TRACKING VALUE

White paper COLOPHON TABLE OF CONTENTS

We are very thankful for the valuable contribution of CONTACT all members of the Community of Practice and their Hilde Sijbring: [email protected] Executive Summary organisations. Their expertise, motivation and 4 collaborative spirit resulted in a tangible and Elisa Achterberg: [email protected] transferable outcome. Miquel Ballester: [email protected] Introduction 6

CORE TEAM PUBLICATION DATE 1- Community of Practice 8 Hilde Sijbring (Circle Economy) February 2020 Julia Moss (Circle Economy) 2- Context Tracking Value 9 Elisa Achterberg (Sustainable Finance Lab) POWERED BY Miquel Ballester (Fairphone) 3- Circular Tracking Wishlist 15 Alix Dodu (Fairphone)

4- Tracking Technologies 18 COMMUNITY OF PRACTICE PARTNERS PARTNERS Coen Thomas (Allen & Overy) 5- Proof of Concept 20 Nicole Wolters Ruckert (Allen & Overy)

Edwin Voskuilen (Avery Dennison) 6- Financial Implications Jasper Zonnenberg (Avery Dennison) 22

Mesbah Sabur (Circularise)

Carrie George (Everledger) 7- Legal Implications 24

Lucas Geusebroek (NBA)

Henk Kuipers (Rabobank) 8- Conclusion 27

Diane Zandee (Schiphol Group) Wiep van Beest-Stienstra (Schiphol Group) 9- Challenges & Future Developments 30 Paul Kooijman (Schiphol Group) Appendix A 32

EDITORS Appendix B 34 Fieke de Haan (Circle Economy)

Aglaia Fisher (Circle Economy) Notes 36

DESIGN Literature 37 Nicolas Raspail (Circle Economy)

Alexandru Grigoras (Circle Economy)

COMMUNICATION Melanie Wijnands (Circle Economy)

2 2 TRACKING VALUE 3 EXECUTIVE SUMMARY KEY LEARNINGS

ABOUT THIS COMMUNITY OF PRACTICE aimed at increased longevity of the assets and recovery of as much material as possible. Tracking A Community of Practice (CoP) is an open assets creates ways to optimize the business model innovation, pre-competitive environment where by creating intelligence that is needed to provision tangible and replicable solutions are co-created to Based upon research of multiple tracking technologies, it was found that QR codes, for future costs and to accurately price the service facilitate viable circular business models. Product- memory chips and RFID tags are the most suitable tracking technologies. contract. as-a-Service (PaaS) entrepreneurs retain ownership of their assets, which requires having more control Using the FaaS business model as a case study, this over the product and hence the need for tracking white paper focuses on providing answers to: Tracking assets provides insight into the location and condition of assets giving the and monitoring. The mission of this CoP was to entrepreneur a better grip on the assets. Therefore tracking can help to lower the • What are the possibilities of tracking for tackle the complexities around tracking assets, with risk profile of the proposition, making it an interesting business case for financiers. intelligent management and monitoring of a focus on identity, location and condition of the circulating assets? assets. The relevant existing technologies have been explored and the financial and legal • How can asset tracking contribute to an improved Gathering data on the condition of and required maintenance for assets leads to implications of tracking assets have been business case in circular business propositions? improved estimates of future contractual obligations (provisions) and inventory investigated. required, which strengthens the business case.

DESIGNING A PROOF OF CONCEPT THE CASE STUDY: FAIRPHONE As part of this CoP, a proof of concept was designed Collecting insights about usage and performance of assets enables the Modularity makes the recently launched Fairphone 3 to illustrate the potential of automated tracking of entrepreneur to improve the product and further increasing the product lifespan easy to repair for customers and service partners, different metrics focused on the condition of the reducing associated time and material costs. battery. First, a feasibility study was done to Although Fairphone currently has a for-sales understand which tracking techniques worked best The data generated when tracking assets is subject to data protection laws and business model in which they lose control and on the different modules, including the battery. regulations. The main questions an entrepreneur should ask himself are: How is the ownership of the devices after the sale, the social Secondly, an app was built from which the most data retrieved? What type of (personal) data is collected and processed? Why is this enterprise intends to offer Fairphone-as-a-Service important battery-metrics could be read: the data needed? (FaaS) to businesses. This requires tackling a few key charging temperature and the total charge. Lastly, a challenges: mock-up software instruction was written that Obtaining consent from a user for gathering (personal) data is the preferred and 1. Tracking location, condition and corresponding models the condition of the battery from the safest route to choose, however, customers should be able to withdraw their (residual) value of circulating Fairphones and/or metrics. This way, batteries can easily be categorized consent. The main question to be addressed is whether the withdrawal of consent modules over their lifecycle. and sorted according to their condition. is technically feasible.

2. Managing the increased organizational complexity associated with providing a service. For enterprises in need of an infrastructure that provides better grip over their 3. Overcoming financial challenges with respect to, assets, tracking technologies generate insights that are indispensable for a transition for example, defining value propositions for the 7 to the circular economy. Circular business models can be improved and track records different qualities of assets. can be built, which ultimately could provide the comfort for financiers to take the plunge. This pilot with Fairphone paves the way. 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. Decision- making 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

4 4 TRACKING VALUE 5 INTRODUCTION

TSUNAMI OF E-WASTE Electronic waste, or e-waste, is the fastest-growing waste stream in the world, estimated at 48.5 million tonnes in 2018.1 If nothing changes, e-waste is predicted to more than double to 120 million tonnes by 2050.2 The United Nations is calling it a “tsunami of e-waste”.3 E-waste includes all electrical and Our planet is reaching its limit of available re- electronic items or equipment that have been sources. We urgently need to re-evaluate our fu- discarded as waste without intended reuse. Only ture and change our attitudes towards product 20% of global e-waste is formally recycled, the lifecycles and their obsolescence. By collectively remaining 80% will likely be incinerated or dumped ‘’building expertise, we can get the most out of the in landfills leaving a trail of toxic materials and material resources we use by working towards valuable precious metals to waste.4 In addition to extending the lifetime of the products we make. being environmentally relevant, e-waste is also We are therefore very grateful to work with part- important economically. The total value of all raw ners who share our passion to make this transi- materials found in e-waste is estimated at 55 billion tion, so that we can take the first steps together. euros in 2016.5 Next to reducing the consumption of electronics, a circular electronics system needs to – Eva Gouwens, CEO Fairphone. be adopted to encourage closing the loop of these materials through better design, reusing and recycling valuable materials and diminishing the need to extract and waste raw materials.

RESOURCE EFFICIENCY SIGNIFICANTLY REDUCES CARBON FOOTPRINT 2018 research by McMaster University in Canada calculated that the IT industry, including devices and servers, is responsible for around three percent of global greenhouse gas emissions.6 This is two percent more than 10 years ago, with smartphones being the fastest growing IT category in terms of emissions. Notably, more than 80% of the carbon footprint of a mobile phone comes from the production phase. Modularity is an effective design strategy to facilitate repair and upgrades.7 Next, with proper software support, the lifetime of smartphones can be extended to five years and beyond. An extension to five years reduces 30% of the footprint related to global-warming-related emissions.8 Therefore, in order to maximize resource efficiency and minimize emissions, it is important for a company to track their assets and have the ability to estimate their condition at key moments in their lifecycle.

