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SUSTAINABLE MANUFACTURING Circular economy – A revolution in the orbit of sustainability

May 20, 2021

What is the common thread tying companies like Hitachi, Jaguar Land Rover, Dassault Systèmes, Tata, etc? The execution of a circular economy. Now, what exactly is circular economy? How does it affect the world? How will it affect India specifically? How can India work towards creating a circular ecosystem? The Viewpoint offers answers to these questions and touches upon the nitty-gritty of a circular economy, the benefits of manufacturing adopting it and how companies that haven’t adapted to it can work towards establishing the circular business model.

Circularity promotes resource frugality while driving business innovation - Venkat Garimella, Vice President – Strategy & Alliances, CSR & EE, Schneider Electric India

Defining circular economy

The linear economy model of take-make-dispose is a wasteful, extractive industrial one. Conversely, circular economy redefines growth by avoiding waste and reusing, remanufacturing, and recycling. It also uses renewable energy and avoids toxic chemicals, helping natural systems regenerate.

The Circular Economy (CE) shuns the end-of-life concept, adopting a restorative or regenerative design. Therefore, products are made to last long by using quality materials and optimising for disassembly and reuse cycles, making it easier to manage and transform/renew these goods. The CE model is differentiated by its closed loop product cycles, unlike the linear one based on disposing or recycling items. The latter wastes immense amounts of embedded energy and labour. The goal of CE lies in preserving and enhancing natural capital via the controlled use of finite stocks and by balancing the flow of renewable resources.

As an organisation, Schneider Electric has been a corporate pioneer in the battle against environmental degradation and a vocal hero for circular and sustainable industry business models for more than fifteen years. As circularity is at the core of Schneider Electric’s business strategy, it has led to our involvement with UN’s Sustainable Development Goals since their inception. We are a member of the Ellen MacArthur Foundation Circular Economy (CE100) programme and have co-created a circular economy e-learning initiative, undertaken by around 4500 Schneider Electric employees so far. By 2025, we aim to have 100% of our primary and secondary packaging free from single-use plastic and with recycled cardboard, 200 of our sites to be zero-waste sites, and 420,000 metric tonnes of avoided primary resource consumption through our ‘take-back at end-of-use’ programme.

Benefits for manufacturing & India

Circularity promotes resource frugality to protect the planet while driving business model innovation. Manufacturing industries can advance their goals and action plans with regards to CE and have minimal environmental harm while becoming more cost-competitive, through reduced use of raw materials, reusing recycled material, repairing by maintenance and modernisation services, and recycling via end-of-life product services. A McKinsey report notes that cheaper production and easy disassembling and reusing of goods can ensure higher GDP growth. CE can result in up to 70% of material savings. The global growth in population and the rise in middle-class cohorts could spike the demand for natural resources. But CE’s lower material needs can help eliminate recycling and landfills via its focus on ensuring that material cycles last longer while avoiding higher pollution through constant extraction of minerals and materials.

Having said that, at Schneider Electric, our approach to circular economy is a concerted move away from the wasteful linear system of ‘extract, manufacture, dispose’ that is demonstrably damaging to the planet and climate. All new products are eco-designed, which means they are created, to be easily repaired, upgraded, and finally dismantled at end-of-life. Our green premium products come with digital Product Environmental Profiles (PEP), that give customers straightforward information on a product's carbon footprint and environmental impact, and detailed End-of-Life Instructions (EoLI) maximise products' circularity after their ‘first life’. The products also comply with global standards on minimal use of hazardous and chemical substances (RoHS and REACH). By 2025, we’re committed to have 80% of product revenue coming from Green Premium products.

One of our key circularity offers for the manufacturing set up is the retrofit solution, ECOFIT™ that facilitates equipment upgrades by replacing only certain key components, rather than replacing a whole system. In addition to extending the equipment’s useful life at a fraction of the cost of outright replacement, these upgrades also typically boost functionality, add communication capabilities, and enable networking, maintaining — or even increasing— utility for years to come.

The opportunities, particularly in India, could occur through new jobs created via the rise in recycling and repairing businesses. Finally, novel opportunities and niche businesses could increase through innovative practices and new business models.

How to get started on circularity

Companies should focus on interests and investments that support environmental and economic sustainability. They can begin by shifting to more recycled or reusable inputs that entail a greater share in labour costs, benefitting workers and ascertaining companies are less dependent on raw materials with more price volatility. This approach will also safeguard companies from geopolitical and supply chain problems that have impacted them recently.

