Is a circular economy the answer to supply chain woes?

Building a supply chain that maximises resources and leaves no trace on the environment is the path to true sustainability. It also builds resilience against the headache of an unreliable supply chain.

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Is a circular economy the answer to supply chain woes?

Key takeaways

• Recycling and reusing materials in production can ‘close the loop’ and reduce impact on the environment

• Building products that last and ensuring better stock control with ‘glocalisation’ will lessen vulnerability to global disruptions and reduce pollution activities

• Employing IIoT technologies with fast, low latency 5G can help transition to a fully circular economy

The COVID-19 pandemic showed us the fragility of global supply chains. Still, today, in the automotive and industrial product industries alone, 97% of companies report having problems maintaining steady production due to supply chain inconsistencies.1

62% of enterprise businesses have limited visibility over their supply chains¹.

Restrictions may have eased, but the supply chain pinch has yet to with global data showing that 62% of enterprise businesses have limited visibility over their supply chains1.

The solution? A circular economy. A recycling and reuse method of production has a ‘close the loop’ philosophy and a low impact on the environment. In practice, this means finding smart ways to reduce the dependence on raw materials, reuse the current materials in circulation and recycle the existing hardware.

The circle starts with manufacturing

For the manufacturing industries, the circular economy means building products to last and removing planned obsolescence to prolong the product’s life. In Singapore, the National Environment Agency runs the ‘Producer Responsibility Scheme’ where manufacturers are required to contribute to the cost of collecting e-waste, therefore incentivising the design of products with a long shelf-life.2

The digitalisation of processes that otherwise require handheld devices also helps reduce the 53 million tonnes of e-waste created each year. 3

Globalisation + localisation = Glocalisation

One of the key themes at the Economist Sustainability Week in Singapore was the risk of building a business that relies on raw materials. Failing to create a circular economy was identified as the greatest risk to these companies and one that can only be solved by building a circular economy.4

A circular economy makes companies less dependent on global supply chains and more on suppliers closer to home that can offer things like recycling and waste services. Known as ‘near-shoring’ this concept embeds resilience over efficiency and is more tolerant of geopolitical shocks.5

“Glocalisation” is a combination of these two concepts. It describes distributing a product globally but adjusting it for local markets when it arrives. This gives better control of stock and makes the supply chain less vulnerable to large-scale, global disruptions. It also shortens the distance that raw materials travel and reduces two big polluting activities – air and sea freight.

For near-shoring and glocalisation to work, companies will heavily rely on data to monitor stock and trigger deliveries. Using AI to manage this data will remove the chance for human error to deliver exactly what’s needed – and nothing more.

How technology can save the day

Singapore’s Zero Waste Masterplan puts the city-state at the forefront of the global transition to a circular economy. The ambitious targets of a 30% reduction in waste to landfill by 2035 and a 70% overall recycling rate have inspired the European Union and global corporations to replicate the model for their reduction strategies.6

Combine these IIoT technologies with fast, low latency 5G, and the transition to a fully circular economy looks achievable in the near term.

Using technology to sort recycling is projected to add 114,800 additional tonnes of recycling to the value chain and create dozens of jobs while building efficacies for the increasing number of companies needing recycling services.7

This smart and agile application of technology to achieve efficiencies in production is nothing new. Industrial Internet of Things (IIoT), combined with artificial intelligence (AI), has long been used to detect machine flaws and maintenance needs in the production process. By adding advanced software, cloud computing and smart technologies such as programmable automation controllers (PACs) and smart field devices, these efficiencies increase tenfold. Combine these IIoT technologies with fast, low latency 5G, and the transition to a fully circular economy looks achievable in the near term.

Network as a Service – NaaS

While recycling and reusing are complex processes, the digitalisation of products has the power to remove raw materials from the supply chain entirely. For example, providing SaaS-based tools to teams instead of distributing hardware drastically reduces the raw materials used in production by simply switching to a virtual service delivery model.

In the same way, NaaS removes the hardware associated with networks by providing all the secure services of an SD-LAN, but as an SD-WAN model.8 Whereas SD-LAN needs local set-up and hardware, SD-WAN covers a wider area and relies on virtual connections, therefore removing the physical products needed for set-up.

Big data collection

Technology has the power to democratise data by enabling fast, at scale, information sharing between companies in the supply chain. Sharing this data will help overcome the hurdles of interoperability and allow local businesses to be embedded in the supply chain instead of relying on tech-advanced global suppliers.

For manufacturers, data collection also allows for inefficiencies along the supply chain to be detected to reduce both energy and resource use. By placing IoT sensors in the supply chain to measure the temperature, humidity and quality of products, the opportunities to reduce them become vast.

By embedding technologies into the value chain, the circular economy is no longer a pipedream, and companies can start to achieve both a sustainable supply chain and sustainable business growth.

Talk to us about building efficiencies in your business.

References

  1. Supply Chain, 2022, Circular Supply Chain 'Can Ease Manufacturing Problems'
  2. National Environment Agency, 2021, Extended Producer Responsibility (EPR) System for E-waste Management System
  3. The Conversation, 2020, Global Electronic Waste Up 21% in Five Years, and Recycling isn’t Keeping Up
  4. The Economist, 2023, Circular Economy Rhetoric Needs a Reality Check
  5. The Guardian, 2023, From Near-Shoring to Friend-Shoring: The Changing Face of Globalisation
  6. European External Action Service (EEAS), 2020, Circular Economy in Singapore
  7. Forbes, 2021, Singapore Is Well-Positioned To Play A Leadership Role In Advancing The Circular Economy
  8. Network World, 2023, Three Ways SD-WAN and Networking-as-a-Service Benefit Sustainability and ESG

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