By Suroor Anwar, Vice President Strategy and Commercial, Asia Pacific, RS Components
For a long time, the manufacturing industry has been accustomed to a ‘take-make-dispose’ approach, which is one that generates massive waste. If manufacturers don’t shed this linear model, annual waste generation is projected to increase by 70% worldwide, by the year 2051.
With environmental concerns and supply chain disruptions becoming focus areas in boardroom agendas these days, businesses are expected to explore ways in which they can operate in a sustainable manner. A survey conducted by RS Components and Chartered Institute of Procurement and Supply (CIPS), found that half of the manufacturers now have a sustainable and ethical procurement strategy. Further findings showed that 38% of them have a plan to reduce their carbon emissions, and another 20% are working to monitor their energy consumption.
A circular economy model enables businesses to adopt a more sustainable method of production and to reduce their operating costs. It is no surprise that there will be a day when manufacturers will switch to a circular economy model to meet their sustainability goals and continue to grow their business.
Transforming the economy
The world produces around 2 billion tonnes of waste every year and despite reduced economic activity due to the pandemic, the number is expected to increase by 70% within the next 30 years.
While the circular model allows manufacturers to maximize the use of resources, the impact goes further than the manufacturing and factory setting, affecting the broader economy. For a region like Asia, which is the world’s largest manufacturing hub, this can mean more job opportunities, more room for innovation, and further growth across industries. The Inclusive Innovation Industrial Strategy (i3S) recently implemented by the Philippine government is one example of how a sustainable and circular approach will help drive the growth of the manufacturing industry by upskilling workers, developing business competencies and competitiveness, encouraging collaboration and helping local manufacturers adopt Industry 4.0.
Shifting towards a circular economy model
To achieve sustainable growth and resiliency, manufacturers must shift their attention toward long-term value creation rather than focusing on just-in-time and lean manufacturing. It is also good to note how sustainability plays a role in the end-to-end value chain.
Here are some key considerations for businesses looking to unlock the advantages of implementing the circular economy model:
- Putting sustainability in the heart of the business strategy
The first step manufacturers should take when making a shift towards a circular economy model, is to adopt sustainability into their business. This includes having measures in place across the supply chain, logistics operations, production lines, and procurement processes that align with the environmental, ethical, and societal commitments of the business.
At RS Components, we continue to review and adopt strategies that enable us to make amazing things happen for customers, our people, and the environment. To reduce C02 emissions in our supply chain, we have extended our work with our suppliers, carriers and partners to measure, report and actively reduce supply chain and transport impacts as part of our sustainable procurement activities. We also continue to further develop our global packaging strategy to increase recycled content and aim for 100% kerbside recyclable packaging for all products sold. Specifically, we will reduce the amount of paper generated for customer orders and limit single-use plastic globally.
- Embracing Innovation
Technology and Industry 4.0 can help advance sustainability while simplifying many processes as well. An effective digital strategy enables manufacturers to experience greater cost savings, efficiency, productivity, and less material wastage.
Manufacturers can integrate green technology when rebuilding and restoring their equipment instead of purchasing new machines. This enables the machine to be used to its maximum while lowering the carbon footprint. The adoption of smart manufacturing also gives manufacturers better visibility and access to data that allows them to detect potential defects and make faster and better decisions.
- Strengthening supply chains
To embrace sustainability, one has to build a resilient and ethical supply chain. It is an ongoing process as manufacturers will need to constantly monitor and manage their supply chains in order to ensure sustainable approaches are adopted successfully. For example, in addition to ensuring the quality and compliance of products, they need to be aware of how and where materials are sourced, and if they are transported responsibly.
Other factors to consider are whether or not machines can operate in an energy-efficient manner if plant and maintenance engineers have reliable access to tools and products that will help them upgrade equipment, and how the business can engage customers on initiatives to recycle or repurpose materials. RS teams work closely with customers to identify solutions to streamline and automate procurement processes and ensure the organisation has fast and reliable access to critical components from a broad range of suppliers who can guarantee quality and performance.
Furthermore, it is imperative that both suppliers and business partners share the same commitment to sustainability and have the capabilities to support manufacturers in their green mission.
Nurturing customer relationships and employee loyalty
The Business Times reported that a study conducted by Kantar, revealed that 53 percent of Asians stopped buying products and services that were not sustainable. Today’s savvy consumer cares about his or her contribution to environmental protection and promoting socially responsible practices. By demonstrating actions taken to operate in a sustainable manner, a business can grow its market share, win new customers, and retain loyal employees. The ‘take-make-dispose’ approach is no longer a viable method for manufacturers. A mindset change is necessary. Similar to shifts in digital transformation, implementing a circular economy model will require investment in time, money, as well as people and relationships. Businesses can engage and leverage the expertise and capabilities of trusted supply chain partners and service providers.
Climate change will continue to be in the headlines and the manufacturing industry has a huge part to play in reducing carbon emissions and its environmental footprint, and this can only be achieved by reviewing processes across the end-to-end value chain and identifying opportunities to innovate and collaborate with the wider community.