Entrepreneurs must also accept that upfront investments may be required with longer timelines for returns because the demand for circular products is currently less. Companies may also need to invest in the skilling of qualified ICT (information and communications technology) professionals since such personnel may be unavailable in adequate numbers. Also, entrepreneurs and institutions should shift from short-term to long-term value creation goals since that’s what CE is all about. Significantly, the World Economic Forum states that CE, backed by new regulations and organisation of labour markets, can generate greater local employment, both entry-level and semi-skilled.

Transitioning to circular economy requires a holistic approach in operations - Akanksha Sharma, Global Head, Social Impact & Sustainability, Sterlite Technologies Ltd (STL)

Defining circular economy

Unlike the more widely used ‘linear’ or ‘source-produce-waste’ models, a circular economy looks to decouple economic activities from utilisation of limited resources. It involves ingeniously removing waste out of the entire system through recycling, reuse or other methods. Basically, using waste as a resource in alternative organic or industrial cycles.

Benefits to manufacturing

In a manufacturing setup in particular, circularity is beneficial not just in terms of efficient use of materials, but also in terms of fiscal and environmental benefits that span across the value chain – ZeroWaste to Landfill for instance. At STL, this endeavour has helped us recycle, reuse and repurpose 93% of the waste we generated in FY20-21 ensuring it is diverted from landfills and can be used by other industries as a resource. So also, for water which is of significant importance considering water scarcity is no longer just a local or national issue, but a global one. By recycling water, we’ve avoided 130,000+ cubic meters of freshwater intake in FY20-21.

How to get started on circularity

In a country like India which is the highest waste generator in the world, the opportunities are infinite. However, transitioning to a circular economy requires a holistic approach in overall operations to integrate business sustainability for waste optimisation, green supply chain development, keeping the environment and community at the very centre.

Companies must define value for the organisation & the ecosystem impacted - Diego Groiso, MD, Let's Improve Ltd, Principal Consultant - Associate, Radtac

Understanding circular economy

The Ellen MacArthur Foundation defines the circular economy as a framework for an economy that is restorative and regenerative by design decoupling economic activity from the consumption of finite resources and designing waste out of the system.

Benefits for manufacturing ecosystem

Implementing a circular economy initiative can reduce costs, create brand value, and increase employee engagement, giving purpose to their work. Manufacturing companies can apply the same Lean Manufacturing principles they are familiar with to circular economy initiatives, just at a larger scale. The Ecosystem Scale.

How to get started on circularity

First, let us define value, not just for the organisation but for the whole ecosystem of impacted organisations during the whole lifecycle of the materials. Move away from a linear flow to a circular cycle of value and materials. Understand the whole materials cycle, all the process steps and everyone who gets impacted. Then continuously remove impediments to minimise waste. Design products to be pulled by the customers when they are ready rather than pushing them into the market. And finally, do not design the solution upfront. Iterate and experiment continuously using small batches.

Circular economy helps sustain national economy & resources - Sunil Malik, Managing Director, RACE (Recycling and Circular Economy)

Understanding circular economy

The concept of circular economy is like that of ‘water-clouds-water’. A circular economy represents an end-to-end process of uses and reuses while ensuring nothing is wasted. Imagine the dinosaur was drinking the same water that we use today. It saves foreign exchange and helps the national economy to sustain for long and sustains resources for development activities while giving the earth a chance to save itself.

Benefits and how to get started

Collecting, recycling, reusing and recreation of waste are essential components of a circular economy. In such cases, producers, brand owners, manufacturers and importers are responsible for making the recycling of products sustainable and viable to achieve a circular economy concept. It begins from the mindset of attaining zero wastage, reduce carbon footprint & recreate.

Focus on better design, better use of data and better materials - Rajeev Mittal, Regional Director - India & SAARC, Autodesk India

Understanding circular economy & impact

A circular economy is a closed-loop system that doesn’t generate waste. In a linear economy – which is what we largely have today – you extract resources, make something, use it, and then throw it away. By contrast, the goal in a circular economy is to use a product at its highest value for as long as possible – and that can mean product itself or material and components it’s made of.

Recycling is just one part of the circular process: It starts with product design but also includes the business model and the infrastructure that supports that product, from the supply chain to waste management.