6 6 TRACKING VALUE 7 1 - COMMUNITY OF 2 - CONTEXT TRACKING PRACTICE VALUE

TACKLING THE COMPLEXITIES OF TRACKING tracking solution. Using the business model TAKING A TOUR ON THE VALUE HILL Fairphone-as-a-Service (FaaS) as a case study, this ASSETS The ‘tsunami of e-waste’ is a consequence of In a linear economy (left Value Hill) resources are CoP focussed on the following research questions: Circular business models, like Product-as-a-Service society’s ‘take, make, use, waste’ economy. In the extracted as if there are no limits. This is followed by (PaaS), provide opportunities to shift traditional • What are the possibilities of tracking for linear economy, raw materials are extracted to create a short use phase after which products enter post- patterns that keep the industry stuck in the linear intelligent management and monitoring of products often consisting of many different use where value destruction is fast. In a circular economy. The mission of this project as presented in circulating assets? materials, which makes it hard to recycle these economy (right Value Hill) the value of products is this whitepaper was to tackle the complexities around complex products. Next, many consumer goods are retained at their highest level for as long as possible • How can asset tracking contribute to an improved used only until a newer, cooler, faster version through four main business strategies10: tracking assets and exploring the technologies that can business case in circular business propositions? becomes available. These consumer goods have a provide the relevant data. For enterprises in need of 1. Circular design: facilitating lifetime extension limited economic lifespan, while their technical an operational infrastructure that provides grip and and re-use of products. Products are designed control over their assets, to improve their business OUTCOME: A PROOF OF CONCEPT lifespan can be much longer (figure 4). Producers are and manufactured to be long-lasting, easy to model and to win over financiers, such insights are incentivised to boost sales figures, to seduce maintain and repair. indispensable and can be groundbreaking for the Tracking assets enables higher resource efficiency customers to buy new products repeatedly, resulting transition to the circular economy. through monitoring asset performance, in many products that are wasted, ending incinerated 2. Optimal use: extending the lifetime of products improvement of predictive maintenance, and the use or as landfill. Only 8.6% of materials are reused and by optimising the use of the products through of gathered data to improve future design of recycled, meaning over 91.4% of the materials circular business models such as PaaS. products and components. In our quest to find 9 THE COMMUNITY OF PRACTICE: A currently used are being wasted. This is not a 3. Value recovery: closing the loop and retaining solutions the focus has been on one component of COLLABORATIVE APPROACH sustainable situation and the need for a more a product’s value for as long as possible. These the Fairphone 3 device, the battery. The technologies circular economy is becoming increasingly apparent. businesses generate revenue by capturing the A Community of Practice (CoP) is an open innovation, that came out as most suitable and interesting for value from used products, e.g. refurbishment, pre-competitive environment where tangible and The Value Hill, please see figure 1, is a circular our purposes are RFID tags, memory chips remanufacturing. replicable solutions are developed to facilitate viable incorporated in the modules’ electrical circuits, and business strategy tool to help businesses position circular business models. It is a one-of-a-kind QR codes. themselves in a circular context and can be divided 4. Network organisation: Doing business in one of network of relevant stakeholders who together dive into three phases: the three aforementioned categories does not into a particular case. The partners of this automatically create a circular business. There is • The pre-use phase (mining, production, Community of Practice are Circle Economy, a need for coordination of information, material, ABOUT THE REPORT distribution) where value is added in every step Sustainable Finance Lab, Fairphone, Nederland and money flows. This report is structured as follows: as the product moves uphill. Circulair!, Rabobank, Allen & Overy, Schiphol Group, Avery Dennison on behalf of the NBA (the Royal • Chapter 2 explains the context of the research • The in-use phase depicted on top of the hill, Netherlands Institute of Chartered Accountants), questions. Why is there a wish to track circulating where the value of a product is at its highest. Everledger and Circularise. assets? • The post-use phase, where the product loses • Chapter 3 describes the scope of this CoP, value as it moves downhill. introduces what can be tracked, why this would DEEPDIVE INTO FAIRPHONE-AS-A-SERVICE be interesting and concludes with a Circular Figure 1. The Value Hill. Adapted from Achterberg et al. (2016). Fairphone is a social enterprise that inspires Tracking Wishlist to guide the pilot. sustainable change in the electronics industry. The Chapter 4 is about how to track. Technologies company uses the development and marketing of its • available for asset tracking are researched and phones to drive awareness, provide the example and the most appropriate technologies for this CoP enable industry action in four key pillars: long-lasting are highlighted. design, fair materials, good working conditions, and reuse & recycling. A modular phone was adopted to • Chapter 5, 6 and 7 elaborate on the technical ensure long-lasting and circular design. Modularity proof of concept and the financial and legal makes the phone easy to repair for customers and implications of using such tracking technologies. partners, reducing time and material costs. The CoP • Chapter 8 concludes by means of reviewing the partners cooperated to find a technical solution for Circular Tracking Wishlist and summarizing which tracking the modular assets and to tackle the wishes have been fulfilled and which elements financial and legal complexities related to such a need further research.

8 8 TRACKING VALUE 9 PRODUCT-AS-A-SERVICE: MOVING FROM Furthermore, robust contracts are required to FAIRPHONE-AS-A-SERVICE: A CIRCULAR FAAS CHALLENGES TO BE TACKLED stipulate the terms and conditions between PRODUCT SALES TO PROVIDING A SERVICE MOBILE SOLUTION FOR BUSINESSES Being able to track and trace the modular assets is of customers, end-users and the PaaS provider. These In circular business models, such as Paas, assets are utmost importance, but with its current operational challenges were tackled in the previous COP, The Although Fairphone currently has a for-sales no longer sold. This enables a shift from a linear set-up Fairphone faces the following challenges when Circular Phone, by the development of a financeable business model in which Fairphone loses ownership supply chain where control is lost over products, to a transitioning towards a FaaS business model: business model and a corresponding contract. and control of the devices after the sale, the social circular one where value is controlled and enterprise intends to offer Fairphone-as-a-Service • The inability of tracking the condition and recaptured (figure 2). These business models could Moreover, circular supply chains require (FaaS) to businesses. This innovative proposition corresponding (residual) value of assets over the be the solution to dematerialising the electronics cooperation and coordination between all actors, requires businesses to pay a fixed monthly fee, which lifecycle accurately; industry and untangling profits from the use of leading to high administrative costs and need for guarantees access to a functioning Fairphone device, resources. In a PaaS business model, customers no trust, transparency and long-term agreements maintenance services, device updates and take-back • Increased organizational complexity as assets, longer pay for ownership of a product, but for the between chain partners. In The Circular Service of devices when use is ended. while owned by Fairphone, keep on circulating use of a product through a use fee giving them Platform an infrastructure was tested that provides between users and other stakeholders (e.g. FaaS in a business-to-business (B2B) environment access to the product and the additional services the asked-for transparency and trust between repair, logistics, refurbisher). This involves an means: provided. PaaS providers retain ownership of their stakeholders (e.g. repair shop, end-user) and ongoing (return) flow of materials, information products, and therewith the responsibility of their automates administrative tasks against low cost. • Fairphone retains ownership of the Fairphone and money between these actors that needs to be managed; maintenance. This incentivizes them to create high These solutions assume the existence of data devices; quality and durable products that retain value over regarding material composition, condition, location, • Fairphone is incentivized to offer high-quality, • Financial challenges with respect to defining time through easy upgrades, repairs, refurbishing or maintenance, supply chain actors, asset use and durable products that can be easily upgraded, value propositions for the different quality of take back at the end of life. corresponding revenues and costs. Yet, this data repaired and taken back at the end of its useful assets, and setting the right price for each value The transition to a PaaS proposition, however, needs to be structurally generated, gathered and life; proposition as intelligence on residual value is entails organizational and financial complexities, stored. How this can be achieved is the central still in development; • Product modularity allows Fairphone to optimize such as a need for initial investments in the fleet of challenge of this CoP. value creation based on the technical life of the • Legal challenges with respect to data privacy assets against a backdrop of longer payback periods, individual modules instead of the entire device; and contractual agreements in the circular which puts pressure on the cash-flows. value chain in order to align incentives of all • The transactional relationship with the customer stakeholders. becomes an ongoing engagement.

The four main benefits of FaaS in a B2B environment

Figure 2. Controlling & recapturing value in multiple use cycles vs losing control over products (Fischer and Achterberg 2016) are: 1. Flexibility: customers are not limited to the RESEARCH QUESTIONS devices in their contract, businesses can up- or Using the FaaS business model as a case downscale their phone ‘fleet’ every month; study, this report provides valuable 2. Always-on service: Fairphone will always answers to: provide a solution when a device breaks; 1. What are the possibilities of tracking 3. End-of-life ease: Fairphone collects the phones for intelligent management and and/or phone modules before end-of-life to monitoring of circulating assets? either reuse or recycle; 2. How can asset value tracking 4. Corporate Social Responsibility/Environment contribute to an improved business case e.g. give companies metrics on how much CO2 in circular business propositions? emissions they have saved compared to their old procurement model.

