An old friend of Tomas’s wife has been working with 3D imaging for most of his working life. It’s a cool technology that’s taken him to Hollywood, Las Vegas and beyond (it’s also brought Tomas and his wife some nice 3D photos of their wedding). However, despite working from the beginnings with a digital technology once thought of as having the potential to disrupt an entire industry, 3D imaging has not brought him income, fame and glory.
At the same time, the stock price of 3D printing companies is soaring. The technology that was once dismissed as ‘toys for engineering boys’ or only likely to be suitable for expensive prototyping, is now expected to disrupt global supply chains, spare-parts warehousing, product repairs and enable mass-customization.
The difference in the fates of 3D printing and 3D imagery illustrates some important questions: in a world where technology removes boundaries, how can we understand which technologies we should be investing in and where in our industry will disruption happen?
One of the ways that we have approached these questions is by looking at the different types of waste in today’s linear value chains and examining how the circular economy might address them through the right business models and technologies. In a rapidly digitizing world, exploring these types of waste in your value chain could tell you where disruption might take place. Our analysis had identified four key categories of waste. The auto industry provides an excellent example of two of these different types.
The first is wasted resources, which in this case is oil. More than 95% of global transportation runs on a resource that takes millions of years to form. 65% of the world’s oil is consumed in transport and hence wasted. That huge waste is ripe for technology disruption over the decade to come. That means through advanced biofuels and electric drivetrains, of course, but also by optimizing transport systems using digital technologies including cloud, mobility and analytics.
The second type of waste is capacity. Private cars are used for about 2-5% of the time. And when they are in use they typically carry only about 20% of their seat capacities. Less than 10% of the weight being transported is the actual person needing to get from A to B. However you look at it, capacity utilization is less than 1%. So, for example, in Sweden that would mean we have a 1000 billion SEK car park of which 990 billion is wasted.
But enter artificial intelligence and cheap LIDAR (laser-radar technology), and we can disconnect the activity of travelling in cars from the need to own them. This will enable car sharing optimized around specific needs: e.g. commuting, family vacations or business trips. In New York City, for example, the typical Uber vehicle is in use for up to 50% of the time. Self-driving cars can also free up in the region of 25% of the city space that’s currently wasted on parking for idle cars.
The third type of waste we identify in our study, wasted life cycles, is in fact handled today in the automotive value chain. An efficient second-hand market matches buyers and sellers and most cars are repaired until it’s no longer economically viable to do so. Even then, the components are harvested, making sure that even at the end of its life, the product’s waste is minimal. Digital technology will multiply these efforts and it brings this approach to other industries. The Internet of things enables remote diagnostics, optimizing lifetimes. Online commerce and social technology match ‘have’s and ‘have nots’ for everything that people might want to trade. Digital technology significantly lowers transaction costs, bringing new, less capital-intensive products into play for efficient second and third-hand markets. And 3D printing, along with abundant cloud storage for blueprints, technically means everything can be repaired.
The fourth and final category is wasted embedded values. These are the calorific or material values at the end of a product’s life currently being wasted in many industries today. In the US alone, aluminum cans with a material value of US$ six billion are said to end up in landfill each year. Machine learning, coupled with optical sorting, has the potential to pick out anything valuable in a pile of rubbish headed for incineration and instead utilize its embedded material value. Online waste marketplaces that allow anyone to sell industrial waste can enable networks of companies working in industrial symbiosis. Finally, to tie things together, in Africa, informal waste pickers collect plastic and send it for recycling into plastic filaments; these filaments are then used as the raw material in 3D printers.
The overall lesson is that when you’re trying to understand where you are vulnerable to disruption or where opportunities may exist don’t look at technologies in isolation. Look along the linear value chain and identify where the waste is today. Calculate its magnitude. And then identify the evolving technologies that could address it. And, unless you are working in Hollywood*, my bet is that 3D printing will be high up on that list.
*In fact, one of the clients with whom we are discussing the power of a circular economy is a Latin American media house looking to reduce total cost of ownership on its studio decoration