The circular economy truly embraces the idea of upcycling and making sure that the materials that we put in our products can be upcycled and used in a new product. Take the plastic water bottle as an example. There is a lot of awareness about putting the empty bottle in the recycling bin so that the plastic can be processed and used again. The circular economy takes that further. Accomplished through a variety of processes and advanced by new technologies like 3D Printing, products as small as a coffee maker and as large as a medical imaging machine can now be upgraded. Rather than recycling or merely refurbishing the item to its original state, the process also enhances the product to make it comport with the latest technology.

Benefits for manufacturing & opportunities

Manufacturing companies play an important role in providing improved living standards, but at the same time, they are linked to unsustainable production and consumption. With its closed-loop system, the circular economy can help increase profitability while reducing dependence on natural resources.

Globally, approximately 19% of global greenhouse gas emissions come from the manufacturing industry, and by 2050 the growth in population and demand for consumer goods will require at least twice the energy and materials currently used.

India is a rapidly developing nation that is also on the path to building a resilient and low-carbon economy. Positioned to be the manufacturing hub for the world, a circular approach in its manufacturing systems will be immensely beneficial – creating a US$624 billion annual value in 2050, an amount equivalent to 30% of the country’s current GDP. This will also reduce greenhouse gas emissions by a whopping 44% in 2050 compared with the current development plan.

How to get started

The application of Circular Business Models (CBMs)—those that consider the entire lifecycle of a product — is key to realising the circular economy. In manufacturing, circularity begins with design, and digital technologies such as AI and machine learning can enable organisations to transition away from linear production methods, towards a model that allow goods to be designed for extended use from the outset.

When working with customers to achieve circularity, we focus on three main areas:

  • Better design – Design is arguably one of the most important elements of the circular economy – concepts like disassembly or recyclability need to be integrated at the beginning of the product development cycle – i.e., at the design stage. There are several design strategies that help, from making a design modular with easy disassembly, to being more repairable and also more durable. Digital solutions such as generative design, a technology exclusively available in Autodesk Fusion 360, help with everything from reducing weight, to creating standardised components, designing for durability, and designing for easy disassembly at end of use.

  • Better use of data - Adopting a circular approach can only succeed if different stakeholders are connected throughout the lifecycle of a product and share information with one another. Cloud-based tools such as Fusion 360 can help connect workflows between design and manufacturing, ensuring less waste in production.

  • Better materials - A circular economy depends on selecting better materials – such as recycled material. Technology such as generative design enables users to explore recyclable materials for their designs and help gauge how these materials impact product performances.

Beyond the obvious of being better for the environment, the benefits of circular design are clear. It helps reduce costs in both design and production, meaning fewer materials are needed and companies can benefit from a simplified supply chain with fewer spare parts in inventory. With 10 billion people soon to be living on the planet with finite resources, designing for a circular economy is the only way forward.

Circular economy provides 'business opportunity' worth $1000 billion per year - Ranjeet Koul, VP & Country Manager, APAC MEA, Aeris Communications

Defining circular economy

In a new paradigm that prioritises the need to take a comprehensive view of products and processes, the circular economy is an economical approach aimed at eliminating waste and the continuous use of resources. The growing global popularity of the circular economy can also be attributed to the 'business opportunity' it provides, which is currently estimated to be worth $1000 billion per year. A circular economy path taken by India could result in significant annual benefits, as well as substantial reductions in congestion and pollution, which would have a snowball effect on the economy.

Benefits for manufacturing & opportunities

Growing environmental awareness, environmental legislation, and the need for social responsibility have prompted manufacturers to seek new ways to conduct business. There is growing agreement that the only way forward for sustainable production and development is to transition from a linear model to a circular economy, thereby contributing to a more environmentally responsible and socially equitable society.

India is constructing new infrastructure to meet its growing mobility needs and today's decisions will determine the mobility system's mid- to long-term development. A circular economy development path for mobility and vehicle manufacturing could create annual benefits of ₹31 lakh crore in 2050, compared with the current development scenario. Using circular economy principles could also result in a highly innovative and efficient mobility system with fewer negative externalities. The government has been actively developing policies and promoting projects to move the country closer to a circular economy. In this regard, it has already notified several rules, including the plastic waste management rules, e-waste management rules, construction and demolition waste management rules, metals recycling policy, etc.

How to get on the journey?