10 10 TRACKING VALUE 11 TECHNICAL SPECIFICATIONS 1 - TOP MODULE 4 - CAMERA MODULE FAIRPHONE 3 The Fairphone 3, launched in August 2019, is Main obsolescence drivers: Main obsolescence drivers: the subject of study for this CoP. The 5 - BATTERY • Clogging of the audio connector due to • Camera market technology Fairphone 3 contains eight modules: top lack of maintenance by the user. developments module, bottom module, speaker module, Main obsolescence drivers: • Camera market technology display module, camera module, battery, • Loses capacity with every charging cycle developments Relevant component: main camera and image sensor core module, and the back cover, please see • Loses capacity when charged at extreme temperatures figure 3. Relevant components: selfie camera, audio port

Figure 3. Fairphone 3 Modules and their main obsolescence drivers 3 - DISPLAY MODULE

Main obsolescence drivers: ACTIVE • Sensitive to drops PASSIVE Relevant component: display, glass

The definitions used in the figure are:

• 'Active’ modules: Contain a component with an electronic chip that can ‘communicate’ with the operating system to be used, for example, to automatically track the ID number.

• 'Passive’ modules: Unable to respond and store information.

• Whether a module is active or passive is important when choosing the most suitable tracking technology.

• Obsolescence drivers: all the factors that affect the lifetime of the modules. Technological and market trend developments influence the economic lifetime of modules. Drivers that affect the technical lifetime of the modules are:

• Wear & Tear: Factors that damage the modules progressively over time being the natural result of using the phone.

• Accidents: Due to the human factor in using the phone, some modules are prone to accidental damages. For example, it is estimated that the average user drops his or her phone seven times a year11.

7 - BACK COVER 6 - CORE MODULE 8 - SPEAKER MODULE 2 - BOTTOM MODULE

Main obsolescence drivers: Main obsolescence drivers: Main obsolescence drivers: Main obsolescence drivers: • External parts of the device suffer most • New chipset technologies drive of wear & tear obsolescence of the whole device. • Wears off faster in humid • Clogging of the USB port due to lack environments. of maintenance by the user. • Sensitive to humidity and drops.

Relevant component: chipset Relevant component: loudspeaker Relevant component: usb port

12 12 TRACKING VALUE 13 3 - CIRCULAR TYPES OF DATA THAT CAN BE COLLECTED Data regarding product use and performance is a UNDERSTANDING THE VALUE GAP OF ASSETS TRACKING WISHLIST critical part of value creation in PaaS business In order to create a truly long-lasting device, the value gap between the technical lifetime and the models. Four types of data are distinguished12: economic lifetime of the device needs to be closed (figure 4). Technical lifetime refers to the actual With a solid idea of the composition of the Fairphone • External factors: e.g. humidity or temperature durability of the assets and is affected by wear & tear and improper use, while economic lifetime is in mind, the required data points to be tracked to that impact the functioning of the product; the expected time a user considers the asset to be valuable and is affected by technological solve (some of) the challenges as mentioned developments and user behaviour. previously need to be determined. An overview is • Location: in real time or based on connected provided here of all the tracking ideas with regard to checkpoints; the scope of this project, from which a selection was Technical/Physical Lifetime • Condition: either related to the technical Technical/Physical Lifetime made to be tested small scale in a pilot. performance and/or the cosmetic/visual condition of an asset. This could, e.g. be data Economic Lifetime Value GAP collected from the repair centre or data about Economic Lifetime Value GAP GOAL & SCOPE use patterns, which can inform maintenance Figure 4. Economic versus technical lifetime The ultimate goal of this tracking exercise is to keep actions by predicting and preventing failure; the Fairphone circulating even longer on top of the • Availability: information on the availability of Closing this value gap would lead to a longer use-phase of the device. Modularity is part of the Value Hill. Tracking technologies could aid this goal by an asset communicates whether an asset is idle solution to diminishing the gap. optimizing preventive and targeted maintenance and but also could provide market (supply/demand) enabling efficient re-use of components. The focus is Think for yourself! How do your assets age during the life cycle? What are the events that can dynamics. Availability also includes information on the use and re-use phase, i.e. the phones are provoke damages? How do market developments affect your users wishes? about asset ownership. either in-use or being repaired, upgraded to be directly re-used. Tracking the provenance of materials uphill through the supply chain is out of scope of this project, see figure 5. ADDRESSING THE CIRCULAR THOUGHT IN as new'. Those who are on a tighter budget can opt THE FAAS BUSINESS MODEL for a value proposition where refurbished assets play the main role against a lower service fee. In order to extend the use phase of an asset, one could set different value propositions for different Based upon the different conditions of the modules, Figure 5. Scope of this tracking value pilot: Use and re-use. Adapted from Achterberg et al. (2016) types of customers and different conditions of the Fairphone drafted new value propositions allowing device. Customers do not always demand a product optimal use of the Fairphone devices, please see to be 'new', but also accept a product that is 'as good Table 1.

SCOPE: TYPE VALUE PROPOSITION (DRAFT) IMPLICATIONS repairmaintain

Premium Assurance that users will have a The device always looks as good as new. The ADD RETAIN working phone within four company battery holds > 90% of charge. The phone and VALUE VALUE hours, no matter what breaks or its modules are tracked.

happens to the phone and no matter retai reuseredistribute how often this occurs. The user is

always guaranteed to have the most assemb refurbish powerful device and modules. remanufacture

DIY Users always have access to spare The phone looks good. The battery holds manufacturin parts. After the user requests a spare between 60-90% charge. A back-up battery is recce part, this will be delivered within 24 included (this holds charge less than 50% and etraction hours. The contract covers one new is only used for emergencies). The phone and screen for free. its modules are tracked. PRE-USE USE POST-USE Refurbished Not as a value proposition but a second hand market to sell refurbished phones

Table 1. Overview of the different value propositions for FaaS

14 14 TRACKING VALUE 15 USE OF THE DATA LOCATION AND IDENTITY OF MODULES ASSESSING THE AVAILABILITY OF A conditions would allow for replacing modules when Data can be used in various ways. Firstly, monitoring PHONE OR MODULES data provides insights and feedback to the user or failure is imminent. This can enhance product other relevant stakeholders. For example, changes performance and predictive diagnostics for service Localization and identification of modules in the environment, location, condition or availability and repair. and devices Transparency of availability of phones and can alert users, or maintenance providers, to act. modules to optimize re-use of modules Lastly, autonomous products combine monitoring, Secondly, controlling data allows stakeholders to control and optimization capabilities to achieve a Identifying changes to the composition of level of autonomy. Such products could ‘self- control their own systems remotely, or let the modules in a Fairphone FACILITATING DESIGN & OPERATIONAL service provider exercise control without user diagnose’ and act accordingly. Think of sending a IMPROVEMENTS, CHAIN COLLABORATION involvement. This could entail, for example, drone to do repairs13. & PRIVACY switching a device off, when bills are not paid. But it All these possibilities seem very promising. By Optimizing (reverse) logistics for service of could also take the form of controlling product keeping all of the above in mind, the Circular replacing broken modules Improving the design of the Fairphone and functions or personalizing the user experience. Tracking Wishlist was established. This list serves as its modules and processes in the future Thirdly, optimizing data, is about goal-based a guide when exploring the solution space of improvements using algorithms which learn from tracking technologies in the following chapter. ASSESSING AND INFLUENCING THE CONDITION OF MODULES historical data. Real-time monitoring of module Optimizing operational efficiency (i.e. balancing resource utilization with rapid

Assessing the condition of the modules and redeployment of modules, and keeping estimating actual remaining lifetimes assets in service)

USING PRODUCT DESIGN Steering: steer behavior through design INTERVENTIONS TO NUDGE USERS • Users are guided to do what the designer Minimizing or preventing downtime thanks Provide information to involved stakeholders (e.g. repair, logistics) to TOWARDS SUSTAINABLE BEHAVIOR intended through constraints or to predictive maintenance improve chain collaboration affordances, e.g. defaults, limits, targets or physical constraints. Collected data can potentially also steer users Accurate asset valuation by considering the • Sustainable use can also be made so easy towards more sustainable behavior and condition of the modules, their expected Adhere to privacy and GDPR regulation engage them in the company's mission. This that the user does not think about it, e.g. by remaining lifetime and costs can be done in various ways14: making the functionality more prominent than others. MEASURE CORRESPONDING IMPACT Guiding: providing usage information and feedback • Other ways to steer behavior are by Improving decision-making of future loops: providing economic incentives by giving i.e. re-use, reparability, remanufacturing or Measure utilization rate for modules and • Users are informed about usage, which rewards to prompt desired behavior or recycling devices and its corresponding material, encourages reflection and enables them to penalties to ‘punish’ unsustainable usage. footprint and cost make more responsible decisions.

