WRAP: Servitization goes hand-in-hand with circular economy business models

Firms that can expand their business models from simply selling products to providing resource efficiency-related services for customers will be the most resilient and profitable in the future.

Liz Goodwin says businesses that can adapt their business model to become service providers will be the most resilient and profitable in the future

Liz Goodwin says businesses that can adapt their business model to become service providers will be the most resilient and profitable in the future

That's according to WRAP chief executive Liz Goodwin who, in her speech to delegates at the Resource exhibition this week, stressed the importance of businesses understanding that "it really is possible to increase profits through decreased material consumption". 

In the past, moving towards a circular economy has been about reducing waste to save money. Now, Goodwin says it should be about creating commercial opportunities to increase revenues though bringing new and more resource efficient services to the market.

Customer convenience 

In her speech, Goodwin cited the Korean example of consumer electrics company LG which offers a circular repair model in a competitive market - LG provides a same-day service to fix any of their goods, large or small.

"Their business model is all about putting convenience for their customers at the heart of their operations." Goodwin said. "LG has found, as have many others in South Korea, that offering a 'service' built around your customer, offers greater chances of brand loyalty, and positivity." 


WRAP is working with businesses through its European project, REBus, to develop and pilot resource-efficient business models that put service at their core. One example is integrated support services company Carillion, which has worked with WRAP to develop business models around the better management of vehicle-based assets. 

"With WRAP, we are at the coal face of the circular economy, delivering action. We are working with a number of businesses in most phases of the new business model process. I am delighted to say that in the next couple of months we will be in a position to talk about a couple of national roll-outs. The roll outs will be examples of big businesses taking action."

Circular Economy Package

Ahead of the European Circular Economy Conference today, Goodwin admitted she was "disappointed, as many were" when the circular economy package was dropped last year by the European Commission.

But she believes both first vice-president Frans Timmermans and commissioner Karmenu Vella had been making "positive noises recently" on a more ambitious package, and was interested to see what came out of today's conference. "This is a business opportunity - having policy backing is important, but ultimately putting the circular economy into practice is down to business," she said.

Earlier this week, Innovate UK announced it is backing the business case for a circular economy.The Government's innovation agency launched a competition which will allocate up to £800k to projects exploring the feasibility of a range of business models aiming to maximise the value of durable projects.

New business models at Sustainability Live 2015

Today’s business models are not fit for purpose if we are to deliver the transformational changed needed to create a sustainable future. The brand new high-level conference at Sustainability Live 2015 will include a specific session all about 'the system revolutionaries'. 

The session, on Day 2 of the show (22 April), will explore a range of innovative new business models from the circular economy and closed-loop processes to the sharing economy and servitization.

Find out more about the new conference and register to attend Sustainability Live 2015 for FREE here.

Lucinda Dann



Waste & resource management
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