Have you ever thought about buying a refurbished smartphone? Do you take clothes in good condition that you no longer wear to the second-hand store or give them away? Do you dispose of the gas cartridge for your water bubbler or swap it for a new one? These questions take us right into the heart of the circular economy. In contrast to the linear economy as we know it, resources are used but not consumed in the circular economy. New business strategies ensure that products, components, and materials remain in the system during and after use, i.e., are shared, leased, reused, repaired, refurbished, and recycled for as long as possible. At the same time, hazardous and environmentally harmful waste is reduced to an absolute minimum. The entire cycle encompasses the development, manufacture, repair, refurbishment, reuse, remanufacturing, and recycling of manufactured goods.
However, the transition to a circular economy is not a wishful thinking process but is supported and demanded by politicians. Consumers are also paying more attention to how “clean” the products they buy are manufactured. The market research company Gartner dares to predict that supply chains will no longer be allowed to produce waste by 2029, as customers and many governments will no longer accept this. To remain competitive, you must change your business model to a circular one and communicate it accordingly.
Due to this necessary change, procurement management is undergoing a significant transformation and can significantly contribute by making the procurement of products and services sustainable.
It all starts with the development of products. The choice of raw materials already determines whether refurbishment, reuse, recycling, etc., is possible at the end of the life cycle. Therefore, Forward-thinking companies use innovative design strategies to minimize harmful materials or raw materials and non-renewable resources. The implementation of this holistic design philosophy requires the cooperation of specialists in the fields of design, development, and procurement management.
Using as little packaging material as possible can already be considered at this stage to avoid waste. The reusability of transport packaging is increasingly becoming the focus of purchasing professionals. Innovative start-ups are developing sustainable solutions and bringing new ideas to the market.
Without the involvement of all partners in the supply chain, from production to the end of the product’s life, the system change cannot succeed. Clear criteria can be defined for partnerships in the circular economy. By working closely with suitable suppliers, it is easier to procure or develop recyclable materials (so-called recyclates). With the help of specialized recyclers, set targets can be achieved more quickly. These measures are particularly relevant to achieving Scope 3 targets, which include emissions for which a company is only indirectly responsible in its value chain. By working together in a collaborative network, underutilized resources can be used, reducing production costs.
Even if it doesn’t sound like it at first, the circular manufacturing of products and components helps reduce costs in the long term. The cost of materials and raw materials is reduced due to repair, reuse, recycling, etc., and longer use. In addition, costs for components and raw materials in high demand and subject to price fluctuations, such as semiconductors and lithium used in the automotive industry, fall.
Unfortunately, these effects will not be felt overnight. The transition to circular business models requires investment and bold business decisions. We are happy to support you.