The fast growing concept of ‘Circular Economy’ also referred to as ‘Circularity’ in general, is gaining prominence and accelerating our transition towards a sustainable green future. This is paving the way for a regenerative and smarter model of circular economy, which thrives on the concept of reduction, reuse, and recycle.
Circular economy makes it possible to boost the profitability of industries and also reduces their dependence on natural resources. Circularity is steadily moving from theory to practicality, thanks to the emergence of various digital technologies such as analytics, use of sensors and Internet of Things (IoT).
However, organizations and industries need to embrace a full circle approach to waste elimination in supply chains to realize the actual potential of Circularity.
This means supply chains should be circular in nature too. Circular supply chains enhance the opportunity to eliminate waste and reduce the carbon footprint through proper reuse and recycle, making a positive impact on sustainability as well as the environment. A research by Accenture propounds that by 2030, the growth of circular economy will lead to unlocking an amount of $4.5 trillion of economic growth.
Strategic approaches using digital technology implemented by few companies has changed the way of looking at circular supply chains, improving both the product life and the waste-to-value potentiality. Let us look at some such examples.
The best example is that of the world’s largest Fortune 100 corporation, Caterpillar Inc., an expert manufacturer of construction equipment. Caterpillar focuses on optimizing its resources and maximizing the life cycle value of its products, thereby successfully minimizing its cost of ownership for its customers. The company has various remanufacturing and rebuild programs aimed at sustainable business practices under circular economy.
Next, Schneider Electric, the French giant, recently won the Circular Economy Multinational Award. The company specializing in automation and energy management has implemented take-back schemes in its supply chain, and uses recycled materials to manufacture new products. Schneider Electric utilizes 12% of its revenues towards circularity activities and aims to save approximately 100,000 metric tons of primary resources during the period 2018-2020.
Maersk, the world’s largest container shipping conglomerate has been successful in creating digital twins of its latest container ships. The digital twins provide a clear picture of the parts as well as materials that can be reused, recycled, or remanufactured. This helps the company in keeping its resources in a circular flow during shipbuilding.
However, barriers still exist and very few organizations or industries have embraced the full circle approach of this economy in their supply chains. The Circularity Gap Report states that our world is only 9% circular. To bridge this gap, four actionable insights were proposed at the annual meeting of the World Economic Forum, in Davos, early this year. Following are the four actions proposed to close the circularity gap –
Circular economy can greatly help in restoring our natural resources. The above-mentioned business cases are a hint towards steps taken in the direction of sustainability; however, there is a need to implement data analysis to the entire value chain, right from the production phase, to the usage of the product, and the end-use of the recycling phase. Only then will all the elements play a vital role towards realizing the true value of Circular Economy.
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