A large proportion of old or broken cellphones go into a drawer and stay there, which illustrates the take-make-waste paradigm of traditional manufacturing. Everyone recognizes this isn’t sustainable. Resources are finite and should be preserved and reused rather than discarded and sent to a landfill.
This is what’s driving movement towards a circular economy. This blog explores the meaning of a circular economy in manufacturing. After explaining what the expression means, we set out the main circularity principles before proposing implementation strategies, reviewing benefits and identifying potential challenges and solutions.
Principles of a circular economy
The concept underpinning circularity is to eliminate waste and avoid extraction of new resources for raw materials. This is expressed in four principles:
- Design out waste: The best way of eliminating waste is to design in a way that uses the least amount of raw material. This implies a focus on eliminating packaging and designing products for long life, easy repair, refurbishment and eventually, recycling.
- Use products longer: Repairing, refurbishing and reusing all extend product life and reduce raw material consumption. Examples of this are repurposing EV batteries for domestic energy storage, the Patagonia clothing company’s return and repair program and thrift shops.
- Recycle: Many materials, such as glass, paper and metal alloys, already get recycled. For some, such as glass and aluminum, recycling is less expensive than using virgin material. For truly circular production, all products should be recycled when they reach the end of their lives.
- Recover: This refers to two ideas — obtaining energy from otherwise waste material and restoring natural resources like rivers and arable land. While a last resort, under the right conditions many materials can be burned or otherwise treated to obtain energy, usually heat. Natural resource restoration helps reduce fertilizer use while raising crop yields.
Benefits of a circular economy in manufacturing
For some materials, such as aluminum, there are clear economic benefits to recycling. (It takes far less energy to melt aluminum than to smelt bauxite, the raw material.) More generally though, beyond the logic of not wasting finite resources, the benefits aren’t always obvious. Here are the top four benefits of circular manufacturing:
- Economic advantages: Consuming less material per unit of production is an immediate cost savings. For some materials recycling already offers cost benefits, and for others, savings will arise as volumes grow. Also, consider that repair, refurbishment and reuse themselves present new business opportunities for entrepreneurs. (For evidence, look to the startups working on EV battery recycling.)
- Resource efficiency: Optimizing resource use in manufacturing results in more sustainable production processes. It also reduces consumption, which improves long-term resource availability. For example, moving away from solvent cleaning systems reduces the volume of waste going for disposal (which is becoming increasingly expensive).
- Environmental sustainability: Lower consumption reduces carbon emissions associated with production of those resources. There’s also less waste going to landfill, and improved conservation of natural resources such as water, timber, minerals, metals and oil.
- Competitive advantage: Adopting circular practices may become mandatory to comply with regulations, but a more proactive stance enhances brand reputation (look at the success of Patagonia as an example) and helps meet growing consumer demand for more sustainable products.
Key strategies for implementing a circular economy
Once a business can answer the question, “What is a circular economy?” it needs to begin moving in that direction. This means addressing product design, resource consumption and the supply chain, as well as seeking opportunities to re-imagine how manufacturing can meet consumer needs.
Product design and innovation
Design products that will last and are repairable. (For example, use screws rather than adhesives.) Consider how they will be recycled. Seek ways to minimize packaging and switch to materials that can be easily recycled.
Resource recovery and recycling
Most factories have multiple waste streams. Explore ways of incorporating these materials into other products (or assisting entrepreneurs who want to do so). If the waste materials can’t be reused or repurposed, look for ways to recover the valuable materials.
Sustainable supply chain management
Addressing material consumption within the factory is important, but what about the processes used to manufacture purchased materials? Similar to addressing Scope 2 and Scope 3 greenhouse gas emissions (emissions resulting from the energy consumed, and from upstream and downstream activities), sustainability requires action throughout the supply chain.
Business models focusing on product-as-a-service
Manufacturers lose control over the product once it is delivered to the customer. Consider moving to business models in which the manufacturer retains ownership of products and leases them, as Rolls-Royce is doing with some aircraft engines. This ensures products are returned at end-of-life for recycling or remanufacturing.
Challenges and solutions
Five barriers to circularity are:
- Cost
- Lack of technological solutions
- Absence of refurbishment/repurposing/recycling infrastructure
- Fear of being placed at a competitive disadvantage
- Resistance to change
Many businesses want to do the “right thing”, and be seen as doing so, but are concerned it will impact profitability, especially if competitors (who may be overseas) don’t take the same path. In parallel, entrepreneurs see opportunities but can struggle to finance R&D activities with uncertain returns.
Some manufacturers are developing their own technologies and solutions for building a circular economy, but many require external support. This should comprise a mix of government incentives, industry collaboration and education/training programs to raise understanding of the opportunities circular manufacturing presents.
Role of technology and innovation
Particularly for refurbishment and reuse, solutions are lacking. Innovation is needed in two areas: tools for optimizing resource use and improving recycling processes, and development of parts and materials that are easier to recycle and reuse.
In terms of tools, the IoT and blockchain offer ways of tracking material consumption and ensuring “pirate” materials from unsustainable sources are not introduced into the supply chain. In parallel, recycling efficiencies will almost certainly improve with the aid of AI tools that can identify and guide recovery of high value materials.
On the materials front, the opportunity is to find and/or develop replacements for materials that currently present recycling or reuse challenges. Composites and plastics stand out as two examples.
Policy and regulatory support
The European Union is in the vanguard of efforts to create a circular economy in manufacturing with legislation and regulations addressing Extended Producer Responsibility (EPR) and waste reduction. (EPR is where manufacturers are required to consider the entire lifecycle of the things they make.)
In North America consumer pressure is the primary driver. Further afield, understanding of the need for and benefits of circular manufacturing appears low.
One tool having an effect is the ISO 14001 standard for environmental management. Businesses choosing to be certified to this standard have committed to measuring and reducing their environmental impact. Elsewhere, a plethora of sustainable manufacturing practice awards and incentives exist to encourage moves towards circularity.
Building the future with circular manufacturing
As manufacturers become more aware of their environmental responsibilities, and the related business opportunities, they spend more time measuring and attempting to reduce their impact. As a leader in industrial maintenance, ATS helps businesses to improve manufacturing operational efficiency and reduce waste. Contact us to learn more.