The circular economy has come a long way in the last decade. Numerous leading organisations worldwide have successfully adopted circular business models and leveraged disruptive technologies to demonstrate the business case for circularity. Investing in the circular economy can help to accelerate the implementation of sustainable solutions. The following industries are critical in the transition to a circular economy, and businesses in these industries can also improve their processes to make a difference.

  • Infrastructure: Offer green renovation and building upgrades; improve building material recycling infrastructure

  • Plastics: Offer innovative alternatives and recycled packaging, as well as improve the collection, sorting, and recycling infrastructure

  • Agriculture: Assist farmers in transitioning to regenerative agriculture; encourage the collection and redistribution of food surplus and by-products

Start with thinking of the environmental and societal impact of operations - Ramesh Ramadurai, Managing Director, 3M India

Defining circular economy

For more than 150 years, our economy has been linear. A circular economy looks beyond the consumption model of taking raw materials and converting them into finished goods while creating waste into the environment. A circular economy is a framework that aims to rethink growth strategies which has far reaching impact on environment and society. It moves from a consumption model to designing for reducing waste, recycling and ensuring that the waste doesn’t go back into the environment but is reused and restored.

At 3M circularity looks at the entire lifecycle of a product, moving to more recycled and renewable materials in product and packaging design. 3M uses the power of science to design for solutions for the circular economy. The Company made a Sustainability Value Commitment which commits to embed sustainability into every product commercialised ensuring that it is driving impact for the greater good. Commitments include recyclability, using recycled or renewable materials, opportunities for reuse at the end of a product’s lifespan and more.

Benefits to manufacturing & opportunities

Manufacturing continues to be the centre of focus in embracing circular economy initiatives as it reckons to drive zero waste entitlement, maximising utilisation of all resources across each of its processes to minimise impacts to the ecosystem by adapting sustainable product designs through economically sustainable manufacturing processes delivering continuous beneficial advances to support a greener environment, protecting planet life for a more sustainable future.

At 3M, we look at each manufacturing process steps through the lens of circular approach to minimise water usage & waste generation, reduce landfill, minimise environmental impacts & air pollution by introducing efficient, automated & connected processes while conserving energy and natural resources.

Getting on the journey

Businesses that want to be more sustainable need to start thinking of the environmental and societal impact of operations right through their value chain. Analysing what the company is already doing is a first step, for example focus on recycling efforts and how they can be improved. Second, review the materials that are being used and make sure that the impact of each material is maximised, and the least amount of waste is being created. Lastly, partnerships with other businesses, whether your customers, non-profits, institutions for collaboration can create the biggest environmental impact.

Leveraging digitally-enabled platforms usher an inclusive, sustainable economy faster - Karthik Natarajan, Executive Director & COO, Cyient

Understanding circular economy

In principle, circular economy practices ensure that non-renewable items cycle through closed product loops at their highest utility for as long as possible. Taking a circular approach in business and industry extends to saving a significant amount of time, raw material, and money. At the same time, it opens up new opportunities to innovate, diversify, and create new revenue streams. And digital technologies are driving this shift toward sustainability.

The concept of a circular economy is not new. It is woven into the sustainability measures and practices that businesses have been undertaking as they move away from the linear ‘take-make-waste’ approach to growth. Restorative and regenerative by design, circularity emphasises on dissociating growth from the use of finite resources. This, by no means, implies an increase in costs. The premise of building a circular business is based on moving toward sustainability without compromising profitability.

Opportunities for manufacturing & India

As we move towards connected factories or Industry 4.0, companies can easily monitor, optimise, and maximise their operations with IoT and sensor technology. Sensors and connected systems empower decision-makers with the right data sets and actionable insights on the supply chain, inventory, rework, scrap reduction, energy reduction and waste management/disposal to enhance competitiveness across the entire value chain, leading to higher profits and a much lower carbon footprint – a start to decarbonising the world. An example of this is in renewable energy use for manufacturing plants. Power plants today can use of analytics and AI to seamlessly switch between renewable and non-renewable sources of energy depending on the demand they are facing, focusing on utilising renewable energy first.

There are two kinds of opportunities, in a country like India –

  • Greenfield – Design for circularity can be adopted at the beginning of the design process. Lifespans of the product as well as individual parts can be accounted for and incorporated into the design. These parts would have a natural post life state that is productive and non-wasteful.

