7 Ways Manufacturers Can Embrace the Circular Economy

If you thought the circular economy only involved retailers and consumers, you thought wrong. 

Before a product grazes against a customer’s fingers or lays on a shop’s shelf, it's first given the touch of life by a manufacturer. And at this critical conception point long before the product even enters the marketplace, more than 80% of its environmental impact is determined.

The manufacturing sector is the second-largest contributor to greenhouse gas (GHG) emissions in the EU, following only behind the energy sector. Besides GHG emissions, the manufacturing sector is also accountable for being one of the primary consumers of energy from fossil fuels. 

While manufacturers aren’t solely responsible for a product’s lifecycle, they play a leading role in shaping its sustainability. As such, they are uniquely positioned to drive change. Instead of perpetuating a harmful cycle, manufacturers can break the mold, adopt greener practices, and lead the fight against environmental harm.

Here are seven ways manufacturers can embrace the circular economy and transform their impact:

7 Ways Manufacturers Can Embrace the Circular Economy

1. Reduce consumption of finite resources

This is perhaps the easiest step towards a sustainable path — avoiding unnecessary purchases and investments. You see, the greenest resource is one that’s never been consumed. This is simply executed by manufacturers refusing to buy items they have no use for, saving money for other important aspects of the company. They can also rethink ownership and usage of machines to maximize their productivity, and redesign products to consume fewer — and greener — resources during their manufacture and use. 

Optimizing global supply networks helps manufacturers integrate sustainability into their workflows, enhancing operational efficiency. Raw material extractions are responsible for 18% of greenhouse gas emissions related to EU consumption. Manufacturers can significantly reduce carbon output and minimize ecological harm by considering the source of raw materials, the processes involved in their extraction, and the environmental impact of transporting them.

Another way to cut back on finite resource usage is by electrifying industrial operations. Investing in innovative technologies enhances efficiency, and where feasible, switching to renewable energy sources is cost-effective and lowers greenhouse emissions!

2. Adopt reverse logistics systems

Manufacturers can create efficient systems to retrieve used products for refurbishment, remanufacturing, or recycling. Creating a reverse logistics system helps manufacturers execute this as it transfers products from the end consumer to the manufacturer who initially supplied them, reducing production costs and increasing sales. According to Gartner’s report, businesses that effectively manage reverse logistics in their supply chain can cut costs by up to 50%.

Partnering with logistics providers or setting up in-house collection programs can ensure end-of-life products return to the manufacturer. Third-party logistics providers specialize in reverse logistics, putting them in charge of the flow of products from consumers back to manufacturers. With in-house collection programs, manufacturers can also directly manage the return of end-of-life products, ensuring effective retrieval and processing. 

3. Reuse manufactured goods again and again. 

Manufacturers should highly focus on the process of a product’s conception, as smarter designs encourage longer-term use and reuse, helping reduce consumption. A decision of a product during its design critically determines its environmental impact, making the development stage heavily important.  

Manufacturers can try shifting to an equipment-as-a-service (EaaS) business model, which involves businesses renting equipment through a subscription service instead of purchasing brand-new equipment to maximize the utilization of high-demand machinery.

4. Repair broken products instead of replacing them. 

One way manufacturers can embrace the circular economy is by designing products that are easy to repair, with user-serviceable components and readily available spare parts. By letting customers fix their products, a second life is given to them, keeping products and materials in use longer and spending less time in landfills.

Manufacturers can also support “right to repair” legislation, which requires spare parts and refurbishment information be available for every product, in key markets in which they operate, or can explore the chance of connecting with programs like Repair Circle, which provides training and material support for repairing goods in local communities.