• Rather than only providing the information, Interact with (human) users to change use Embedding: more ‘forceful’ strategies users can also be friendly invited to change patterns to minimize wear and tear and Measure increase in customer trust15 their behavior through information about • Decisions are taken by the (intelligent) stimulate sustainable use and repairs consumption. For example, by providing product itself to mitigate unsustainable personal or social comparison. user behavior. For example, the battery will not charge itself when temperatures are Develop specific value propositions and below a certain threshold. individualized interactions & experiences that contribute to circular goals

Table 2. The Circular Tracking Wishlist.

16 16 TRACKING VALUE 17 4 - TRACKING APPLICATION STORAGE SIZE READABILITY SIZE

TECHNOLOGIES SUCCESSFUL TRACKING Printable codes on surfaces like Barcodes are ~10 - 60cm Several EXAMPLES labels or product housings are one dimensional centimeters Depending on resolution and used extensively in logistics and and limited to a long Smart tracking solutions are continuously developing reader type. to become more integrated and ubiquitous, proving retail industry. Their cost is very character string. End-to-end traceability for the wine The tags require a line of sight beneficial in the logistics and warehousing industry. low. industry to the scanner. To reach the goals of this Community of Practice, as QR Codes are two dimensional, summarized in the Circular Tracking Wishlist (see Table How to ensure that the fine wine you Tampering is very easy. have different Can be very 2), different tracking technologies were explored. drink is not a counterfeit? Everledger and storage sizes small; under Avery Dennison partnered up to combat 2 Please see Table 3 for an overview of the with much more 1 cm counterfeit and fraud in the wine technologies highlighted in this whitepaper. capacity than industry. Secure, non-copy and tamper- barcodes. resistant inlays with Near Field Three factors were considered crucial for application Communication (NFC) technology were Radio-frequency (RF) methods NFC16 chips ~0 - 10 cm > 13 mm to the Fairphone case: injected in the labeling of wine bottles, are an antenna-based technology typically store ~2 No line of sight needed for giving each bottle a unique digital that allows the wireless transfer of KB (kilobytes) of 1. The amount of information that can be stored or reader but range is short. identity. By means of supporting data to and from electronic data; which is collected; blockchain technology, supply chain data tagged-chips attached to items sufficient for a Consumer-friendly reading (e.g. present in smartphones). 2. The size of the physical tracking technology as can be captured allowing customers to (eg. labels). Examples of use are long serial animal microchipping, access number. some of the modules are small; follow the journey of their wine from Reasonably tamper-proof. control cards for buildings or car grape to bottle.20 3. The readability, the context needed for reading doors or baggage tracking. UHF17 tags can ~0 - 10 meters ~5-7 cm the information (e.g. manual scanning, detection) store up to 64 Tags are active or passive. The KB. Elimination of disposable cups reading range varies widely, making it suitable for use in HIGHLIGHTED TRACKING TECHNOLOGIES Cup Club is launched with a mission to warehousing. eliminate disposable cups without The modules of the Fairphone 3, except for the back removing the convenience of disposable Tags do not require line of cover and the core module, have a QR code label cups. Each cup can be used 132 times sight, they can be read through identifying their serial number. The design also before it is recycled. Cup Club combines other materials. Metals (ie. in contains an NFC reader. Some modules contain electronics) can distort or a set of technological solutions to track memory chips, like the screen, and could be impede reading18. individual cups and reward their users, programmed to store their own serial number. namely Radio Frequency Identification Reasonably tamper-proof. Passive modules, such as the bottom module, would (RFID tagging), mobile interface and require the addition of a chip in their hardware. Most Internet of Things (IoT). The RFID chips Integrated RF Chips, technologies Flash Memory They can be useful to store ~1 mm - 10 mobile phones, including Fairphones, already contain like bluetooth/wifi are also used chips can store large quantities of data, like mm19 provides a single cup with a unique bluetooth, wifi and other over the air communication for transferring large amounts of around 32 Mb usage data to define the identity which enables Cup Club to follow capabilities as well as a long list of sensors like data but obviously require to work - ~1 Tb. condition of parts of the device. the cup throughout its lifetime. Their thermistors, accelerometers, light sensors, etc. with a software operating system reusable cups can be picked up at coffee and are typically embedded in the shops by consumers who are using the design of the product and require app and dropped off at collection points this one to be ‘on’. to re‐enter circulation after cleaning. If Integrated Memory Chips are you do not return the cup to a collection widely available and can be point, Cup Club assumes you want to integrated in the design of keep the cup and you are charged a fee. electronic products to store large The latter should incentivize the user to amounts of information for the always return the cup to a collection operating system to use, or send point.21 to databases. Sensor’s Sensors fulfill many different n/a collected functions, for example, Integrated sensors can be used Information is thermistors can sense in the design to collect information stored in temperature and accelerometer about the environment in which memory chips. can be used to track when a the device is used. device is dropped. Table 3. Highlighted Tracking Technologies

18 18 TRACKING VALUE 19 5 - PROOF OF CONCEPT

EXPLORING THE CIRCULAR VALUE CHAIN OF code. An overview of the main tracking technologies STEP 3: WHAT BATTERY LIFECYCLE carries out actions that influence the condition of THE BATTERY has been provided in the previous chapter. INFORMATION CAN BE TRACKED ALREADY? the battery (e.g. charging the battery at high temperatures). This action serves as a proxy for a In our quest to find solutions, the focus has been on PROOF OF CONCEPT The software team at Fairphone extracted all the deterioration of the condition of the battery (i.e. its one of the most important components of the metrics that the operating system of the phone can To illustrate the potential of automated value state of health) and assigns a specific condition value device, the battery. Batteries have an estimated life read from the battery (a list of more than 20 tracking, a proof of concept was designed as part of to that specific battery in a database (e.g. ‘Battery cycle of 2.5 years, and decrease charge capacity per different metrics) and built an app that can read and the CoP. The condition of the battery depends on xyz has a condition of 60%”). charging cycle. A poor performing battery is often a different metrics, e.g. the temperature at which the display all these values. A selection from these reason for the purchase of a new device, as battery is charged, the amount of charging cycles it metrics was made to be used in the proof of consumers highly value having a battery that lasts goes through and how much it is charged per cycle. concept: the charging temperature and the total STEP 5: CONDITION TRACKER EASES long enough with one single charge. In Fairphone’s charge. Models that explain the condition of the battery are SORTING current business model, batteries are not reused. studied by various scientific communities. For the Thanks to the condition data, batteries can easily be When a battery has been used and recovered it goes purpose at hand, we restrict our focus to the categorized according to their condition, for straight to recycling. In order to close the value gap, collection of some of these metrics and not to the STEP 4: BUILDING A SIMULATED ‘CONDITION example, when they are scanned at a warehouse batteries that still have a certain charging capacity underlying models that explain how these actually TRACKER’ FOR THE BATTERY could be used in a second value proposition or used and subsequently assigned to the applicable value degrade the life of the battery. A software instruction was created to read and as back-up batteries. proposition. record the aforementioned metrics when the user Similar opportunities arise when considering other modules that can be ‘rescued’ from used devices to STEP 1: UNDERSTAND THE BATTERY be put again in service. In the CoP The Circular JOURNEY Phone the different stakeholders that are part of The journey of the battery through the supply chain Figure 6. The journey of the battery through the supply chain. FaaS were discussed. These core partners are was investigated and graphically mapped (see figure essential to the service proposition and key for 6) to understand who the different actors are that maintaining the longevity of the phone. The core interact with the battery along its journey. All the partners are Fairphone, logistics/warehousing and different steps were codified to identify tracking repair centres, and customers. opportunities. Identified was, for example, that a Additionally, there are key component producers radio frequency tag could be applied at the that provide parts that are crucial for the functioning manufacturing stage as this would enable the of the device (e.g. chipset manufacturers or battery battery to be 'scannable' without opening the device. Fairphone manufacturer). In the case of a battery, a battery is ets tacin eiements o Recycler Repair center identification and condition. produced according to certain specifications. The nos mateial content om the poct passpot battery then moves to a manufacturing factory STEP 2: WHAT TAGGING TECHNOLOGIES atteies ae WORK ON A BATTERY? ese instea o where it gets assembled onto a phone and then it sent o ecclin enters the logistics warehouse. As FaaS is a A battery is packed with metals (e.g cobalt, lithium, proposition for business customers the devices go aluminium), which can distort the radio frequency through logistics, to a business and finally to the signals of RFID technologies. Avery Dennison, end-user. partner in this CoP, made a feasibility study to understand which tags worked best to identify and Battery Device Assembler Logistics/ Customers Users track the different modules (more information to be producer (ODM/OEM) Warehouse acin technolo is Reas the conition on he atte an its SUITABLE TRACKING TECHNOLOGIES conition stoe on the found in appendix B). In conclusion, all of the applie hee ataase sots atte accordingly for future use. atte o coe mole is pate to the ataase The technologies that came out as most suitable are modules were readable when using different RFID at regular intervals. RFID tags (NFC), memory chips incorporated in the tags, but some had a very limited readability range. design, and QR codes. It was decided that these would

