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An increasing number of manufacturers are opting for a circular business model, made possible by Industry 4.0. These companies are doing so due to considerations vis-à-vis growth in turnover, cost reduction, innovation and sustainability. The effects of customers’ changing needs are also playing a role, including access over ownership. A circular business model can encompass elements such as product-as-service, remanufacturing, refurbishing, asset sharing and alternative organic or secondary raw materials. How will your manufacturing business close the cycle?
The industrial revolutions have brought us economic growth and innovation, but they have also brought the concept of waste. After a period of use, most products in manufacturing end up in an incinerator or disappear to an unknown destination for low-value processing. To take an example, the Netherlands disposes of six hundred thousand washing machines a year and millions of industrial appliances. A circular economy will put a stop to waste by labelling it as avoidable loss of value and by closing the organic or technical cycle.
According to calculations from the Ellen MacArthur Foundation, if the manufacturing industry were to organise itself in line with circular principles, this could save up to 630 billion dollars a year on raw materials in the EU. This equates to a reduction of ten to fifteen percent on direct materials required for the production process.
Curious as to how your company could profit from a circular strategy? A value leakage scan could provide you with some initial insight into the loss of value within your organisation. We are happy to contribute our thoughts on how you can achieve a reduction in costs in terms of such things as purchasing, in conjunction with renowned partners in resource management. Our experience shows that this can yield an average cost reduction of fifteen percent.
We can also develop a business case for extending longevity, by way of such things as refurbishment or product-as-service. Another option is to improve the utilisation rate of your company assets, often by more than ten percent, by means of an asset-sharing platform. We can develop a circular purchasing programme for you, or ascertain what the strategic impact on your company will be of the circular economy and legislation, including benchmarking.
In order to give your company’s management insight into the possibilities presented by the circular economy, we are organising inspiration sessions with circular innovation start-ups and scale-ups.
Senior Manager, PwC Netherlands
Tel: +31 (0)61 066 77 80