Remanufacturing with Upgrade PSS for New Sustainable Business Models

Product Service Systems are indicated in literature as enablers toward a more sustainable and resource-efficient industry. In particular, the potential of Eco-efficient PSS to promote more sustainable industrial practices, such as re-use and re-manufacturing, has been discussed outlining the possible environmental advantages deriving from a more intense use of resources and emphasizing the economic benefits for producers as well. In recent years, together with barriers hindering the implementation of such strategies, authors started discussing also some ‘rebound effects’ that could limit the expected re-manufacturing environmental benefits, such as the obsolescence of re-manufactured products, especially in case of fast technology cycles. To overcome these criticalities and to target high-value customers segment, the concept of product upgrade in re-manufacturing has been introduced. Upgrade cycles would allow embedding technological innovation into products, to reach advanced environmental performances over time and to satisfy evolving customers’ preferences. However, the concept of product re-manufacturing with upgrade has been treated mainly theoretically with limited evidence of industrial applications in PSS. Producers currently engaged in established remanufacturing practices are mainly big manufacturers of durable or long life-time products, in particular in the B2B sector, while only few pioneering cases of PSS offering product upgrade are cited in literature, mainly referring to B2C. To contribute to the progress of the state of the art and to move from theory to industrial application, this article takes a business model perspective for the implementation of remanufacturing with upgrade PSS. A coherent configuration value proposition, supply chain and reverse logistics, revenue model and ownership scheme is proposed, aiming at addressing the major criticalities and barriers encountered in the literature for the implementation of remanufacturing strategies. The producer will play a central role in the business model, since he has the knowledge and capability to conceive product's design and supply chains suited to perform remanufacturing and upgrade cycles. Potential benefits, and unsolved barriers to the implementation of the proposed business model are finally introduced in order to suggest future research directions.