Achieving a circular economy is possible, but it comes with a list of challenges, the first being awareness. Unlike many other sectors, manufacturers cannot ignore resource scarcity.
Some are already acting, appreciating that raw materials are critical to producing goods. To make the most of the circular economy, manufacturers can take these 6 steps to transition to a circular economy:
1. Create a solid business case for a circular economy
Reducing your organisation’s carbon footprint is a worthy goal. However, if you want your circular economy implementation to be seen as a priority, you’ll have to show the board some solid numbers. Just like any type of organisational change, enthusiastic buy-in will make all the difference in getting everyone else on board. Your business case is the first step in achieving this.
2. Starting small
The key to success here is to embed manageable chunks of change into your organisation’s routine. For example, start with setting up a refurbishment programme to repair and resell second-hand products. Once you’ve trained your staff, successfully launched the programme and are starting to get good feedback from customers, move on to the next phase. No action is too small. Even if your first step is as simple as making all your packaging recyclable, it’s a solid start and a contributing factor to the circular economy.
3. Keep everyone in the loop
Implementing a circular economy is a transformation that will affect every single department of your organisation, so make sure everyone’s on the same page and ready to work with you. The perfect circular economy implementation team will vary from organisation to organisation, but your basic list of internal stakeholders should include:
Supply chain and logistics: If you’re moving to a buy-return-service-send model, you’ll need to make sure your supply chain is geared to this before making the switch.
Procurement: How you source your materials and parts may need to change if you’re looking for less wasteful alternatives.
Sales and marketing: You’re moving away from the assumption that after a certain period, a product will become obsolete and your customers will need to buy a new one. This may not fit with your current sales cycle or campaign strategy, so you’ll need to allow time to adjust.
Manufacturing/shop floor: How you process orders will change when you implement a circular economy. Your factory floor will need to figure out how they can make this switch while fulfilling demand on schedule.
Finance: A circular economy changes how and when the company generates income.
IT: Will there need to be any software purchases or infrastructure changes? Getting your IT experts involved at an early stage will help prevent issues further down the line.
Engineering/product design: So much of a successful circular economy is in how your products are designed. Your engineers or product design team are your number one ally here.
4. Ensure your supply chain can manage a circular system
As a manufacturer, you may focus on your logistics activity such as ‘parts and raw materials in, complete products out’. However, if you want to incorporate remanufacturing, leasing, asset management and incentivised return into your business model, this means that your products will move back through the supply chain for reuse or repair.
If everything runs smoothly for your customers, they’ll keep coming back; if things are lost, damaged, or delayed, it will be harder to persuade them to return and you may lose them to competitors.
This means a reliable, watertight supply chain should be a top priority when implementing a circular economy. Before you launch any new services, answering the below key questions should be a good guide:
- What movement of goods will these new services require?
- Do I have enough driver capacity to deliver the service as promised?
- Will demand for these services increase over time, and how do should I plan to match that?
- What sort of training do our drivers and supply chain operators need to receive to get used to new ways of working?
5. Do your current systems embrace a circular economy model?
Attempting to implement a circular economy with a legacy IT structure will not give you the results you want. It, therefore, may be a good idea to conduct a thorough review of your current IT systems. Your workforce will need to make fundamental changes to how they work when you implement a circular economy. Consider an ERP system that can deal with the demand that implementing a new host of services would generate and provide the level of functionality you would need for a circular economy to be feasible.
6. Share the changes you are making with external stakeholders
A circular economy model generates extra revenue and can help you reduce costs. However, another advantage is that it attracts environmentally conscious consumers. More and more companies are adopting recyclable plastic packaging for online deliveries. However, the circular economy has not moved into the mass adoption phase yet. So, if you choose to implement a circular economy, you are ahead of the curve. It’s a major selling point for you, so make it central to the public perception of who you are and what you do as an organisation.
It’s important to remember, that reducing our harmful environmental impact doesn’t necessarily mean a loss of profits, but rather a restructuring of our business vision and goals to incorporate the principles of a circular economy.
For manufacturers, a move to the circular economy should include research into understanding flexible remanufacturing or how reverse logistics can be harnessed to increase productivity and active disassembly for efficient material recovery. The need for investment in a circular economy requires prioritising long-term goals. Overcoming knowledge and cost barriers can open the doors for manufacturing, to achieve a more innovative and sustainable future – one that is developed to suit the future low-carbon, low-waste economy.
Check our guide ‘How the circular economy can transform manufacturing’ to discover how manufacturers, distributors and wholesalers can unlock the opportunities available from the circular economy.