There’s a lot of information out there about the benefits of switching to a circular economy model. But what business owners want to see is how it’s working in practice. Which companies are actually doing, rather than talking? And what positive impact is a circular approach having – both on the crucial bottom line, and on the wider environment and community?
The truth is that adopting a circular approach takes time – particularly for those businesses that have long-established supply chain procedures. It requires clear and focused leadership from the very top. It needs the whole business to be aligned towards the same goals. Suppliers need to understand the change in emphasis and be supported to take a similar approach.
Be serious about getting your circular supply chain right
Businesses currently using a circular approach might be on their second or third attempt to get it right. An example in the Harvard Business Review is Interface, the US-based flooring company. With a clear goal of being ‘the first sustainable corporation in the world’, it designed and implemented what it thought would be the right approach. However, customer feedback and ongoing market research showed that this first idea wasn’t the right one. The business pivoted to a new approach which reduced its carbon footprint by 69%.
What this example shows is that, while there is an overarching model for a circular supply chain, there’s no one-size-fits-all solution. Each business needs to look at its own products or services, analyse its supply chain and look for ways to adopt a more sustainable approach. The journey to a circular economy is not a straight line. Businesses must look at other examples of what’s worked – and what hasn’t – to help them design and test a strategy that everyone can get behind.
Reimagining Renault
Take French car OEM, Renault which, in late 2020, established its ‘Re-factory’ – Europe’s first dedicated circular economy factory for vehicles and mobility.
Renault wanted to build a sustainable model to extend the life of vehicles and vehicle components. This would help it reduce the use of virgin materials, using technologies like 3D printing to reverse engineer older parts, thereby keeping its cars on the road for longer.
With a focus on remanufacturing parts rather than building new cars, Renault has increased its workforce – training and upskilling them to meet demand. These workers are also local to the company’s factory in France, as there’s no need to outsource or add to transportation costs.
According to a case study on the company’s sustainability efforts on the Ellen MacArthur Foundation website, this remanufacturing approach has resulted in the following savings at the factory:
- 80% less energy use
- 88% less water use
- 92% reduction in chemical products
- 70% less overall waste
This approach works because Renault took the time to understand what would drive a circular model for its business, and because it invested in the technology and skills it needed to achieve its goal.
The role of innovation in circular supply chain change
As with all change, innovation sits at the heart of the move to a circular approach. It really is the centre point of the switch you want to make. Embracing innovative thinking, and understanding how technology can help you gain better insights and make more informed decisions will drive ambitious plans and give your business the impetus it needs.
There are several approaches to a circular approach – there might be just one approach that works perfectly for your business, or your strategy may involve taking elements of several different ways of working. For example, the global tyre manufacturer, Michelin, has committed to using sustainable materials in its products. To do that, it acquired a business that specialises in manufacturing rubber powder made from tyres that have reached the end of life. At the same time, Michelin has moved some of its business operations to a lease model, rather than a purchase one. This means that the company retains control at the point where tyres reach end of life, making sure they can be collected and reused responsibly.
So, your business may be able to move to a circular approach by:
- Improving innovation and embracing technology.
- Retaining ownership of products and using a lease or subscription service instead of outright purchase.
- Look for alternative materials to virgin raw materials.
- Recover materials from your own products, or from other products.
- Researching how to extend product life and look for new income streams in maintenance and repair.
- Design with reuse and recycling in mind.
Circular from the beginning
Start-up businesses can have a head-start in creating a circular supply chain. Unlike bigger companies, they are not constrained by supply chain agreements or a slow-moving change process. Instead, they can design their businesses from a position of commitment to a circular approach. Often, these businesses are set up to provide a more sustainable alternative to existing offerings, as is the case with Dutch company, DyeCoo.
DyeCoo works in the textiles sector. Across all textile-producing countries, the use of toxic chemicals and large quantities of water mean that the fabric dyeing process causes significant environmental problems. DyeCoo has addressed this problem by using a completely water-free dyeing process, using high-pressure carbon dioxide to dissolve the dye and spread it through the fabric. The carbon dioxide evaporates and is captured, recycled and used again. Because this is a dry process, it uses less energy, less water, takes half the time and costs less. DyeCoo is working with major global brands to bring this circular-driven technology to the textiles market supply chain.
Can you take on the circular supply chain challenge?
It’s time to take the transition to a circular supply chain model seriously. The earth has finite resources and customers – both corporate and individual – have an expectation that the companies they buy from are serious about long-term sustainability.
Of course, this type of change is challenging. Your plans may be constrained by money, staff resource, communication and resistance from some stakeholders. But, as these examples show, committing to taking a more circular approach reduces costs in the long term. It also saves valuable natural resources, boosts your brand reputation and opens up potential new income streams.
To find out more about how our dedicated platform can help your business to transition to a circular approach, contact our team today.