be the most easy and interesting technologies to try CENTRALIZED reen capacit DATABASE during the pilot. Furthermore the Fairphone 3 already eow capacit has an NFC reader, some modules have a memory Red capacit storage chip and all electronic modules contain a QR

20 20 TRACKING VALUE 21 6 - FINANCIAL IMPLICATIONS

DATA PROVIDES COMFORT FOR FINANCIERS Provisions are a balance sheet item representing SMART TRACKING IMPROVES ACCURACY IN funds set aside to cover anticipated future costs with In general, the backbone of financial decision making REQUIRED LEVEL OF STOCK uncertain timing and/or amount. An entity at the level of banks is based on historical financial FINANCIAL CHALLENGES recognises a provision if it is probable, i.e. have a The data captured by means of tracking assets can data (i.e. track record), available collateral and 50% probability of occurring, that an outflow of also provide valuable input for inventory revenue generation. Early stage financiers, i.e. With respect to setting up a viable PaaS cash or other economic resources will be required to management. Part of the service proposition is a fast financiers who are willing to take a higher degree of business case there are some financial settle the provision. If an outflow is not probable, replacement of Fairphone modules when the asset risk, focus most often on young companies with no challenges to overcome: the item is treated as a contingent liability. does not function in accordance with the agreed track record. As historical data is lacking, these service contract. Being able to swiftly replace parts financiers focus primarily on forecasts of future • predicting cash-flows in a service An accurate estimation of provisions for repair and requires Fairphone to keep a sizeable inventory financial results and qualitative aspects, such as the business model; replacement throughout the lifetime of the assets is position. Inventory which sits idle does not generate background and experience of the entrepreneur. As key for setting the right service fee for each value • defining different value propositions any revenue. It is therefore of utmost importance to proposition. the PaaS entrepreneur stays the owner of the for the different conditions of assets; be able to estimate the condition of your assets assets, the financial risk for the asset throughout its accurately in order to avoid keeping too many assets lifetime will be carried by the entrepreneur. • estimating the costs of future service in stock. Transparency on the location and condition of assets obligations; gives the entrepreneur a better grip on its assets • estimate the residual value of the and hence might improve the value of the asset as assets when to be refurbished. collateral to underwrite a loan. As tracking improves Taking all these points into consideration, accuracy of forecasted cash flows and control over the last challenge is setting the right assets (i.e. collateral), it lowers the risk profile of the price for each value proposition. LIFETIME EXTENSION entrepreneur and increases his/her chances to obtain funding. The expected financial obligations under a The generated data also provides information with service contract should be lower in comparison respect to the valuation of the modular assets and to the additional cash flow generated from can influence depreciation schedules and the asset longer use cycles. The question should be value on the balance sheet. However, as these are Finally, data tracking supports the buildup of asked: How much additional lifetime (i.e. cash- COSTS non-cash effects, the focus of this whitepaper has product history data, which can lead to flow generation time) is created by repairing/ been on the influence of data tracking to improve improvements in operational efficiency and can upgrading a modular asset of the phone? the FaaS business case and setting the right price for have a positive impact on cash flows, for example to Figure 7 graphically shows that the ratio each value proposition. make better estimations with respect to future

between the additional cash flow created from VALUE costs, e.g. repair and replacement costs and the lifetime extension (purple arrow) and costs inventory (see next sections). Having access to this to be made to realize the additional lifetime TIME LIFETIME EXTENSION DEVELOPING FINANCIAL INFORMATION type of information enables the entrepreneur to set (green arrow) should be smaller than 1 (i.e the right level of margin for a specific value As a PaaS entrepreneur there are quite a few benefits are larger than costs) and is relevant proposition. financial challenges to conquer, see box Financial to distinguish feasibility of cascading products Figure 7. Ratio investment costs versus lifetime extension. Challenges. Tracking assets generates information or components (e.g. refurbishing, re-using or on the location and the condition of assets. This SMART TRACKING IMPROVES THE QUALITY recycling). information is essential for a sound PaaS business OF THE ESTIMATIONS OF FUTURE SERVICE model, through accurately pricing the business OBLIGATIONS case. Tracking the condition of assets enables the entrepreneur to define different asset categories In a PaaS business model the PaaS provider is that can be offered in different value propositions to responsible for the condition of the assets. Repair the customer, as presented in chapter 2. Different and replacement costs thus need to be included in value propositions extend the lifetime of the assets the service proposition. With respect to estimating as they can be offered in multiple use cycles, which the expected future obligations, it is important to also increases the revenue generation of these focus on your expected costs to cover future service assets. obligations under the PaaS proposition: provisions.

22 22 TRACKING VALUE 23 7 - LEGAL IMPLICATIONS

DATA PROTECTION REGULATION Since 2017, there has been an e-Privacy Regulation in Basing the processing of (personal) data on the the make as a follow up of the current directive. execution of an agreement with the customer and/ The data generated when tracking assets is subject to Similar rules to the ones known under the ePrivacy or under legitimate interest brings some data protection laws and regulations. The main PERSONAL DATA Directive are introduced in this regulation.23 advantages, for example, not needing a technical questions entrepreneurs should ask themselves are: solution to enable withdrawal of consent, but may • How is the data retrieved? Any information relating to an identified bring risks should the information about data or identifiable natural person; an GENERAL DATA PROTECTION REGULATION gathering not be very clear to users. On the other • What type of (personal) data is gathered? identifiable natural person is one who (GDPR) hand, communicating effectively and very can be identified, directly or indirectly, in • Why is this data needed? GDPR became applicable as of May 2018. Whereas transparent about the (personal) data tracked and particular by reference to an identifier the purposes, could ensure high consent Some information about the usage of a device, in the ePD is applicable to all data, GDPR is only linked such as a name, an identification percentages and a positive attitude towards the this case a smartphone, could be labelled as to personal data. If personal data is collected from number, location data, online identifier matter by the users. personal data. The amount of times a device is the device or otherwise processed, companies, or to one or more factors specific to the dropped, been in humid environments or charged at among other legal obligations, need to ascertain a In the next section the ethical aspects are discussed physical, physiological, genetic, mental, high temperatures, could give important ground for processing this data gathered from the and some solutions are proposed to practice Privacy economic, cultural or social identity of information to be used to estimate the technical device. These grounds can be either: by Design. that natural person22. condition of the device to, for example, assess 1. User consent; repairability or refurbishing opportunities, or simply to exercise preventive maintenance for users. The 2. Execution of an agreement; or, other side of the coin is that this data can easily say obtained by means of e.g. expression of consent via 3. Legitimate interest (upholding company’s something about the places where the user has marking a tickbox. commercial interest and provided that this been or the type of daily activities the user has A THREE-STEP TEST CAN BE interest outweighs the privacy interest of the undertaken. The point to take into account when obtaining UNDERTAKEN WHEN CHOOSING users). 24 consent is that customers should always be able to FOR LEGITIMATE INTEREST : Entrepreneurs servicing the European market and withdraw their consent. Therefore, the withdrawal of gathering data from their users should take into consent should be technically feasible, i.e. it should If consent is required under the ePD, then consent is account the below EU regulations: 1. Purpose test: Identify a legitimate be possible to technically stop tracking the also needed under GDPR. Therefore, obtaining interest (personal interest / interest 1. ePrivacy Directive (ePD) - applicable for general (personal) data. consent from a customer might be the preferred of third parties / societal interests) and personal data Some exemptions exist to the consent requirement. and safest route to choose. The disadvantage, 2. Necessity test: Show that the 2. General Data Protection Regulation (GDPR) - only For example, if the placement of information or however, as stated in the previous paragraph, is that processing of personal data is applicable for personal data access to it has as sole purpose to enable the customers should always be able to withdraw their necessary to achieve this interest. communication over an electronic communication consent Therefore the question should be asked if If you can obtain the same result network or is strictly necessary to deliver an the withdrawal of consent is feasible. ePRIVACY DIRECTIVE (ePD) without obtaining this data then information society service (e.g. a website) at the If it is possible to base the retrieval of data from the legitimate interest will not apply; and The ePD is the existing directive that sets out strict request of the user. A third reason for an exemption device, on one of the exemptions set out in the ePD, rules for the electronic communications industry. In is when instead of 'pulling' data from a personal then one could opt for executing an agreement with 3. Balancing test: Balance your the Netherlands, these rules are set out in Article device, one could also develop a solution that the customer or for processing the data in line with interests against the individual's 11.7a of the Dutch Telecommunication Act. When 'pushes' the required data from the device, such as its legitimate interest (please see box). interest. If the retrieval of data would using tracking technologies whereby data is sent to an IP address is pushed from a device. In this case, it cause unjustified harm, then the It is fair to argue that there is a legitimate interest or retrieved from a personal device, two could be argued that no consent from the customer individual's interest most probably for companies in the Circular Economy to gather requirements need to be adhered to: is required. However, this could be a long shot. The will override your legitimate interest. (personal) data to increase the efficiency of circular supervisory authorities will most probably argue a. Before the sending or retrieval of data the user business models. The interesting question is how to that all tracking technologies used fall under the must have given his/her consent; balance that interest with user rights. ‘Privacy by scope of the rules of the ePD and Dutch Design’ principles (please see next page) enable b. The user needs to be informed, in line with Telecommunication Act. GDPR (please see below), why the data tracking individuals and society to stay in control of what In any event, it is always required to clarify how technology is used. personal data is shared and how. (personal) data is gathered and processed and for In other words, the use of the tracking technology which purposes. requires the informed consent of the user. This can be

