How digitization of supply chains can boost circular economies
Research shows that businesses, governments, and consumers around the world are increasingly concerned about the environment. Despite our apparent concern, it seems that we are doing very little to address it. Per a recent report, material extraction and use has nearly quadrupled in the last 50 years, outpacing even population growth. The current economy follows a linear model. Organizations harvest Earth’s natural resources and then create and sell products to consumers, who then use and dispose of these products. It is estimated that over 100 billion tons of material are harvested and consumed every year, with more than 90% ending up in landfills without being recycled. The circular economy seeks to change this. It promotes a more sustainable approach to natural resource extraction, production that minimizes waste, and materials that are regenerated, repaired and reused as much as possible to ensure that businesses don’t have to extract natural resources for fuel. The circular economy has the potential to significantly reduce pressure on the environment, create a multi-trillion dollar economy, stimulate innovation, and create enormous numbers of jobs.
What’s stopping the circular economy from taking over?
Achieving a circular economy is easier said than done. Even the most well-intentioned companies may run into major hurdles when trying to achieve a circular economy. According to Gartner, there are four main challenges to the circular economy. It can be difficult to return ownership of end-of life materials. It is important for organizations to do an in-depth analysis of how products are used and promote new supply chains that allow expired products to return to manufacturers. Second, raw materials should have sufficient residual value at the end of their useful life to continue to be relevant for the business. Businesses must be able to demonstrate their case to stakeholders. Fourth, complexity of the product is important. The simpler and more cost-effective reprocessing will be, the better.
How digitization of supply chains can boost circular economies
Digital innovation and the circular economy are kind of symbiotic in nature. It’s difficult to imagine a circular economy initiative without technology in these times of internet proliferation. While there can be a number of ways in which digitization can positively impact the circular economy, here are the top three:
1. Digitization can help organizations make better, more sustainable decisions.
Digital technologies enable information to travel alongside the product. This allows businesses to track, store, and analyze their consumption patterns. This helps them make better decisions. For example, research shows that 70% of greenhouse gas emissions (GHG) are related to material handling and use. Businesses can see how full their aircraft, truck, or ship is and determine how efficient their delivery will go. This results in lower fuel costs, faster delivery times, and less greenhouse gas emissions. Thyssenkrupp, one of the world’s leading elevator manufacturers, installed a cloud-based predictive maintenance system on 130,000 of its elevators worldwide. Its sensors gather data about the health of its components, systems and performance. Thyssenkrupp can provide better service, longer product life spans, and extended elevator uptimes.
2. Digitization can help unlock greater value across entire supply chains. Businesses have always been focused on connecting data and devices to their customers. Digitization can unlock many parts, partners, or consumers across the entire value chain. To check if they have enough raw materials, a supplier of raw material can use APIs to access the manufacturer’s stocking system. Manufacturers can use digital technologies to determine if the products have enough intrinsic value to be returned once they have reached the end of their useful life. This allows businesses to be more efficient, reduce their resource consumption, and produce less waste and emissions. An increasing number of digital platforms are promising to create tighter value-chain integrations and assist various manufacturers in transitioning to a circular economy model. On the consumer end, digital marketplaces are helping to create more sustainability-conscious consumers.
3. Digital supply chains need to be reliable and secure. Digitization of supply chains promises greater speed, efficiency and visibility. The increased availability of APIs means that organizations’ attack surface increases. A single container ship caught in the Suez Canal can disrupt the global economy. An API that isn’t available or not trustworthy can also disrupt important supply chain processes. As organizations digitize, it is important to take the necessary precautions to protect their digital assets.
How Citrix is engaging the circular economy
Citrix technologies empower individuals and businesses to work from anywhere and embrace adaptable work models. These technologies enable organizations to adopt a secure hybrid model of work. This also means that organizations using Citrix can dramatically reduce commuting emissions while meeting employee needs for flexibility, given how 27% of U.S. emissions derive from transportation sources and office-related commuting.
Citrix solutions allow users to use low-energy devices, and can use the same devices for longer periods of time, reducing emissions and costs while keeping hazardous waste from landfills. This supports two core principles of a circular economy: device reuse and waste reduction.
Citrix technologies play an important role in facilitating a seamless transition to energy efficiency and lower-carbon cloud computing. Citrix’s App delivery and security solution scales APIs, which are essential to a digital supply chain that is efficient and streamlined. Moving to a circular economy requires that we protect the digital backbone.
The transition to a circular economy will not come easy, but it will be worthwhile. Customers want businesses that not only provide excellent service but also adhere to their core values. Companies that embrace circularity and leverage digitization will be viewed as visionaries and will be rewarded by deeper customer relationships and loyalty. It is true what you see, is what you get.
This content was produced by Citrix. Citrix produced this content.
I’m a journalist who specializes in investigative reporting and writing. I have written for the New York Times and other publications.