An integral challenge lies in moving beyond the take-make-waste industrial model which is detrimental to our planet, accounting for 90% of biodiversity loss and huge climate impacts. Circular economy business models aim to reduce waste while adding value by reconsidering product design, reverse logistics and business model innovation.
Slowing the loop” means reducing unnecessary consumption, prolonging product lifespan and encouraging reuse; as well as “industrial symbiosis”, which explores ways for products across industries to be exchanged more freely.
Upcycling
Upcycling is the practice of turning waste materials into new products such as furniture or car parts from previously existing waste streams, such as furniture. This reduces energy use while simultaneously diverting them from landfills reducing environmental risk and protecting our planet’s resources from harm. Upcycling is one element of circular economy and an excellent example of how businesses can operate more sustainably with sustainable business models.
Upcycled products are more valuable than those destined for landfill, as they can be reused to produce more useful goods. Plastic can be recycled into new toys and containers while clothing and furniture from used products may also be created from unwanted ones. Furthermore, upcycling helps cut down landfill waste production which creates harmful gases like ammonia, sulfides and methane emissions.
Upcycling products is made easy through reuse. Manufacturers can do this by designing longer-lived products, or offering trade-in services like Vodafone’s, which allows its customers to return old mobile phones in exchange for discounts off new devices or store credit. Once returned, these items can be refurbished, resold or their components stripped and recycled.
An effective approach to sustainable manufacturing involves finding ways to forgo product production altogether, such as designing durable, repairable designs. Also consider using renewable or reusable inputs such as biomass or recycled materials – this will reduce waste generation while increasing customer loyalty.
Innovation is one of the central tenets of creating more sustainable business models, and in an economy shifting towards circularity companies must reevaluate how they create and deliver value. Attaining this goal can be accomplished through business model innovation, technological innovation and behavioral and education enablers. While the first focuses on how value is created and captured for delivery purposes, while secondly involves new ideas and strategies designed to change consumer behaviour. Transitioning to a circular economy will be challenging for legacy companies that cannot or are unwilling to change; those that embrace this shift could find rewards such as reduced costs, ongoing income sources throughout a product’s lifecycle, improved resilience and customer intimacy.
Downcycling
Transitioning towards the circular economy provides businesses and consumers alike with numerous advantages. From reduced costs to enhanced product performance, these models not only help save money but also have positive repercussions for the environment and individual users – saving energy consumption and greenhouse gas emissions while increasing revenues throughout its lifecycle while cutting waste management expenses.
Implementing and scaling circular business models depends upon having an in-depth knowledge of their value chains, including defining and examining value propositions as well as analysing creation and delivery processes of products and services. Furthermore, stakeholders’ needs must be identified along with suitable technologies before businesses develop a new operating model for operations.
Circular supply chains provide an alternative economic model: instead of extracting raw materials for use and discarding them once no longer useful, circular supply chains incorporate an end-of-life phase where products can be collected for reuse or recycling. There are numerous advantages associated with adopting this approach and many companies have already begun taking up this trend; Arc’teryx hosts ReBird as an upcycle program using modular scrap and production waste; Nike Grind also collects used footwear and materials that are then transformed into sports courts, playgrounds or e-bike stations – two examples are Arc’teryx’s and Nike Grind’s similar system for upcycling upcycled gear from modular scrap or production waste for reuse as upcycling opportunities.
Companies are also increasingly producing products that can be repaired and upgraded to extend their useful lives, as well as offering product-as-a-service and sharing economies to better utilise products and components, leading to higher income per unit and easier disassembly for remanufacture or recycling.
Circular supply chains can help businesses reduce the amount of fresh raw materials required, increase renewable resource use and address climate change, volatility in resource pricing, natural disasters and other environmental concerns. But it should be remembered that benefits may take longer to come to fruition due to implementation challenges.
Resource Recovery
This business model revolves around producing renewable and reusable inputs for use within the supply chain of an organization, with the intention of reducing environmental impact and increasing customer loyalty while saving on raw material and energy costs. Such models can be applied across an organization’s value chain from sourcing through manufacturing to distribution processes; examples of such models are closed loop recycling, industrial symbiosis and Cradle-to-Cradle designs.
Businesses adopting the resource recovery model face one major challenge when adopting this model: devising an effective plan for eliminating waste streams. This can be accomplished by integrating end-of-life management into overall product lifecycle management and forging partnerships with waste managers. Furthermore, energy values of waste products must also be considered; thermal recovery processes allow companies to harness heat generated during recycling to lower energy usage by using heat recovery mechanisms like thermal recuperation processes which allows companies to use heat generated during recycling to offset electric consumption costs.
Designing durable and repairable products can also help to reduce waste, as these will last longer and be reused multiple times. Companies can further extend product durability through add-ons like software upgrades; this allows the same product to serve multiple customers over a longer period, saving resources while cutting down costs.
Additionally, companies can reduce their environmental impact by employing renewable and reusable energy sources in their production of goods and services. This may involve harnessing renewable power from waste products or through partnerships with utility providers; one such manufacturing plant in the US employs waste wood and plastic to generate renewable heat energy that it then uses in its operations – saving both money on natural gas purchases as well as fuel expenses.
Implementing a resource recovery model requires companies to reduce negative environmental impacts while decoupling economic growth from resource usage. To do so effectively, companies can set efficiency targets and focus on product groups with high impacts while working alongside waste management companies and NGOs for optimum solutions.
Recycling
Recycling waste into new products is the cornerstone of circular economy business models, cutting reliance on virgin raw materials while increasing supply chain resilience. Furthermore, recycling can generate recurrent income through repair and refurbishment services that may be incentivized through product-as-a-service models or sharing economies.
Transitioning to a circular business model involves altering how value is created, captured and delivered to customers. This may involve redesigning products and systems, overhauling supply chains, adopting new technologies and adapting energy consumption practices; however, the costs associated with making this switch should not be prohibitive; in fact adopting such an approach could save companies money through reduced virgin material usage and speedier replacement times of existing products.
Companies can ease their transition by focusing on reducing unnecessary consumption, prolonging product lifespans and encouraging reuse. Bugaboo offers a leasing program for its strollers that enables customers to upgrade or return them as needed; another example would be Swedish oil-as-a-service provider SKF’s RecondOil service which cleans used oil so it can be recycled back into production.
Circular business models not only reduce virgin material requirements but can also help organizations improve operational efficiency by decreasing waste generated. This is achieved by designing durable products, offering product take-back programs and offering repair or resale services.
Closing resource loops within a circular economy can have a positive impact on a company’s bottom line by saving on raw materials and energy costs, and also decreasing exposure to volatile raw material prices, increasing resilience against natural disasters or geopolitical imbalances, and strengthening overall resilience.
While adopting a circular business model offers many advantages, companies should carefully consider its impact on both the environment and their stakeholders. Companies should avoid consuming excessive raw material and energy; use recycled or renewable material in their products whenever possible; and develop plans to safely dispose of waste at its end of useful life.