24 24 TRACKING VALUE 25 ETHICS OF GATHERING DATA • Respect for user privacy: Keep it user-central. Provide good information and make the options 8 - CONCLUSION As mentioned already, data gathering can help to user-friendly. “The individual’s free and specific establish an efficient and cost-effective PaaS consent is required for the collection, use or TRACKING IS INVALUABLE FINANCIAL AND LEGAL IMPLICATIONS proposition. With the rise of digital data storage and disclosure of personal information, except communication in the last decennia, a business uses a where otherwise permitted by law. The greater Tracking the value of modular assets in a circular Tracking assets provides transparency on the multitude of online services which hold consumer the sensitivity of the data, the clearer and more PaaS proposition is invaluable. It improves decision- location and condition of assets and therefore gives data. It is easy to lose overview of the information specific the quality of the consent required. making regarding the cascading of components (e.g. the entrepreneur a better grip on its assets and the traffic in and out of the company. There are multiple Consent may be withdrawn at a later date” refurbishing, re-using or recycling) and predictive assets can serve as collateral to attract financing. In ways in which data can leak out of the system or maintenance, aiding to the goals to make smart addition, tracking can help to lower the risk profile of targetted by externals to be hacked. design decisions to increase longevity of devices and the entrepreneur by providing lifecycle information To sum up, any entrepreneur in this circular journey, The former Information & Privacy Commissioner of recover as much material as possible. It also allows of the assets, improving pricing and quality of needs to be well aware of the risk of data gathering Canada, Ann Cavoukian, created the 7 principles of for providing a timely and high quality, customer estimating future service obligations (i.e. provisions). and surely should avoid collecting data just because it Privacy by Design. A helpful tool to set up a responsible type-specific service, ensuring customer satisfaction An accurate estimation of provisions for repair and is possible. Think about what needs to be gathered to and secured value tracking system for modular assets and retention. Finally, it creates ways to optimize the replacement throughout the lifetime of the assets is make the value proposition successful and less risky and user data in general. Please see below a summary business model by creating intelligence on necessary key for creating a viable PaaS business case and and make sure you get a good feel of how your users of her practical tips: provisions to cover future costs, accurately price the setting the right service fee for each value will think about it. contract, optimize operational efficiency and cross- proposition. The data captured by means of tracking • Proactive and Preventive: When designing a selling opportunities that makes the value assets also provides valuable input for inventory value tracking system, keep data privacy central proposition richer. management, aiming to optimize inventory costs. in the process from the start. Do not wait with With respect to legal implications, the data generated solving privacy issues after implementation or when tracking assets can be subject to data when they arise. QR CODES, MEMORY CHIPS AND RFID TAGS protection laws and regulations. Obtaining consent • Privacy as the Default: “No action is required ARE MOST SUITABLE TO FAIRPHONE from a customer for gathering (personal) data is the on the part of the individual to protect their For Fairphone’s as-a-service proposition, this CoP preferred and safest route to choose. The privacy − it is built into the system, by default.” found that QR codes, memory chips and RFID tags disadvantage, however, is that customers should This means that the amount and type of data (NFC and UHF) were found to be most suitable. QR always be able to withdraw their consent as well. is kept to the minimum necessary for a well codes have the advantage that they are easily Therefore the main question that should be asked is: defined purpose. It is retained for the duration readable by any device. NFC technology has the would the withdrawal of consent technically be needed for that purpose, before being securely advantage that the reading equipment does not feasible? destroyed. need line of sight, but the disadvantage that the • Privacy Embedded into Design: Think of privacy signal can be distorted if the modular assets have WHAT IS ACCOMPLISHED? as an integral part of the architecture of the IT metallic parts. UHF has the advantage that multiple system and of business practices related to the modules can be read at once and from a distance, The following table provides a summary of the value tracking system. but requires more specialised reading equipment. wishes that have been (partially) fulfilled and how QR codes and RFID tags are widely used by this has been achieved. • Full Functionality - no zero- sum: It is always manufacturers and logistic companies, and are possible to find a way to satisfy all legitimate objectives of value tracking IT systems, be it suitable for many other products and (circular) functionality, security or privacy. Center the business cases. These technologies can be possibly discussions around finding these ways, without extended with other types of identifying losing time on trade-off discussions. technologies. Next, integrating memory chips in the design of new modules can open up possibilities for • End-to-end security: Secure the user data tracking the condition of modules or other actions throughout its entire lifecycle. Technical done by the user. Being part of the design, software measures needed to attain this include up-to- can specifically respond to a certain context and can standard encryption, methods of secure data serve as a valuable tool to deliver rich insights to destruction, strong access control and logging service providers in a service proposition. methods.

• Visibility and Transparency: Collection of user data should be accountable, open, transparent and compliant. Always communicate clearly to your users what data you are tracking, how it is used, and for how long you will keep it.

26 26 TRACKING VALUE 27 LOCATION AND IDENTITY OF MODULES ASSESSING THE AVAILABILITY OF A PHONE OR MODULES

Localization and identification of Either by QR-codes or by RFID tags. Transparency of availability of Tracking modules’ location (based on connected checkpoints), modules and devices phones and modules to optimize condition and availability (in-use or idle) enables optimal re-use of modules allocation of devices and modules.

Identifying changes to the Ideally by programmed memory chips that are implemented in FACILITATING DESIGN & OPERATIONAL IMPROVEMENTS, CHAIN COLLABORATION & PRIVACY composition of modules in a every module. Fairphone There are effective feedback loops between operations and Improving the design of the engineering teams. However, building more historical data Fairphone and its modules and about use, lifetimes and cascading decisions, will provide Optimizing (reverse) logistics for Reverse logistics solution still need to be developed. processes in the future service of replacing broken additional insights. modules

Optimizing operational efficiency Combining above, feedback loops for product design, knowledge on ASSESSING AND INFLUENCING THE CONDITION OF MODULES (i.e. balancing resource utilization availability and condition provides a solid ground for improving with rapid redeployment of operational efficiency. Assessing the condition of the Batteries are categorized according to their condition. modules, and keeping assets in modules and estimating actual Solutions for other modules still need to be developed. service) remaining lifetimes

Provide information to involved Data sharing opportunities still need to be addressed as well as Minimizing or preventing Key condition factors of the battery are tracked and stored in a stakeholders (e.g. repair, logistics) aligning stakeholders further with the FAAS value proposition. downtime thanks to predictive centralized database, which enables predictive maintenance. to improve chain collaboration maintenance Solutions for other modules still need to be developed.

