The shift towards a circular economy is inevitable, and businesses are beginning to prepare for this transformation. With approximately 33% of executives expecting disruption from circularity start-ups, manufacturers are facing essential questions about their operations. The move towards circularity challenges traditional linear models of product creation and disposal, emphasizing accountability and sustainability in the entire product life cycle.
The rise of product-as-a-service and outcome-based revenue models is challenging the concept of product ownership in both B2B and B2C sectors. Companies must find ways to reintroduce products, components, and materials back into the supply chain to innovate and grow. Embracing digitalization across the enterprise is crucial for manufacturing businesses to transform and adapt to new business models quickly and at scale.
A circular business model places demands on the supply chain, emphasizing the ethos of “reduce, reuse, recycle, and recover.” Data is at the core of meeting circularity challenges, with real-time visibility across the supply chain essential for manufacturers. A cloud-based, composable solution can help enable collaboration and leverage data for competitive advantage and resilience.
Governments and regulators are implementing new ESG and carbon emissions requirements, demanding accurate reporting and measurement from manufacturers to ensure compliance. Reporting sustainability performance will require recording, analyzing, and managing a wide range of ESG metrics, emissions data, and KPIs. Having a single source of truth, such as a unified database, is crucial for accurate visibility and reporting across the manufacturing enterprise.
Manufacturers must proactively design for circularity by selecting transparent, ethical suppliers and redesigning products for easy disassembly, repair, and recycling. ESG functionality within enterprise cloud platforms can support decarbonization efforts, while technologies like AI and remote assistance can enhance agility and visibility. CFOs play a key role in promoting sustainable strategies, combining green finance initiatives with technology for maximum impact.
The circular economy presents economic and environmental opportunities for the manufacturing sector, allowing for optimization, resource conservation, and compliance with net-zero regulations. By leveraging insights and technology tools, manufacturers can remain competitive and sustainable in a rapidly changing business landscape.
