Today it’s hard to find an appliance that doesn’t have an option to connect to the internet. We have smart refrigerators, stoves, thermostats, and can even turn music on with voice commands. Many of these appliances include sensors that can detect key failure points and prevent them from failing — even before it happens. This information can be sent to the consumer or back to the manufacturer, and has tremendous opportunity in the circular economy; for one, it reduces waste by discouraging the need for new products.
These physical objects (things) with embedded information technology (sensors and software), as well as many more items, such as smart cars, smart homes, fabrics, and energy systems, are all around us. This network of connected devices are linked through various systems to exchange data over the internet.
Companies have already begun to integrate these systems to help these devices communicate with each other. The idea is that these devices will communicate in order to improve efficiency, identify elements that require repair or upgrade, or notify of the need for new batteries and so forth. Imagine all the aspects of the circular economy that can be realized if this information is used correctly!
For Example: Better Coffee Brewing
Did you know that coffee brewers age significantly when they get over-calcified? A coffee brewer will last three to four times longer if decalcified properly.
Currently most manufacturers recommend that brewers be decalcified based upon time (every x months) or off-cycle count of brews. These methods both have deficiencies in both accuracy and timing. Many users understandably forget how long ago the last decalcification occurred, and research shows the number of people who decalcify at all is very low, let alone those who do it consistently.
Because water quality varies, measuring water pressure is the best way to measure calcification. Here’s a simple idea that could drastically reduce the number of coffee brewers that go into the landfill:
Install a sensor that detects water pressure within the coffee brewer. Then, when water pressure slows to a certain level, the sensor can send a message to either a smartphone or light on the brewer that indicates it’s time to decalcify.
A sensor with communication would add about $3.00 USD cost to manufacturing. In order to achieve margin, $12.00 USD retail would need to be added to the product. As this is a significant price increase for the consumer, a large marketing effort would need to be undertaken to educate on the benefits of this product.
If the average coffee brewer today lasts two years, this improvement could create an eight-year lifecycle, which is a benefit to the consumer. However, it also significantly reduces the number of coffee brewers manufactured, so why would a manufacturer want to do this?
The benefits are many:
- A properly decalcified machine will produce a superior cup of coffee. This will increase the company’s reputation and reinforce its commitment to quality.
- Many brewers could be on the market for 6-12 years, which would drastically decrease the amount of landfill waste.
- The superior length of the product’s life would set it far above the competition, which would strengthen customer loyalty.
- The sensor and communication device could supply the company with data on users, including the number of brews that occur regularly, the longevity of the product, and demographics. This could be used for product extensions, which could increase revenue.
- The customer-level data will allow the company to close the loop on product, allowing old machines to come back to be remanufactured; reusing components could also decrease the cost of future coffee brewers.
Bottom-line Benefits
In this coffee brewer example, and in other applications, the addition of a sensor would reduce the amount of products purchased and therefore reduce long-term sales. So why would a manufacturer want to adopt this technology?
Because better performing products create loyalty. Products that don’t break as often create loyalty. And loyalty encourages consumers to buy more products from a brand, and to recommend that brand to others.
The Internet of Things (IoT) also provides a lot of information to manufacturers about how their product works, how it’s used, and who is using it. This can create an ongoing relationship with customers that didn’t previously exist, and all of this information can be incredibly powerful for a company and drive topline revenue.