Talk of the circular economy is de rigueur in the world of business at the moment. Interest has piqued in the new model of economic success that promises equal measures of both commercial and environmental benefits.
But what exactly is a circular economy? How viable is it for businesses in the automotive industry? And why should it be embraced?
Everybody is familiar with a linear economy: a world in which objects are made, used, and disposed. Well a circular economy is one in which resources are utilized for as long as they possibly can be, with the maximum use and value extracted before what remains is recovered, regenerated, and re-resourced.
In the context of the automotive industry, this all sounds great: “Hey, we can recycle 95 percent of the vehicle and reduce all of our traditional waste!”
That’s true of course, but dig a little further and you hit a problem: the sheer brute force and energy required to complete the recovery, extraction, and regeneration. Transforming an old tire into a new plastic product, or acquiring its oil content, takes so much effort that the immediate benefits are almost immediately negated.
But, fortunately, that’s not the end of the story. There is another way. And that way is remanufacturing.
Through remanufacturing, we can bring most of the products which suffer from wear and degradation to a refreshed and restored state of operation.
And it needn’t only be done once – the process can be repeated many times over!
So how can our industry adapt to appreciate the obvious benefits of remanufacture and provide extended longevity in our products?
• Develop a specific supply chain focused on remanufactured parts, with an in-built return loop to collect cores or used products. Environmentally friendly packaging should be utilised wherever possible.
• Create a remanufacturing production line, adapted to specific products, with bespoke end-of-line testing equipment. This is the stage which is most likely to impact on carbon footprint, so the more un-worn components that can be reused the better.
• Make future remanufacture a key concern when designing new product. This is a fundamental requirement for successful implementation of a circular economy. Preparing for regeneration in the design stage is what will make the whole operation possible!
• Communicate the benefits of regeneration to the customer. Help them understand why a circular economy is important and how regenerated products provide benefits both to them and to their environment.
• Embrace the concept of product-as-service. The leasing – rather than selling – of product is the obvious ultimate end game of a circular economy. Those who are able to reach an accord in which both sides understand why leasing is beneficial will be the winners in the circular economy.
If these milestones are reached, the final destination will be one in which the economic structure of your business is streamlined, self-fulfilling, and sustainable. Your customers will be happy with the flexibility and the cost, your shareholders will be satisfied by the extension of the business, and the negative impact on the environment will be significantly diminished.
Remanufacturing may be a difficult ball to get rolling, but – like a circular economy – once it builds momentum there will be no stopping it driving you towards future success!