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Circular-Economy

Five Ways Digital Technology can make the Circular Economy Spin Faster

 

Business & Technology Services
28 February 2020

Coca-Cola recently unveiled a sample bottle created using recovered and recycled plastic from the ocean. The company says that it’s the first of its kind and may herald a future in which plastic bottles are made using marine litter that has been successfully recycled. It’s an important step in the drinks giant’s concerted mission to cut back the amount of new plastic it’s responsible for.

It’s also an example of the circular economy – a way of producing and consuming goods that sees them move from a linear trajectory to a circular one: buy, use, reuse and recycle.

Although not a new concept – the idea of a circular economy is one that has been around for a long time – the advent of digital technology gives us the power to put theory into practice.

Enterprises now have a view over a transparent supply chain, can use technology to optimize resources and create smart products designed with the principles of the circular economy in mind – just like the Coca-Cola ocean plastic bottle.

From profit to purpose

As we enter a new decade, the issue of sustainability has never been more important. From minerals to metals, and water to clean air, our world is consuming resources faster than the planet can replace them. With the population predicted to reach 8.5 billion people by 2030 there is a pressing need to develop sustainable systems to reuse and recycle precious materials.

In the business world, environmental concerns have now reached the board agenda, with increasing examples of companies scrutinizing sourcing, production, packaging, logistics and disposal options to find ways to reduce their impact on the planet.

And there have been some remarkable examples of the circular economy in action.

Some of the best instances have seen companies create profitable new product lines by reusing resources. Nike’s Flyknit shoes, for example, use polyester made from recycled plastic bottles. The material has also drastically reduced the amount of waste created when compared to traditional ‘cut and sew’ methods.

And then there’s clothing brands Timberland, which is using old tires to create new shoes, and G-Star RAW, which has collaborated with singer Pharrell Williams to create jeans using ocean plastic.

However, a circular approach is not always easy to implement. The innovation and technology necessary to overhaul systems can be initially costly. Companies often have to establish new partnerships to help them source recycled materials. And there needs to be a broad system-level understanding across the supply chain of the interrelation between different resources.

For companies to succeed in the circular economy, they need both a commitment from all stakeholders and also to align the purpose of their technology. Here’s how digital technologies can help them in that mission.

1. Using asset-tagging and geo-mapping to keep a track on resources

Companies’ ability to reuse and recycle materials is reliant on their ability to keep track of them.

Denmark-based Maersk Line keeps track of all the materials used in its ships by using ‘digital passports’. The passport includes guidelines on how to disassemble and recycle materials when they can no longer be used.

As a result, Maersk says 60-70% of all the materials in its current fleet of 600 ships can be recycled, ranging from the steel used to build the hull to navigation equipment. In the future, its goal is to recover 98% of newer ships.

The aerospace division of conglomerate Honeywell also uses digital product passports and has now extended the principle to recovered aviation parts with its GoDirect Trade service.

During a plane’s lifetime, most of its parts will have been replaced many times. So when an aircraft is scrapped, most components can be reused or remanufactured. Users can buy and sell parts over the website, which are all tracked and verified using blockchain.

Six other leading aerospace companies have signed up to use the service, which has 3,500 registered buyers and has helped power the aerospace recycling rate from just 50% of a plane five years ago to more than 85% today.

2. Optimizing production with the Internet of Things

The efficient use of all resources is key to the circular economy. When it comes to production, the Internet of Things (IoT) has a vital role to play. Smart connected devices can alert operators immediately if a machine deviates from prescribed standards, allowing the problem to be rectified quickly, avoiding waste.

For example, General Electric’s power grid battery manufacturing plant in New York state has more than 10,000 IoT-enabled sensors spread across 180,000 square feet of manufacturing space, collecting temperature, humidity, air pressure, and machine operating data in real-time.

GE’s smart manufacturing process allows battery performance to be traced back to specific batches of raw material at every stage. So the company can trace a product’s entire lifecycle from raw material to finished product.

3. Reducing resource demand through improved device efficiency

The manufacturing, production and supply chain processes often consume the greatest resources and have the largest environmental impact. While these processes can be optimized, progressive companies are looking at the “as-a-service” model to reduce their physical asset and infrastructure demand altogether.

Amsterdam’s Schiphol Airport buys “light as a service” for one of its terminals from Philips Lighting. The low-energy LED lighting system is remotely monitored, incentivizing Philips to make its products long-lasting, easy to replace and recyclable.

IoT technology also plays a key role in the upkeep and repair of machinery and components, monitoring parts for wear and damage, and scheduling maintenance.

At the consumer level, sensors fitted around households could help identify faults and keep things working for longer. Kettles, fridges, and dishwashers are not currently designed with repair and maintenance in mind – when a part goes wrong it’s often more economically viable to replace the whole product.

4. Maximizing product use and enabling a sharing economy

Many products we buy only get occasional use – DIY power tools are a prime example. IoT-enabled products could help drive a sharing economy, where communities could operate pay-per-use systems for rarely used items, rather than each household purchasing their own.

Car manufacturers Tesla, Nissan, and Renault are among those operating such a system for their electric car batteries. Users can lease the battery from the manufacturer, who charges a rental price based on time used or distance traveled. Once battery performance starts to dip, they are swapped out and repurposed to store renewable energy.

Sharing models can also be used at the enterprise level. For example, by sharing servers in a cloud data center rather than hosting these on-site, businesses can reduce costs and gain scalability while reducing their environmental impact through efficient device use and optimized energy consumption.

Microsoft says its cloud hosting is up to 93% more energy-efficient and can result in 98% lower carbon emissions than traditional enterprise data centers.

5. Increasing recycling across digital ecosystems

The world generates 2 billion tons of solid waste every year and, according to the World Bank, at least a third of it is never collected for disposal or recycling. In several developing countries, the numbers are much higher.

Plastic, of course, is one of the biggest culprits. In recent years, Coca-Cola has invested in recycling partnerships to reprocess its bottles and try to introduce more post-consumer plastic.

Along with fellow drinks giants Dr. Pepper and PepsiCo, it is also trying to use less new plastic and has signed up to a scheme to reclaim each of its plastic bottles in the US.

Over in Europe, meanwhile, it is trialing a new generation of drinks dispensers that work with refillable microchipped bottles.

The purpose of technology: Delivering holistic growth

The world’s increasingly scarce resources are driving a new purpose to technology. It can give materials a new lease of life. More importantly, through greater integration of technology, companies can identify opportunities to reduce their demand on resources and the environment through lower waste and optimized production; drive greater reuse of materials and products; and increase recycling – truly completing the loop on the circular economy paradigm.

About the author(s)
Business & Technology Services

TCS’ Business and Technology Services organization combines the power of business excellence with digital innovations to help enterprises and leaders be purpose-driven and performance-oriented, making the shift from shareholder value to stakeholder value. By harnessing the abundance of data, talent, connectivity and capital, B&TS helps leading companies around the world build ecosystems that fuel growth and innovation, foster collaboration and engagement across ecosystems, improve health, safety, and well-being, enabling empowerment and inclusivity, and driving sustainability and positive environmental impact.

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