Tracking Value

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* Report: Tracking Value. By Hilde Sijbring, Julia Moss et al. Nederland Circulair & Circle Economy, 2019.

URL = https://sustainablefinancelab.nl/wp-content/uploads/sites/334/2020/02/202001-Tracking-value-CoP-Fairphone-.pdf

THE CASE STUDY: FAIRPHONE

Executive Summary

"The mission of this CoP (Community of Practice) was to tackle the complexities around tracking assets, with a focus on identity, location and condition of the assets. The relevant existing technologies have been explored and the financial and legal implications of tracking assets have been investigated.

Modularity makes the recently launched Fairphone 3 easy to repair for customers and service partners, reducing associated time and material costs.

Although Fairphone currently has a for-sales business model in which they lose control and ownership of the devices after the sale, the social enterprise intends to offer Fairphone-as-a-Service (FaaS) to businesses.


This requires tackling a few key challenges:

1. Tracking location, condition and corresponding (residual) value of circulating Fairphones and/or modules over their lifecycle.

2. Managing the increased organizational complexity associated with providing a service.

3. Overcoming financial challenges with respect to, for example, defining value propositions for the different qualities of assets.

4. Addressing legal challenges with respect to data privacy.


WHY TRACKING ASSETS?

Tracking the value of modular assets in a PaaS proposition is of utmost importance. Decisionmaking is improved with regards to the cascading of components (e.g. refurbishing, re-using or recycling) and predictive maintenance, aiding to the circular goals of the entrepreneur to improve future design aimed at increased longevity of the assets and recovery of as much material as possible. Tracking assets creates ways to optimize the business model by creating intelligence that is needed to provision for future costs and to accurately price the service contract.


Using the FaaS business model as a case study, this white paper focuses on providing answers to:

• What are the possibilities of tracking for intelligent management and monitoring of circulating assets?

• How can asset tracking contribute to an improved business case in circular business propositions?


DESIGNING A PROOF OF CONCEPT

As part of this CoP, a proof of concept was designed to illustrate the potential of automated tracking of different metrics focused on the condition of the battery. First, a feasibility study was done to understand which tracking techniques worked best on the different modules, including the battery. Secondly, an app was built from which the most important battery-metrics could be read: the charging temperature and the total charge. Lastly, a mock-up software instruction was written that models the condition of the battery from the metrics. This way, batteries can easily be categorized and sorted according to their condition." (https://sustainablefinancelab.nl/wp-content/uploads/sites/334/2020/02/202001-Tracking-value-CoP-Fairphone-.pdf)


Key Learnings

  • Based upon research of multiple tracking technologies, it was found that QR codes,

memory chips and RFID tags are the most suitable tracking technologies.

  • Tracking assets provides insight into the location and condition of assets giving the

entrepreneur a better grip on the assets. Therefore tracking can help to lower the risk profile of the proposition, making it an interesting business case for financiers.

  • Gathering data on the condition of and required maintenance for assets leads to

improved estimates of future contractual obligations (provisions) and inventory required, which strengthens the business case.

  • Collecting insights about usage and performance of assets enables the

entrepreneur to improve the product and further increasing the product lifespan The data generated when tracking assets is subject to data protection laws and regulations. The main questions an entrepreneur should ask himself are: How is the data retrieved? What type of (personal) data is collected and processed? Why is this data needed?

  • Obtaining consent from a user for gathering (personal) data is the preferred and

safest route to choose, however, customers should be able to withdraw their consent. The main question to be addressed is whether the withdrawal of consent is technically feasible.

  • For enterprises in need of an infrastructure that provides better grip over their

assets, tracking technologies generate insights that are indispensable for a transition to the circular economy. Circular business models can be improved and track records can be built, which ultimately could provide the comfort for financiers to take the plunge. This pilot with Fairphone paves the way." (https://sustainablefinancelab.nl/wp-content/uploads/sites/334/2020/02/202001-Tracking-value-CoP-Fairphone-.pdf)