Do you know that climate change is ranked as the second most important global worry – according to research conducted by GlobeScan?
The reason behind the climate concerns is our “linear approach” economy, where businesses harvest the earth’s natural resources and create and sell them. And then, these products are used and thrown away by the consumers.
Here, the circular economy comes into play.
What is a circular economy?
It is a solution framework to manage the global challenges, including waste and pollution, climate change, and loss of diversity. This resilient system decouples economic activity from the consumption of natural resources. It encourages the transition to renewable materials and energy while maintaining their value and minimizing the environmental impact.
Currently, over 90% of the materials are not recycled and end up in landfills. And circular supply chain management can help in reducing this percentage in a meaningful manner. Moreover, it has all the potential to reduce all the unnecessary pressure on the environment, encourage innovation, and create a multi-trillion dollar economy.
Why is the circular economy easier said than done?
The path to a circular economy is challenging even for the most sustainable companies. According to Gartner, the specific challenges:
● Return of ownership of used products: The companies need to understand the usage of products and initiate a new supply chain model when products are returned to manufacturers.
● Residual value of end-of-life products: The products should be relevant and worth for the business while being returned to manufacturers.
● Preparing a compelling case for stakeholders: The organizations need to understand the quantity, quality, and intrinsic value of returned materials to present the case to stakeholders.
● Product matter complexity: The reduced complexity of returned products can reduce the efforts and cost of reprocessing.
How can digital technologies boost circular economies?
In times of the increasing proliferation of digital technologies, it is difficult to imagine a circular economy without digital technologies. Here are some digital technologies that can be used:
● Internet of Things (IoT): It helps in the better collection, cooperation, interaction, and exchange of data across devices and people.
● Cloud technology: This architecture enables convenient on-demand network access to shared servers and networks.
● Big data: It improves the management of information assets by variety, velocity, and volume to transform the data into value.
● Blockchain and cybersecurity: The policies, technologies, and guidelines help protect the cyber environment and allow availability, integrity, and confidentiality
● Augmented reality: It provides an interactive user experience by simulating a sense of reality in sight, hearing, or tactile sense.
● Autonomous robots: Robots help operate the operational processes autonomously and interact with people while leveraging autonomous decision-making.
● Additive manufacturing: The production can be performed from CAD models. It also offers the production of parts with high-end geometrical and material complexity.
How can digitization promote circular supply-chain management?
1. Data-driven and sustainable decisions: Digital technologies enable the business to monitor every phase of the product while promoting data-driven supply chain management. It gets easier to capture, store, and analyze the product consumption patterns that help businesses make better decisions. If the businesses have proper insights about the product, they can determine the delivery efficiency in real-time. For example, a leading elevator manufacturer, Thyssenkrupp, has installed a predictive maintenance system to collect the health data of the system, components, and performance. It helps the organization to provide maximum uptime of the elevators, extended product lifespans, and better service.
2. Improved value across entire supply chains: While most businesses focus on the connection of data and devices across the customers, digitization can help businesses unlock isolated partners, parts, and consumers across the entire value chain. For example, the manufacturer can check the inventory and stocking to validate the availability of specific raw materials. As a result, it helps in achieving better efficiency, creating better value-chain integrations, reducing waste and emissions in the process, and assisting in transitioning to a circular economy approach.
3. More reliability and security: Digital technologies ensure better efficiency, speed, visibility, and control. However, untrustworthy APIs can disrupt the value chain processes of the organization. For the same reason, taking necessary measures while utilizing APIs in supply chain processes is essential.
Get started with circular supply chain management today
While the transition to a circular economy will not be easy, it is undoubtedly rewarding for people, businesses, and the environment in the long run. Even the customers are looking for businesses that provide excellent service and sustainable values. Digitization is the one-stop solution to encourage sustainability and a circular economy and reap the rewards of customer relationships and loyalty. The next-gen array of supply chain solutions can empower businesses to streamline an efficient digital supply chain. So don’t hesitate to take your first step toward the circular economy. Get in touch with us for a free consultation with our supply chain management experts today.
