Eco innovation empowering entrepreneurship 11.12.12

Tracey Rawling Church Kyocera Document Solutions (UK) Ltd [email protected]

www.twitter.com/TraceyRC

http://uk.linkedin.com/in/traceyrawlingchurch

Scale-up eco-innovation: challenges and opportunities for a major corporation

Kyocera Corporation Core competence: fine ceramics Global headcount: 71,500 Revenue: € 11,172 million Profit: € 745 million “We produce fine ceramics that are more resistant to heat, wear and corrosion than plastics, metals or other conventional materials.”

Resource inefficiency > designed-in waste

Components of a typical laser printer consumable

Long-life components > greater resource efficiency

Components of a Kyocera laser printer consumable

Resource efficient design creates less waste and reduces lifetime environmental impact

Waste produced during a 300,000 page test conducted by Druckerchannel.de

Analysis by Best Foot Forward concluded that the carbon footprint of a remanufactured laser cartridge is 46% lower than a corresponding new cartridge, and that the carbon footprint of a Kyocera toner-only cassette is 55% lower than a corresponding conventional cartridge Analysis by TCPGlobal calculated whole-life cost savings of typically 50%

Optimising product design is only the start …

1. Design based on lifecycle analysis – identify and design out high impact materials and design features, considering their impacts at every lifecycle stage

2. Streamline manufacturing processes – minimise energy/materials waste

3. Optimise transport and distribution – packaging, routes, modal shift

4. Understand customers’ contribution to use-phase impacts – introduce measures to promote responsible use

5. Close the loop where appropriate – create takeback programmes that offer the most environmentally efficient outcome

Optimising Business Models

Kyocera is working with Forum for the Future to understand why the Product-Service Shift has worked in our industry, so as to transfer the learning to others.

Example: Managed Document Services

Paradigm shift – moves the focus from devices to documents

The aim of an MDS project is to deliver efficient document flows with

• The smallest number of devices, appropriately located in the organisation • Proactively maintained to maximise longevity • Document management software to reduce the need to print • User training to promote the use of energy/paper saving features • Management information to continuously optimise the system • Free takeback and recycling of hardware and consumables • Pay-per-page pricing to discourage wasteful use

Eco-innovation demands disruption

The mainstream laser printer industry is based around a fundamentally wasteful product design – the single process cartridge – and a “razor and blade” business model The market has settled for a solution which seeks to mitigate the waste impact by re-manufacturing consumables, rather than challenging the fundamental design flaws in the product design and business model Innovators in our industry have numerous barriers to overcome: • Their competitors are not just printer vendors, but also cartridge remanufacturers • Legislation specifically promotes remanufacturing and disregards resource-efficient

product design • Established procurement processes focus on securing deep hardware discounts (cap-

ex) and rarely consider whole-life costs (op-ex) • Silos in customer organisations don’t support the level of collaboration required to

take advantage of innovative consumption models

Exploring innovative business models

Service system based on existing

product

Dematerialised service

Long-term leasing

Conventional hire

Peer-to-peer rental

Short-term rental

Long-term leasing with linked service

Asset management

Incentivised return to third parties

Collection of used products

Incentivised return to manufacturer

Reducing consumption

Durable products

Closed loop recycling

Peer-to-peer lending

Made to order

WRAP’s Innovative Business Model Map

The Opportunities for Eco-innovation

Opportunity 1: Design products to be more resource-efficient throughout their entire lifecycle Opportunity 2: Design products to be more easily dismantled and reprocessed for resource recovery at end of life Opportunity 3: Create new business models that uncouple functionality from physical goods Opportunity 4: Work with customers to ensure they understand how to benefit from the resource-efficient features of the product or service during the use phase Opportunity 5: Collaborate with providers of resource recovery services to close loops locally

The Challenges (From a B2B perspective)

Challenge 1: Manufacturers can only sell in innovative ways if customers are geared up to purchase in innovative ways

Challenge 2: Designing-in longevity incurs a price premium which can make hardware appear expensive when in fact whole-life costs (direct and indirect) are lower

Challenge 3: Few manufacturers are able to deliver every link in a product-service system – we must learn to collaborate with new partners and in new ways

Challenge 4: Resource recovery/recycling infrastructures are immature and continuity of supply of post-consumer materials is unreliable

Challenge 5: Policy landscape doesn’t support disruptive innovation

Closed loop, open loop or helix?

Ellen Macarthur Foundation

A word about public sector procurement

The tender process stifles innovation: If an invitation to tender is written around a hardware specification, the supplier cannot bid a dematerialised or service-led offer – he’ll simply be disqualified • Outcome based tenders would provide the freedom to innovate around a goal

Hardware cost has disproportionate influence on procurement: Sustainability data gathered as part of the vendor selection process rarely plays a part in the final procurement decision • Whole life costs – both direct and indirect – could be embedded in the targets of

procurement professionals

Smokestacks prevent collaborative consumption: Emerging business models provide extensive opportunities for government departments to share hardware and services, cutting both cost and carbon • A more holistic approach to ICT infrastructures can enable collaborative

consumption, dematerialisation of services and improved efficiency

In conclusion

Resource inefficiency is a systemic problem which is best addressed by going back to product fundamentals and designing out waste from product designs, supply chains and business models This cannot be resolved by manufacturers alone – we need to collaborate with service providers, policymakers and customers to create conditions that foster disruptive innovation

Kyocera is working with Green Alliance on the Circular Economy Task Force – to try to understand how circular business models can be developed in a way that keeps companies profitable, and how the policy landscape can better help to foster a circular, resource secure economy

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THANK YOU! Tracey Rawling Church Kyocera Document Solutions (UK) Ltd [email protected]