Measure

Functional sales business model

Functional sales business model
©oodluz, image #113858266, 2017, source: Fotolia.com
Resources:
Energy, Materials, Water, Waste, Carbon
Sector:
All manufacturing industries, Service sector, Wholesale and retail
Cost:
High cost
Annual saving:
20 - 40 %
Payback time:
1 - 2 Year(s)
Resource savings: Raw material:
Depends on the business and sector (textiles, metals, construction materials, chemicals, etc.); in some cases, use of supply materials (e.g. chemicals, detergents, etc) is reduced due to more efficient technical maintenance of leased products by a service provider
Resource savings: Energy:
In selected cases, energy consumption is reduced due to more efficient technical maintenance of leased products by a service provider
Resource savings: Waste:
Considerable amount of waste is avoided because products get repaired and further reused, or remanufactured
Associated cost savings: Raw material:
20 - 40%
Associated cost savings: Energy:
20 - 30%
Associated cost savings: Waste:
20 - 40%
Premises and operation areas:
Product and design, Supply operations, Waste and recycling
Size of company:
Micro (less than 10), Small (less than 50), Medium (less than 250)
Advancement in applying resource efficiency measures:
Beginner, Intermediate, Advanced
What is in it for you:
New business, revenue generating niche. Cost savings for customers due to reduced use of resources and avoiding maintenance costs.
Descriptive information:

As the name suggests, functional sales business models focus on adapting the function and benefits of a product or service to customer needs instead of emphasising the physical product per se. In such models, the ownership of the physical product often stays with the provider, and maintenance, repair, and end-of-life considerations can be included in the offer.

A key characteristic of functional sales is that the service provider takes over the control of the use-phase of the product. That way the producer gets an incentive to improve the product's performance and durability, reducing the need for spare parts or other inputs, making it more energy efficient, and maintenance-friendly. Another important aspect of many functional sales models is that they are designed with product remanufacturing and reuse in mind.

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