Lean

Changing manufacturing for a more competitive Europe

Circular Economy Illustration

Every day, we buy, use and dispose of products that end up as landfill. Unfortunately, the resources required to make new products won’t be available in large amounts forever. Through the EU-funded ResCoM project, four well-known companies have already analysed the extent to which they could adopt a circular approach.

The majority of manufacturers still take a linear approach to their products; materials are extracted, used to manufacture products, which are then distributed and marketed to customers who use and then dispose of them. Manufacturers who adopt the principles of a circular economy build products that consumers can re-use and that can last much longer.

The circular approach is not only better for the environment, but can also benefit consumers and companies’ bottom lines too, explains ResCoM project coordinator Amir Rashid. Not only can manufacturers capture more value from products and materials through a circular approach, but they can also mitigate price and raw material volatility for a more resilient business.

The Ellen MacArthur Foundation estimates that the net benefit of adopting circular economy principles would be €1.8 trillion by 2030, or €0.9 trillion for Europe. In turn, this would increase household income by €3 000 a year, and halve carbon dioxide emissions.

Providing manufacturers with tools for change

“The ResCoM project takes a systems approach to manufacturing to help manufacturers rethink the relationships between business models, design, supply chain and information and communication technology,” explains Rashid. This approach proposes variations of a circular business model, ranging from a buy-back model to a fully functional sales model. It looks at collecting, remanufacturing, upcyling and re-using products. This includes examining initial product design and how companies can effectively collect enough of the used products at the right time to ensure a reliable reverse supply chain.

The ResCoM team is not however proposing particular models for specific industries. The project gives manufacturers the opportunity to explore models as well as how they would apply to particular products and their design. The exercise teaches manufacturers more about the potential challenges of implementing those models in terms of product design, supply chain management and product life cycle management.

“A key innovation of the ResCoM project is the ResCoM collaborative software platform, which is the only tool available that can help a manufacturer develop a product for a circular manufacturing system,” says Rashid. This platform consists of economic, environment and design decision-making tools, and others that support the implementation of circular models. These tools including analytical, simulation, design planning and a forecasting tool, can calculate the potential value of decisions.

Putting circular thinking to the test – from pushchairs to automotive steering systems

The project piloted a circular manufacturing system in four manufacturing companies – Bugaboo, Gorenje, Loewe and tedrive Steering. Bugaboo developed a flexible leasing plan for its pushchairs and prams. “When a market leader, such as Bugaboo, introduces circular thinking, competitors are likely to start rethinking how they work, which has the potential to transform an industry,” points out Rashid.

Gorenje explored a service model called goRent to sell washing cycles (pay per use) instead of machines. “A limited scale survey revealed that consumers were generally positive about businesses offering the service to consumers, but in the case of business to business, retailers, for example, were a little sceptical, preferring the idea of buying the machine rather than leasing or paying-per-use,” points out Rashid. “This case study highlights the importance of considering softer factors, such as consumer behaviour, which can be unpredictable,” he says.

Loewe explored offering televisions as entertainment platforms, with software upgrades creating new product features and connectivity to the home entertainment systems. Loewe’s interest in the ResCoM project was to extend the life of its televisions while improving its customer experience and environmental impact.

On the other hand, tedrive, which manufactures steering systems that it supplies to automotive manufacturers, learned that industry regulations were a challenge to re-manufacturing and expanding the re-manufacturing business, while industry-wide collaboration was a prerequisite for change.

The lessons learned from the pilot studies will feed into virtual scenarios and examples that manufacturers will be able to access and explore on the ResCoM project website. These scenarios will help them make more optimal manufacturing decisions. Visitors who register on the site will also be able to talk to consortium members to start take their plans further.

 

Source: EC Research & Innovation

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