More than 100 billion tons of resources enter the global economy every year – everything from metals, minerals and fossil fuels to organic materials from plants and animals.
The use of these resources has tripled since 1970, and could increase by 70% by 2050 if businesses continue to use resources at this rate. However, less than 9% of all such resources are recycled and used again, contributing to the global waste problem.
This unsustainable rate of consumption has devastating effects on humans, wildlife, and the planet. This mounting waste quickly becomes unmanageable, with experts believing that we would need 1.7 Earths to make our consumption sustainable at its current rate.
Discarding the “Use It Once” mentality
It is more urgent than ever to shift from a “use it once then discard” mentality, to a circular economy – where waste and pollution are limited at design stages, products and materials are kept in use longer, and natural systems can regenerate.
There is not a limitless supply of materials and because of this, many businesses have begun to turn to the circular economy model to change our discard mentality. Every year, more businesses embrace this platform and transition to a circular economy system of production to become more sustainable – and reduce long-term operating costs.
In a report entitled “Waste to Wealth”, Accenture estimated that moving to a circular economic model could add $4.5 trillion in economic output by 2030. This is between 4-5% of the projected global gross domestic product (GDP).
Changing the Linear Supply Chain Model
Past supply chains were built in a linear fashion, with manufacturing facilities turning raw materials into finished goods that are often disposed of after use.
Today’s supply chains are becoming circular by adding a link to create a closed-loop system. This link encompasses returns and recycling, taking waste materials and returned goods and turning them into products which can be resold.
Reclaiming components and materials from end-of-life products to make new products is not the same as procuring virgin materials and new components for manufacturing operations. Supply is subject to the availability of materials from waste streams, which can vary.
Establishing efficient return channels for used products is a significant challenge, especially in consumer markets. Some companies are exploring the use of e-commerce returns services as convenient channels for collecting end-of-life products.
The future of the Product-as-a-Service Model
A circular economy also requires enterprises to rethink their business model to not only build value into producing and commissioning products, but also in decommissioning and recycling the products.
To participate in a circular economy, businesses must evaluate alternative revenue streams besides producing new products, including revenue generated from the embedded value in products. A circular business model is sustainable only if embedded value can be economically recovered from the product. The embedded value of a product can be realized by reusing or recycling the materials.
As a result of the new Product-as-a-service (PaaS) model, businesses are investing in processes to extend product life, make them easier to recycle and offer consumers incentives to return used products. Offering a product as a service is a shift away from the “buy and waste” approach.
Working together to drive change
While PaaS models are driving innovation, the costs of returns and recycling can also be high. Collaborative initiatives and innovative approaches are required to reduce these costs and incentivize end-of-life returns of electronics, which have already become the world’s fastest-growing waste stream.
For example, each year, more than 1.5 billion mobile phones are manufactured worldwide yet just 12% of these phones are recycled globally.
Innovative and automated systems that combine hardware and software can speed up the rate of device grading, the process of grading devices so they can be resold, reused or recycles in they are a lower grade. In addition to speeding up the rate of device grading, these systems can also improve cost effectiveness and accuracy. These systems can perform highly accurate and fast cosmetic grading on returned and refurbished devices to help prolong device lifetimes and improve the global waste issue.
Future-focused companies know that value exists in the circular economy and are moving toward sustainable processes and products. It is imperative that businesses work towards adopting a circular economy to tackle the rising global waste problem. We can all make a world of difference and new models will help us do it together.
About the Author
Mark Wass is Strategic Sales Director EMEA at CloudBlue, Mark is part of CloudBlue’s European leadership teams and leads the Enterprise, Channel and New Business team for EMEA. With over 17 years of experience in the IT infrastructure industry at SunnGard, before moving to CloudBlue, Mark has seen the channel and IoT industry change and adapt to what it is today. As a result, this has allowed him to deliver key insights on the future of the industry and how IoT can transform businesses across a range of sectors.
Featured image: Adobe Stock
