WHEN shifting to a circular economy model, an industry leader said manufacturers should focus on making the supply chain, procurement, logistics operations and production lines sustainable with the aid of industry 4.0 technologies.
RS Components Corp. Country General Manager George Santiago told the BusinessMirror that implementing a circular economy in operations requires the use of innovation to save cost and decrease environmental footprint while boosting efficiency and productivity.
Circular economy refers to sustainable means of production and consumption by reusing materials as much as possible.
Using online procurement platforms, Santiago said, can provide the manufacturers “full visibility” of products and purchase information, which can aid in minimizing errors and reducing waste.
“Having a digital or automated process also removes the need for procurement managers to travel to warehouses to purchase materials, ultimately lowering their carbon footprint and saving time too,” Santiago explained during an interview with the BusinessMirror.
It is more sustainable to source input materials locally, he added, noting that establishing a line with a trusted supplier can help in strengthening the supply chain as well.
In relation with this, Santiago said that a supplier can also consolidate deliveries and offer opportunities to recycle packaging.
Adopting a circular production and supply chain can also have positive impact on the bottom-line figures of the manufacturers as it can reduce your costs, especially for raw materials that accounts for 40 percent of the spending, Santiago explained.
“Aside from savings, sustainability and the circular economy also enable an organization to create new and strengthen existing customer relationships,” he said. “Consumers today care about their contribution to environmental protection and socially responsible practices and from consumer studies, we know customers and employees want to support brands and companies that are ethical and committed to the environment.”
The sustainable shift, he said, can eventually lead to market share growth with new customers.
On factory floors, Santiago said that production can be done more responsibly as well with innovation and digitalization, which provide “data and analytics so that teams can operate efficiently and make faster and better decisions.”
Santiago cited the 3-dimensional printing process, which lessens the steps in the production process and reduces energy consumption. Using this technology means manufacturers will use less input as they will only need raw materials and a digital file, he said.
“Furthermore, manufacturers can rebuild and restore large assets and integrate green technology to remanufactured equipment, instead of buying new machines. This extends machine productivity and use, while lowering the carbon footprint,” he explained.
Adapting sustainability initiatives
SANTIAGO said that the manufacturing industry has been gearing towards sustainability in its operations recently, veering away from the “take-make-dispose” approach.
The 2020 survey by RS Components and the Chartered Institute of Procurement and Supply noted that half of the manufacturers have a sustainable and ethical procurement strategy. Some 38 percent plans to reduce carbon emissions while 20 percent are working to monitor energy usage of certain assets.
“It is essential that manufacturers focus on the long-term impact and value creation, look beyond just-in-time and lean manufacturing, and examine how sustainability is part of the end-to-end value chain —where materials are sourced and transported responsibly, machines can perform in an energy-efficient manner, and businesses can engage customers on recycling or repurposing materials,” he stressed.
The RS Components head said manufacturers should ensure their suppliers and business partners are also on the same page when shifting to the circular economy model as this will ensure better adoption.
Meanwhile, Santiago said that committing to sustainable measures, like digital transformation, will require investment: money, time and partnerships.
“High logistics and electricity costs are some concerns in the industry but working with a strategic partner to streamline the procurement process enables manufacturers to reduce their indirect costs and have reliable access to critical technologies and energy-efficient products for their facilities,” he said.
In August, the Department of Trade and Industry reported that the Asean economic community (AEC) was finalizing the framework of the circular economy for the regional bloc to promote sustainable growth. The framework is aimed to be adopted by October at the 20th AEC Council.
House Bill 7609, also known as the “An Act to Promote Circular Economy and a Whole-of-Nation Transition Towards a Sustainable Future,” is currently pending at the House Committee on Economic Affairs. It seeks to develop green markets through measures that promote circular economy and sustainable consumption; push for the use of permaculture in urban and rural development; and facilitate sustainable recovery amid the pandemic.