Adhere to privacy and GDPR There are a couple of ways to both adhere to privacy by design Accurate asset valuation by Data on condition, lifetimes and costs are ready to be gathered. regulation principles as well as comply with privacy regulation. considering the condition of the Intelligence on corresponding valuation still needs to be built modules, their expected and will continuously be updated. MEASURE CORRESPONDING IMPACT remaining lifetime and costs

Measure utilization rate for This point was out of scope for this paper. However, at the time of Improving decision-making of Elicit re-use scenarios of the battery are distinguished. Similar modules and devices and its writing, the Life Cycle Assessment of Fairphone 3 has started which future loops: i.e. re-use, information on the other modules would improve cascading corresponding material, footprint will deliver interesting insight on the reuse and repair of modules. reparability, remanufacturing or decisions. and cost recycling

This point was out of scope for this paper. The role of the user is Interact with (human) users to A user facing tool is currently being developed that could Measure increase in customer very important. Some of the considerations in this paper will change use patterns to minimize communicate lifetime extending use (e.g. charging behaviour) trust require an active participation of the user and it is expected wear and tear and stimulate to the end user. that this will increase the trust in the proposition. sustainable use and repairs

Wish fulfilled Develop specific value Value propositions were designed to include newly developed propositions and individualized intelligence. This will be continuously improved and built upon. Wish partially fulfilled interactions & experiences that Wish to be included in future research contribute to circular goals

Table 4. Evaluation Circular Tracking Wishlist.

28 28 TRACKING VALUE 29 9 - CHALLENGES & FUTURE DEVELOPMENTS

NEED FOR PILOTING AND AN OPEN MINDSET match. Additionally, in light of privacy, only necessary data - and only for the required period - needs to be In the previous CoP, featuring The Circular Phone, a PROVIDING CHAIN PARTNERS WITH THE collected, rather than collecting whatever might be sound business proposition was prepared. One of RIGHT INCENTIVES BRAINSTORM WITH US! useful. Mechanisms need to be developed that the challenges that remains, however, is the need for prevent potential criminal activity from harming A big future challenge is how to align all stakeholders an open mindset from all stakeholders involved. private individuals and businesses. This, in turn, in the circular value chain to work towards the same How to optimize the Fairphone-as-a- Although tracking technologies can reduce some of requires a legal infrastructure that ensures trust and objective: extending the longevity of the Fairphone Service proposition? You are being the risks, it still requires room for piloting and security over personal data, which is currently a device and re-using as many components as challenged to share any smart, crazy, testing, as track record still needs to be built and major hurdle for Internet of Things (IoT) related possible. In The Circular Phone, the Circular Service bold ideas with us! For example: validated. Many companies, especially the larger market development. Blockchain technology, for Contract can be found which stipulates the rules and ones, have difficulties finding room for experiment if Extend the Product-as-a-Service example, could provide useful in cases where trust is responsibilities between Fairphone and its that means stepping outside their existing processes Proposition to other related products! an issue, to protect data from being altered by customers. However, key stakeholders providing and procedures. Include headphones, covers, screen involved partners. services around the asset, such as the repair center, protectors as a service! Liaise with but also component providers, manufacturers or a green energy supplier to offer the even consumables (e.g. telecom services) also need UNCLEAR RETURN ON INVESTMENT possibility to charge your phone with STORING INFORMATION SECURELY IS A to be involved. Incentive alignment can be achieved green energy or liaise with students A challenge that needs to be addressed, is that CHALLENGE by integrating partners in a circular contract in which specialised in design & innovation to upfront capital investment is required to invest in the responsibilities around the asset, components, or Securely and reliably storing information about invent offering 3d personalized printed tracking technologies, while at the same time a service lie at the best situated company and is assets’ provenance, identity, condition, availability, covers as an additional service. clearly defined return on investment is lacking. rewarded accordingly (e.g. from the service fee). use and ownership (i.e. digital rights) is difficult. It Although the opportunities seem evident, how big needs to be verified that a given device is genuine, the efficiencies will be in the long-run can only be and that its software and settings have not been estimates. tampered with or breached. The area of data security is being increasingly developed, but also requires deep expertise and large investments. Companies COLLECTING DATA DOES NOT ENSURE THAT can benefit from identifying their partners within the THE INFORMATION IS PUT TO GOOD USE intelligent circular asset economy, to determine Communication between business and technical whether they can join a partner’s platform or need to experts is a challenge. To ensure that the right data is develop their own. By joining existing platforms, collected, subsequently processed in the right way interoperability (i.e. seamless data sharing between and eventually put to proper use, good assets and networks of different industry players) communication between the IT/software team, the will improve. business and operations is essential.

INTEGRATE TRACKING RESULTS INTO PRIVACY EASIER TO INCLUDE IN DESIGN EXISTING BUSINESS UNITS THAN TO PATCH UP ISSUES LATER At the time of writing, a troubleshooting tool is being When devising an architecture for a data tracking developed that allows more efficient repair service system, it is crucial to address concerns about how and easier in-house repairs. The insights that are innovators, companies and government agencies gathered through the value tracking pilot (e.g. for the use, share and protect personal data. It was found to battery) could be well incorporated into the app, be simpler and safer to integrate from the start than updating the condition of the modules. It might also to patch up issues later. An important starting point be used to provide more accurate information on is to make the link between the individual user and how much material, emissions and energy is saved the corresponding data as difficult as possible to compared to a benchmark.

30 30 TRACKING VALUE 31 APPENDIX A: FAIRPHONE 3 - MODULES & OBSOLESCENCE DRIVERS

OBSOLESCENCE DRIVERS MODULES MAIN SUBPARTS ACTIVE OR PASSIVE WEAR & TEAR ACCIDENTS MARKET

1) Top Module Earpiece speaker, proximity and light Active; The selfie camera contains a The audio connector is subject The audio connector can have Camera technology advances at a fast sensors, notification LED, selfie camera, camera sensor activated by a chip to mechanical forces when used. a mechanical accident. pace but depends on whether the audio port, secondary microphone, and which can store predefined The audio connector can be users want a better camera. connector to core module. information and communicates with clogged due to lack of the operating system. maintenance by the user.

2) Bottom Module USB port (power and data), primary Passive The charging connector is The USB port can suffer from USB type C is becoming the norm and microphone, the vibration mechanism, subject to mechanical forces mechanical forces when the looks like no new advancements will and connector to core module when used. The USB port can be product is dropped while be introduced anytime soon in the clogged due to lack of charging. shape of the port; though maintenance. compatibility remains an issue.

3) Display Module Display, closing mechanism, connector Active; Contains a chip that processes Scratches may appear over time. Glass on display is likely to A plateau has been reached on actual to core module orders from the operating system and break due to impact when improvement of image quality, but The LCD display might turn manages the functioning of the dropped enough times. further improvements can be done in yellowish over time. screen. The chip communicates to the energy efficiency with AMOLED core module. displays or in functionality like with foldable displays.

4) Camera Module Main camera sensor, LED flash, and Active; The camera contains a sensor The camera module is not Drops can affect operation Camera technology advances at a fast connection to the core module that is activated by a chip. See Top heavily affected by wear and pace. Fairphone 2 was the first device Module. tear. to offer a camera hardware upgrade :

5) Battery Li-ion battery and connection to the core Passive The battery loses capacity with The battery can be damaged Low relevance; research and module every charging cycle. when the phone is dropped development is being done on new or exposed to high or low battery technologies, but so far none temperature among others. seem to be close to being industrially available .

6) Core Module Chipset, antennas, battery connector, Active; The core module contains a Wear and tear is not significant The core module contains the Main driver is the development of multiple other electronic components, chipset that operates the entire phone for the core module. most critical electronic parts new chipset technologies which connectors to all the modules and can process and store information and is therefore sensitive to defines the speed and compatibility humidity and drops but cases of the device to the latest software can be designed to be drop developments. Drives the resistant. obsolescence of the whole device.