  • Brownfield intervention – Obsolescence management – For existing products, obsolescence management is a circular process. We can evaluate parts to see how to extend the life of the product through parts replacement, redesign, and better maintenance, thereby minimising waste and cost. New age technologies, such as Artificial Intelligence, data analytics, Machine Learning can be leveraged to cut down lot of energy consumption, factory non-productive areas in the form of waste reduction, rework reduction, quality improvement.

Getting started on circularity

The most important step is to adopt a mindset of change and willingness to commit to specific ESG/ SDG goals. This will act as motivation and direction for organisations to move to a more circular way of working. While technology will not necessarily fix the ecological and climate crisis the world faces today, it will undoubtedly act as an enabler to minimise negative impact, maximise resource utilisation, and usher in a truly inclusive, sustainable economy faster. Leveraging digitally enabled platforms to co-create in ways that reduce costs, drive innovation, and embrace environmental objectives.

Circular economy should be considered a tool to build financial control - Chandan Trehan, Lead Strategist and Business Development – Blockchain, Bosch Engineering and Business Solutions

Defining circular economy

A circular economy is a closed-loop system that aims at minimising waste and maximising reusability. It is different from the recycling initiatives by the companies because recycling requires waste, and waste is the most fundamental thing that a circular economy aims to reduce or eliminate.

Benefits for India & manufacturing

Indian manufacturing companies can look at the circular economy as an opportunity to collaborate and create circular supply chains with an incentivisation model that promotes repair, reuse and refurbishing of products. This would reduce supply chain volatility and increase supply chain transparency, which can be leveraged to achieve low manufacturing costs and increased market share especially for products with high demand elasticity.

How to get started

Firstly, companies that want to adopt a circular economy should start with one product or one region, learn and grow from there to expand it for all lines of the product. Secondly, companies should approach it collaboratively, rather than trying to solve the entire puzzle by themselves. Especially, ancillary industries (T1/T2 suppliers) should come together with the OEMs and other supply chain stakeholders to create a network for product life and end-of-life management. Thirdly, technologies like blockchain enable creation of a collaborative trusted network with a proper incentivisation mechanism to make products a part of the circular economy. Finally, circular economy should be considered as a tool to build financial control for arresting cost escalations and thereby helping companies in increasing their market share and not just a means to achieve sustainability goals.

Circular economy provides opportunities to build a sustainable society - Satyanarayana P, Director - VI/LFP/RS/DT, Epson India

Understanding Circular Economy (CE)

A circular economy is a systemic approach to economic development designed to benefit businesses, society, and the environment. This aims at eliminating waste and continual use of resource by gradually decoupling economic activities from the consumption of finite resources. The material at the end of its use returns to the cycle with the same quality, which might not always apply in the case of recycling.

Opportunities for manufacturing

Its benefits to the manufacturing companies include reduced strain on the environment, improved efficiency, greater public appeal, more attractive to shareholders and investors, better employee retention, and reduced risk of losing market share to fast-moving challengers.

How to get started on CE

India faces challenges of resource and energy consumption and a circular economy model provides vast opportunities for companies in building a sustainable society by developing recyclability and sustainable resources. Companies will aim to reduce waste, provide solutions for the collection and treatment of e-waste, remanufacture the materials and add value to the supply chain. In order to contribute to the circular economy companies like us are working towards reducing CO2 emissions, reducing water resources in our production processes and committing to transition to 100% renewable electricity. We also encourage the efficient use of limited resources by making products that consumes less power, require less replacement parts, are compact and also by collecting and recycling the products.

Image Gallery

  • Venkat Garimella

    Vice President – Strategy & Alliances, CSR & EE

    Schneider Electric India

  • Akanksha Sharma

    Global Head, Social Impact & Sustainability

    Sterlite Technologies Ltd (STL)

  • Diego Groiso

    MD, Let's Improve Ltd

    Principal Consultant - Associate, Radtac

  • Sunil Malik

    Managing Director

    RACE (Recycling and Circular Economy)

  • Rajeev Mittal

    Regional Director - India & SAARC

    Autodesk India

  • Ranjeet Koul

    VP & Country Manager, APAC MEA

    Aeris Communications

  • Ramesh Ramadurai

    Managing Director

    3M India

  • Karthik Natarajan

    Executive Director & COO

    Cyient

  • Chandan Trehan

    Lead Strategist and Business Development – Blockchain

    Bosch Engineering and Business Solutions

  • Satyanarayana P

    Director - VI/LFP/RS/DT

    Epson India

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