- On July 27, 2021
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- circular economy, consumer preferences, green manufacturing, manufacturing, Supply Chain, sustainability
The Circular Economy for Manufacturers
The World Economic Forum’s circular economy definition is “an industrial system that is restorative or regenerative by intention and design.” As opposed to the traditional linear model that transforms raw materials into products that are used once and discarded, the circular model closes the loop by bringing products back into the cycle after use so they can be reused, recycled, or repurposed (4).
Developing symbiotic relationships can benefit not just your internal operations, but the entire supply chain. For example, the Kalundborg network consists of 11 public and private partners. By collaborating, and exchanging material, water, and energy streams members increase resilience and economic gains, while meeting ESG goals. Annually, combined benefits from the partners are 100GWh of energy, 635,000 tons of CO2, 3.6 million tons of water, and bottom-line savings of $24 million (1). Shifting from linear to circular business practices enhances sustainability, and results in dramatic cost savings and greater resiliency for partnered manufacturers.
Renewable Energy Partners Can Reduce Cost and Save Power
Business management technologies that allow for bi-directional control and total visibility across all your company operations enable you to identify opportunities to optimize power usage. Circular economy manufacturers can also identify production processes that create additional energy sources as a byproduct and create partnerships to exchange renewable energy with other businesses within the circular economy. Buying and trading energy into the market creates opportunities for increased sustainability and additional revenue streams.
Exchange Byproducts to Reduce Waste
According to the Ocean Conservancy, there are more than 150 million tons of plastic filling the world’s oceans today (2). More and more manufacturers are beginning to incorporate recycled materials into their packaging and products to reduce waste. This results in an eco-friendly business model, increased savings, and a more secure business overall since companies are less reliant on raw materials and natural resources. Packaging costs can also be significantly reduced by utilizing another firm’s waste products to create eco-friendly packaging, resulting in less waste management spending and cheaper packaging.
Create Logistics and Equipment Partnerships to Cut Carbon Emissions and Storage Costs
Upwards of 70% of the products in the United States are transported by truck, and each of those trucks generates CO2 and greenhouse gases (3). Technology that allows circular economy partners to collude on their shipping and logistics schedules can help to significantly decrease carbon emissions and transportation costs. For example, a logistics company that works with two manufacturers within close proximity, who ship products to the same retailer, can offer discounted rates if they schedule their shipments on the same day. This maximizes mileage, labor costs, and shipping container space.
Historically, manufacturing firms have created a culture of cutthroat competition, or look only internally to increase efficiency and sustainability. With issues like climate change and the world’s limited natural resources coming to light, more manufacturers are fostering symbiotic relationships with other firms. The circular economy for manufacturers serves to not only increase overall sustainability, but also decrease costs and help businesses succeed overall.