, including used equipment has definitely become an easy way to improve your metrics if you have sustainability goals.”

IT departments are mandated to play a prominent role in a company’s sustainability goals, such as: B. the reduction of CO2 emissions, which drives the demand for more circularity in data center equipment, she said.

“There’s more pressure on IT teams now because within an organization there’s a lot of things that are now tied to what they’re doing to balance their usage costs, electricity costs and transportation costs,” Middleton said.

Diagram showing the differences between the circular economy manufacturing model and the linear economy model

Different approaches to the circular economy

The Fair Repair Act is part of a broader set of regulations in the US and Europe that are helping to raise awareness of circular economy issues, said Stephen Jamieson, global head of circular economy solutions at SAP. The regulations highlight different elements and propose different implementation mechanisms, but they go in a similar direction beyond recycling and towards circularity.

“There’s some arm-wrestling between manufacturers and regulators about what’s the right approach and where to draw the line on things like diagnostic data connectivity, but there’s a plethora of different scenarios,” Jamieson said.

But there are reasons why some complex technology systems shouldn’t be amenable to more amenable repairs, he said.

“It could be very easy to create a situation that makes it an unsafe situation, especially with vehicles, so there’s a massive tradeoff there,” Jamieson said.

The transition to a circular economy will open up opportunities for new business models, such as B. Servitization, where products are sold as a service and the vendor takes care of maintenance and end-of-life. For example, according to Jess Warrington, general manager for North America at CloudBlue, CloudBlue provides a platform that enables businesses such as telcos to build and manage digital marketplaces for devices.

When Dell ships thousands of devices to a customer, the service provider can integrate a suite of applications that add value to the devices, essentially allowing them to be sold as a service, he said. Applications can be updated as needed to keep devices running for as long as possible.

“There’s less replacement and less waste, so it’s an accumulation of incremental gains,” Warrington said. “One thing doesn’t change the world, but even a 1% gain at the scale at which the big service providers operate means you can make a significant impact.”

The shift to an outcomes-based servitization model is new and won’t happen overnight, he said. But it’s a conversation that’s happening at the executive level.

“There are big names that are pursuing this strategy of how to overlay a usage-based software model on top of a traditional hardware company to create a sustainable financial model that can support this type of economy over the long term,” Warrington said.

The circular economy model starts with design

Companies are starting to think more seriously about circularity and how to build services like repairs and reuse into product design from the start, said IFS’ Jaudon. As more companies add service to their business models, there’s a lot they can learn about how their products are being used and incorporate those insights into product design.

“Whether it’s their own service technicians or a third party, they can use that to design more efficiently and make it that way [it can be repaired more easily]she said. “Analytics are going to be really important for manufacturers to help them understand how people are using their products and then take that information back into the design phase.”

Manufacturers think about sustainability and circularity throughout a product’s lifecycle, including design, packaging, shipping and end-of-life, according to IDC’s Middleton. This includes how customers can upgrade devices instead of replacing them.

Customers are driving OEMs to design, build and deliver more sustainable products, she said.

“[Customers] want [manufacturers] to reduce the amount of toxic chemicals that end up being used, but also do whatever it takes to swap out components and use that component for something else,” Middleton said.

However, while customers are more concerned about the sustainability of products, they want a reliable product first and foremost, she said. For the OEMs, the motivation to move towards more sustainability and the circular economy is linked to the reputation of the brand.

“That’s a huge driver, and if [you’re] If you look at it as someone not applying sustainability principles, that will hurt talent attraction and revenue,” Middleton said. “If you can include some sort of circular economy, that helps because companies choose vendors and partners based on their sustainability history. You want to understand not only what you’re doing, but what everyone in your supply chain is doing.”

Jim O’Donnell is a senior news writer at TechTarget, covering ERP and other enterprise applications for SearchSAP and SearchERP.