7) Back Cover Translucid plastic plate that protects the Passive External parts of the device Accidents are unlikely to Not relevant, only if Fairphone electronics of the phone. Easily suffer most of wear & tear affect the back cover. releases new covers removable.

8) Speaker Loudspeaker Passive The moving parts of the speaker Accidents are unlikely to Low relevance, big improvements in Module wear faster in a humid affect the speaker module. speaker technology are not expected environment. a new, more powerful speaker can be implemented with an upgrade.

32 32 TRACKING VALUE 33 APPENDIX B: FAIRPHONE 3 - ASSET TRACKING TEST BY AVERY DENNISON

READING RESULTS RFID READING CONDITIONS (READ RANGES IN CM) Fairphone Reading Tests Assembled Assembled RAIN-UHF Readability on parts Inlay Free Space Disassembled front reading back reading

Battery AD-456u8 60 150a 25d 30d OBJECTIVES Fairphone wants to assess the feasibility of an RFID Display AD-160u7 trim - 140b 140 40 tagging solution for the main parts of their modular smartphone. Parts are classified according to the Bottom AD-806u7 50 10c 60 95 priority level in terms of interest. Three different use • Battery: because the all-metal construction of Module AD-850m4QT 30 2c - - cases have been identified: the battery, only on-metal tag AD-456u8 (sized: • Single part identification (track & trace) 64 x 6mm and 0,5mm thickness) is possible to Core be used. Note this inlay is 0.5 mm thick. AD-160u7 100 40c 15d 30d • Parts in a smartphone configuration module (assembled) • Display: It has a metal play behind the display area. The bottom area is free of metal and Top • Logistics and inventory management of the AD-850m4QT 30 2 2 contact AD-160u7 trimmed (sized: 52 x 6 mm) fits. module single parts

• Bottom module: Both AD-806u7 (sized: 19 x 19 c c This is a preliminary assessment to understand the AD-806u7 50 10 contact contact mm) and AD-850 (sized: 14,5mm diameter) have Speaker level of readability of the different parts in the module been tested, even AD-806 is covering the AD-850m4QT 30 2c - - different scenarios. When use cases are defined connector area. more detailed reading tests could be performed. The Camera AD-850m4QT 30 2 2 2 assessed parts can be found in the image above: • Core module: Space available for a large tag Battery, display, bottom module, core module, top AD-160 (sized: 64 x 6 mm) but metal plane inside. module, speaker module and camera module. • Top module: Only AD-850 fits. Choosing an area Comments: tagging could be integrated in the part without free of metal. Grade in the plastic piece has to INLAY SELECTION be considered when integrating the tag to the • All metal. No readability with regular tags. A mechanical interference in the assembly of the parts part. thicker tag (0,5mm) is needed (AD-456) The battery requires a on-metal tag because of the Best performing inlay and positioning have been full metal piece. This is a 0,5mm thick inlay which selected per each part avoiding metallic surfaces. • Speaker module: Both AD-850 and AD-806 • Out of metal plane area needs to be taken into consideration when the inlays fit. Internal metal piece. Right side of the • Metal plane on the back of the module module is chosen. battery is assembled into the phone. The use of • Display is shielding inlays based on newer chip generation (Ucode 8 and • Camera module: Only AD-850 inlay fits. M7000) could slightly improve the results.

CONCLUSIONS READING CONDITIONS Most of the parts are readable both assembled and The Zebra RFD8500 handheld reader ETSI 1 watt was disassembled. In general though, the read range is used in this test. The inlays tested are types quite limited and suitable for identification purposes AD-850m4QT, AD-806u7, AD-160u7, AD-160u7 but not for logistics/inventory cases (except for larger Trimmed and AD-456u8 in 3 reading conditions: free parts (batter, display, core)). space, inlay attached to the part disassembled and inlay attached to the part assembled. Some small parts are difficult to tag for the small dimensions and the lack of flat surfaces. Deeper analysis has to be performed to understand how

34 34 TRACKING VALUE 35 NOTES LITERATURE

1. Retrieved from: http://www3.weforum.org/docs/ of information. For the purpose of this report this • Achterberg, Elisa. 2019. The Circular Service WEF_A_New_Circular_Vision_for_Electronics.pdf is not applicable. Platform - A Technical-Administrative Infrastructure for Managing Value in Circular 2. Retrieved from: https://www.weforum.org/ 20. Retrieved from: www.everledger.io Networks (white paper). Sustainable Finance Lab. agenda/2019/01/how-a-circular-approach-can- 21. Retrieved from: www.cupclub.com Retrieved from: https://sustainablefinancelab.nl/ turn-e-waste-into-a-golden-opportunity/ en/kennisbank/white-paper-the-circular-service- 22. Retrieved from https://gdpr-info.eu/art-4-gdpr/ 3. Ibid. platform/. 23. Retrieved from https://ec.europa.eu/digital- 4. Ibid. single-market/en/proposal-eprivacy-regulation • Achterberg, Elisa, Fischer, Aglaia, Ballester, Miquel., 2018. The Circular Phone (white paper). 5. Retrieved from: http://collections.unu.edu/eserv/ 24. Retrieved from: https://ico.org.uk/for- Retrieved from: https://www.circle-economy. UNU:6341/Global-E-waste_Monitor_2017__ organisations/guide-to-data-protection/guide-to- com/insights/the-circular-phone electronic_single_pages_.pdf the-general-data-protection-regulation-gdpr/ 6. Retrieved from: https://www.topics.nl/ lawful-basis-for-processing/legitimate-interests/ • Achterberg, Elisa, Jeroen Hinfelaar, and Nancy uw-smartphone-richt-nogal-wat-schade-aan-kan- M. P. Bocken. 2016. Master Circular Business 25. Retrieved from: https://www.androidauthority. with the Value Hill (white paper). Retrieved from: dat-niet-eerlijker-en-duurzamer-a13414344vk/ com/state-of-usb-c-870996/ https://www.circle-economy.com/insights/ 7. Bakker, C.A., Den Hollander, M.C., Van Hinte, E, 26. Retrieved from: https://www.fairphone.com/nl/ master-circular-business-with-the-value-hill Zijlstra, Y. 2014. Products that Last. upgrade-fairphone2-camera/ • Bakker, C.A., Den Hollander, M.C., Van Hinte, E, 8. Fairphone 27. Retrieved from: https://qz.com/1588236/how-we- Zijlstra, Y. 2014. Products that Last. 9. Circle Economy. 2020. The Circularity Gap get-to-the-next-big-battery-breakthrough/ • Bocken, Nancy, Emilia Ingemarsdotter, and Diana Report 2020. Retrieved from: https://www. Gonzalez. 2019. Designing Sustainable Business circularity-gap.world. Models: Exploring IoT-Enabled Strategies to Drive 10. Achterberg, E., Hinfelaar, J., Bocken, N. 2016. Sustainable Consumption. Master Circular Business with the Value Hill. • Christidis, K., and M. Devetsikiotis. 2016. 11. Retrieved from: https://www.govtech.com/ Blockchains and Smart Contracts for the Internet question-of-the-day/Question-of-the-Day- of Things. for-07202018.html • Circle Economy. 2020. The Circularity Gap Report 12. Ellen MacArthur Foundation. 2016. Intelligent 2020. Retrieved from: circularity-gap.world. Assets: Unlocking the Circular Economy • Ellen MacArthur Foundation. 2016. Intelligent Potential. Assets: Unlocking the Circular Economy Potential. 13. Bocken, Nancy, Emilia Ingemarsdotter, and Diana Gonzalez. 2019. Designing Sustainable Business Models: Exploring IoT-Enabled Strategies to Drive Sustainable Consumption.

14. Ibid.

15. Customer brand and product trust is recognized to be one of the most important factors to increase the value of used devices. Source: Makov et al. 2018. What Affects the Secondhand Value of Smartphones: Evidence from eBay.

16. Near-field communication

17. Ultra-high frequency

18. See report by Avery Dennison on the Fairphone 3 in Annex XX.

19. Larger sizes are available to store larger amounts

36 36 37 38 38 TRACKING VALUE