Circular Economy in Discrete Manufacturing Sector

According to Global Footprint Network, in 2018 the global demand for resources was 1.75 times more than what the earth can sustainably support and by 2030 we will need two Earths to support our consumption needs. With this article, we aim to explore how Circular Economy impacts Discrete Manufacturing Sector and what the future holds for it. Our core focus is on manufacturers who make products with a life of more than 5 years like industrial vehicles, jet engines, automobiles, etc. We have also taken examples from other businesses whose innovations can create a considerable impact on this target sector.

Introduction

While there are various definitions of circular economy, the UN Environmental Assembly defines it as a model in which products and materials are “designed in such a way that they can be reused, remanufactured, recycled or recovered and thus maintained in the economy for as long as possible.”

In circular economy, all materials can be segregated into two categories – biological nutrients and technical nutrients. Biological nutrients are biodegradable materials such as cotton, food, wood, etc. and hence provide nutritional value to the soil. Technical nutrients such as metals, plastics, polymers, etc. are non-biodegradable and one would aim to recover them at the end of life to feed back into the system.

Here, we aim to elaborate on how technology can aid the technical cycle by supporting activities like recycling, repairing, refurbishing, and more. Alongside, we’ll discuss on why adoption of circular economy is crucial in future and how it impacts a business from various perspectives.

Why Circular Economy

According to Capgemini Research Institute (CRI), 67% of German Automotive companies support and promote circular economy. However, the same cannot be said for other geographies and in general, across the manufacturing sector. Unless the supporting business case is developed, adoption could continue to be in certain pockets.

However, more and more corporates are moving their focus towards inclusion of circular economy in their business models. The major reasons include broader benefits indicated below, but are not limited to:

• Gaining mindshare of new age customers and employees
• Push from government regulations
• Financial gains from recovery of materials

Millennials and Gen Z value socially and environmentally responsible brands. With them entering the workforce and contributing significantly to corporate earnings and the economy largely, it becomes imperative for organizations to align with their values.?

Governments around the world have committed to sustainability goals. While some have rolled out incentives to encourage businesses, some others have introduced regulations with a core focus on manufacturing.

Among them is the Dutch government who is targeting to achieve full circular economy by the year 2050. Manufacturing industry is one among the 5 transition agendas with a major focus on cars, tyres, electronic goods, packaging, and batteries. They have introduced tax, economic, and regulatory systems to curb the industry in the right direction.

By retrieving the manufacturing components, circular economy also helps businesses financially. Incorporating systematic changes in the supply chains can allow businesses to execute this retrieval in an optimized manner so that extra logistical expenses cost less than procurement of virgin materials. According to CRI, 32% of the automotive organizations’ supply chain contributes to circular economy, and it is expected to rise to 51% in five years.

Role of Technology in Circular Economy

5R framework is the most popular framework among many other CE frameworks. Today, we can see every section of this framework being enabled or supported by innovative use of emerging technologies in some way or form.

Reduce

We can promote circularity by reducing the amount of waste we produce directly or indirectly through our business activities by either replacing technical nutrients like plastics with more eco-friendly substances or by improvising production processes to reduce wastage of raw material.

BMW is one such company that has taken advantage of 3D printing for their cars that allows them to manufacture complex components such as roof brackets, which are otherwise hard to produce through traditional casting process, with zero material wastage.

Reuse

After following a linear economy for more than a century, many businesses have started to realize that reusing components and materials can not only provide environmental value, but economic value as well. Some have even incorporated industrial symbiosis so that their waste is sold to a manufacturer for whom that waste is raw material.

A Dutch start-up called ‘Excess Materials Exchange’ introduced a B2B digital matchmaking platform for reusing waste materials. They are able to match material, product, or waste stream to a new high-value reuse option by quantifying their financial, environmental, and social impact using data analytics and artificial intelligence. By making use of blockchain in their systems, they safely exchange sensitive data.

Repair

Apart from recovery of materials, another focus of circular economy is prolonging the life of the product to reduce energy wastage to bring materials back in the loop. According to CRI 55% of consumers cite “it is too expensive to repair a product” as a reason for not taking circular actions. To tackle that, businesses need to focus on improving repairability of their products.

For example, Bosch Rexroth is incorporating predictive maintenance into their industrial machines using AI and IoT to allow them to predict and repair the machines before there is a breakage, hence, prolonging the life of the product and reducing the cost of ownership for their customers.

Refurbish

A single component’s failure in a complex machine can make the whole setup stop. Refurbishment allows identifying non-working components and replacing them so that it works like new again. According to CRI, remanufactured vehicle parts can save around 30-50% of the cost while retaining the quality.

A British start-up ‘Circular Computing’ uses advanced robotics and computer vision to inspect laptops for damages, replaces the damages and sells them in the market with a 12-month warranty after Aiken testing and 3-hours stress test.

Recycle

This is considered the last resort through which the materials are brought back into the loop at the end of their lifecycle. This method, in a way, gives a new life to the technical nutrients and makes them ready for a whole new cycle.

Apple has a machine called Daisy that dismantles 200 iPhones in an hour and harvests their technical nutrients effectively. Through 1 ton of iPhones, Apple is able to extract gold and copper equivalent to what they would normally get from 2000 tons of traditionally mined rock. Now, imagine if we could do the same for automobiles, aerospace engines, industrial vehicles, and more for technical nutrients ranging from metals to plastics and glass. Such a technology can save mankind from shortages of technical nutrients like cobalt.

Role of Servitization and Design

Another way to look at circular economy is through servitization of business offerings. Philips uses pay-per-lux model where instead of selling bulbs and tube lights, it sells a subscription and takes care of the maintenance. This enables them to retrieve all the components they use to manufacture their products.

Similarly, the manufacturing sector can gain a lot by servitization of their offerings. Machines will be designed for deriving maximum value for the next cycle of the retrieved technical nutrients. The consumer will care less about the maintenance, so the organizations will be incentivized to build better machines that last longer and require less maintenance. Volvo Construction Equipment is a company that has successfully implemented this model.

80% of a machine’s lifetime environmental impact is determined at the design stage. Thus, organizations need to focus on intelligently designing their products so that they can be repaired, refurbished, reused, and recycled.

Conclusion

Today, use of emerging technologies like Artificial Intelligence and Internet of Things for predictive maintenance is increasingly being adopted by manufacturers to prolong the life of their machines. Some are also exploring digital twin, where technologies like 5G and Mixed Reality further support operational performance of the asset and provide them with real-time data to take swift action, when needed.

Blockchain enables sustainable sourcing of raw material and intelligent manufacturing practices like 3D Printing & Robotics Process Automation can contribute to reduction of raw material wastage. Although these technologies are yet to gain large scale prominence, they provide endless possibilities at every step of the circular economy.

Organizations need to incorporate these practices in their core strategy for maximum impact. To improve their footprint, there is a need to upskill the workforce for understanding how technology can help scale circularity. Upon achieving the synchronization between technology and the workforce, the organizations will see their efforts come to fruition.