Updated on February 2, 2016
10 Enablers of the Circular Economy
To make our economy a bit more circular, many sectors will need to adapt and change. Since, many developments in these sectors and processes interdependent, the road to a circular economy is a major challenge. That makes each of these developments equally important. Below are various enablers mentioned in which, at least some, developments or changes are needed to bring about an inclusive circular economy.
To create appropriate products and services within the circular model, they will have to be redesigned. The designs should focus in particular on levels of circularity through product life extension, design for reuse, disassembly and recycling. Designers should take into account all phases of the life cycle depends on the business model: production, transport and retail, use and return or discard. During production various choices can be made: what material should be use and where did this come from (virgin or recycled), match life expectancy and planned obsolescence, which production processes and coatings are required, how should it be packaged with respect to transportation, what maintenance should be carried out and what’s going to happen to the product after the first use, and what after the second use?
2. Asset management
Physical asset management is about the management of products and machinery. More specifically, it considers the purchasing (sometimes partially), maintenance and phasing out of an asset from operations. When investing in new assets, the focus is often on cost efficiency, but for many companies with large capital goods such as factories and infrastructure companies are also other elements are important: the RAMSHEEP (Reliability, Availability, Maintainability, Supportability, Health, Environment and Economics).
From a circularity point of view asset management is even more: it also includes the management of the raw materials and resources that are contained in or used by the assets. A well-designed asset management supports the levels of circularity during the use phase. Especially by managing for optimal value preservation.
Chain integration is important in the circular economy as choices concerning material, assembly and processing can have a large impact on the circularity performance of all supply chain partners. When a purchaser selects a certain alternative on the basis of very narrow specifications, this can have a negative effect on the materials and production techniques higher up in the chain. However, most effects are generally accumulated at the end of the chain because reusability, disassembly and sorting become difficult. As a result, it may sometimes be better for the entire chain to choose an apparently less ideal solution higher up in the chain. For example, because additional investments are made in the design and production to allow disassembly of a product, maintenance will be easier and cheaper extending the life span of a product. Also the discarded product may yield a larger profit during recycling. If the total gains of such investment are to be returned to all involved partners, the additional investment may become attractive.
Logistics, and in particular ‘reverse logistics’ and ‘last mile’ are important elements in the circular economy. To keep materials at their highest quality, effective and efficient logistics flows are required. Highly meshed logistics and return flows are important aspects in that respect. The transport component of logistics is burdensome in various ways. In the current system, simple and often short return flows are handled by waste processors as they are located relatively close to the consumer. But in the circular economy, various business models require reverse logistics from consumer back to the manufacturer.
The current one-way logistics from producer to consumer should be doubled for two-way traffic. This means that there are smarter with transport needs to be worked. Especially in cities, it is expected that the number of vans, as it could grow explosively thing regarding mobility and air quality is not desirable.
5. Business models
New business models are evidently needed to keep financially interesting possible additional costs, but also new business models that generate additional revenue as new services are offered. Ancient known models are rental and leasing. The merits of products (Product Services), a large growth is expected. Buy we are still lights and cars, we’ll be buying light hours and kilometers of travel comfort. Here, the producer guarantees that the light always does and thereby creates and paid for all conditions (fitting, housing, energy consumption). Not only producer-consumer relationships can change by new models, but also the relationship in business-to-business. For example, because the ownership of raw materials no longer proceed from business to business, but that a single party is responsible for coordinating in a chain by retaining ownership of the materials and other parties in the chain only provide a service. Such as where network operators that remain from all the brass owner in the cables. At the end of life leave the grid cables merge into new usable buyer and give this buyer then loaned to a factory that makes new cables for the network operator, the melt and producing cables has become a service. The advantage is that the price of copper can be removed from the chain and thus fluctuations in price due to the commodity market.
6. Open data
To efficiently chains with each other and integrate different chains be able to pick up on each other, it is important to balance supply and demand can match. That must take place continuously in complex chains. The use of open data to facilitate exchange of data is essential. Also, in order to get on a smaller scale matching efficient raw materials of the ground, it is important that it is clear when to use which release materials. Through this clever set up might perhaps less transport are needed and are also shorter and more efficient chain possible.
Purchasing, procurement and investment are needed to make companies give the room the changes that are needed. Through sourcing and procurement providers may well be encouraged to provide circular solutions and thereby be certain that it is taken. Procurement is therefore a way to boost this movement. Investment is especially needed for the setting up of new plants and process technology that in practice has not yet been proven.
Another element of finance is the way of value determination in the books. Purchases are almost always written down to zero over a period of time. That’s actually quite strange. All of these products still have a residual value which, if in the proper way, can be easily recovered. This allows capital goods which contain valuable raw materials that last go even pay for themselves. The principle behind it is that a product is not only seen as objects that played a particular function, but at the same time is a resource bank.
8. Living Labs
How new processes, services and products should be designed in circular economy has not yet crystallized. Ideas need to be able to test his experiments, often so that is achieved scale. For this pilot or living labs are great. These are increasingly being used by governments in collaboration with industry, universities and sometimes also civilians. This living labs can not only provide valuable knowledge but also to create sufficient demand that companies get around their business case. Often living labs set up from a certain aspect: technology, a social problem, an economic challenge. A good living lab does so from all these perspectives. Regarding SmartCity living labs is often only developed from technology and thus underestimated the impact and dependence on society. Another problem related to living labs is that they can be developed without having to meet specific ethical or other conditions that guarantees the interests of for instance people. So people often do not know that they are part of an experiment and privacy is often violated.
9. Regulation and policy making
It is also good tune with laws and regulations is an important condition to trigger the renovation strokes required in previous enablers. Designs that may make use of recycled materials, allowing new business models, to allow experiments in unconventional ways. Often, this point is referred to as one of the barriers. Yet it is questionable whether this is so. Often it is only necessary to interpret some law or regulation differently than we do now, there are almost always exception- and experimentation capabilities possible. What is possible is stimulating laws and regulations establishing a preference for a particular technology or way of working is through financial benefits for example.
10. Consumer behavior
Not least, culture is a key enabler and one that is often forgotten. It is also perhaps the most elusive, but a true change in need, but also will take place largely automatically. Namely culture changed continuously as the development of values and norms. The culture is changing in particular valuation, consumer behavior and social awareness. For example, the value assigned to property versus availability, social awareness around food and energy waste, and its impact on consumer behavior which will trigger another question.