More and more companies want to make their business processes – or at least part of them – more sustainable through a circular strategy. But that is easier said than done. VITO is offering a helping hand: by calculating concrete figures for the switchover to a circular business model, as well as the potential impact on the environment and climate. This allowed Q-lite to switch to a circular business model by renting out displays in the form of a comprehensive “service”.
Copyright header image: Q-lite
Increasing the sustainability of business processes is possible via various routes: companies can reduce the environmental and climate impact of their raw materials, they can make sure that their products last longer and that defects are easier to repair, or that they can be reused or can be easily disassembled and recycled at the end of their lifespan. Closing the cycles of (raw) materials as much as possible is what it’s all about in the circular economy.
From products to services
But how does a company know if it has chosen the right circular strategy to suit its own specific business processes with the lowest environmental impact? Only the management itself can make that choice, as every business is different and this choice also impacts the business processes – from production processes to logistics and possibly even the very nature of the company. After all, running a circular business often means that companies start selling services instead of products, and that is a fundamental change for many companies.
Q-lite is such a company. The Belgian manufacturer of smart and sustainable display solutions (including LED displays) has largely reinvented itself as a service provider. In its circular “Display as a service” business model, Q-lite no longer sells displays, but rents them out for a period of 7 to 15 years. The customer pays an annual fee for this, but that includes installation, maintenance and even electricity. Furthermore, the customer is given the guarantee that the display can be upgraded during the period of use. After the end of the contract, the display is collected by Q-lite for reselling or recycling.
Analysed by VITO
Q-lite developed its circular business model with help from VITO, which has a lot of expertise regarding the link between sustainable innovation and economic added value. “We provide an insight into how a strategic choice towards a circular business model can be made,” says Jeroen Gillabel of VITO. “For this we basically analyse the company first: which steps has it already taken itself, which products or services are eligible, what are the relevant circular strategies, etc.”
In Q-lite’s case, it was obvious from an environmental point of view that a longer lifespan could be an interesting option – which is often the case for electronics – with a possible focus on repair and remanufacturing. This came as no surprise to the company from Baarle-Hertog. “The circular model is nothing new to us,” says Jeroen Raeijmaekers of Q-lite. “We already started using it a few years ago, mainly in the design phase of our displays. But we were wondering how we could extend the lifespan of our displays even more, and whether that would be a good strategy. And we wanted to know what we could gain from this in terms of sustainability. VITO was the right partner for this as well.”
VITO not only indicated the right direction; they also calculated concrete figures for choosing a longer lifespan and a service instead of a retail model. Gillabel explains: “For this we used a calculation model we developed ourselves in which we can calculate economic and environmental parameters for various circular scenarios. We were able to identify that the service model indeed lowers greenhouse gas emissions and the use of materials when the duration of the contract is long enough. “ On top of this, this quantitative approach allowed Q-lite to determine the right annual fee for the “Display as a service”. And the company was made aware of the risks associated with this new business model. “After all, customers no longer pay the full amount in advance,” says Raeijmaekers. “And what effect do factors such as raw material prices, recycling proceeds and fluctuating electricity prices have? VITO investigated these kinds of matters for us, and they were integrated in the calculation tool. This allows us to make corrections later on.”
Longer term
Will the new business model be a success? Raeijmaekers admits that his company is taking a risk. “Because of all the extra services, it starts out more expensive for customers, but in the longer term they can profit both financially and in the field of sustainability. We are confident that our customers will choose this option in the future. We’re also early adopters: the trend of sustainable displays still needs to start really.” It helps that Q-lite has many cities and municipalities among its customers. They often think in the longer term and are often also committed to concrete sustainability and environmental objectives – like the climate-related Covenant of Mayors.
The investment Q-lite made for the change in business processes was paid for by additional funding from the principal shareholder, VP Capital. The investor has a framework contract with VITO, in which projects are outsourced to make its companies more sustainable.
This kind of contract research is very useful for VITO to expand its expertise even more in the field of circular business, in particular to refine it based on concrete business processes. “In this way we will gradually evolve towards a more generic method and calculation tool, which in turn will allow us to further streamline this kind of work. But we still have a long way to go before we have a comprehensive tool that allows us to show any type of company the path towards a circular future,” says Gillabel.
