The circular economy is gaining more and more attention and promises a competitive advantage for the early adopters. Governments are putting an increasing focus on the concept and some pioneering companies are already disrupting the traditional market with innovative business models. Take Airbnb for example, which provides a highly profitable sharing platform, or Peerby, the app that allows neighbours to borrow all sorts of appliances and thus reducing the need for ownership. Start-ups like these can easily apply new growth models from the start, but established companies generally face more difficulty when changing its business as usual. So the question arises: ‘How can established companies in matured markets transform from linear to circular business models?’
Five major shifts in capabilities
The answer to a profitable play in the circular economy covers an broad range of steps and needed technologies. However, successful example cases, studied in Accenture’s Circular Advantage report, show that more concrete aspects of the transformation include five major shifts in capabilities that cover all components of the business operations. It starts at changes in business planning and strategy. The focus is to shift from maximizing throughput and sales margin to participating in continuous product and service loops by establishing collaborative networks with all links in the value chains. Secondly, the focus of innovation & product development should shift form designing for single use to designing for many life cycles and users. The key challenge at this stage is designing products that no longer generate revenues only at point of sale but also during use. Within sourcing and manufacturing the shift should be away from the homogenous supply chains. Flexible resource flows in which no resources are lost, dumped or incinerated, are enabled when sourcing comes from many, heterogeneous and small-scale sources. Such sourcing systems require, but also naturally create, the collaborative networks as touched upon before. In line with the design shift, the sales & product use operations should shift its focus from never seeing the product again to generating greater revenues from the use of products and services instead. Customer and asset life cycle management is essential in achieving this. And lastly, in order to hold the entire loop together, reverse logistics and return chains remain essential. Where most return chains are now driven by government compliance, they must be designed to manage opportunity-driven take-back or buy-back.
There is no need to lose the circular race against innovative start-ups as long as established companies shift the capabilities needed to support circular growth models. Within such transformation it is important to include the entire business form the start since a focus shift in one operational department has direct consequences for the other sections. It might seems to be an overwhelming task, but with a little help we can identify the right business opportunities together and bring a circular advantage to the early adopters.
By: Joost Brinkman, Lead Sustainability Services Benelux, Accenture
Circulaire Economie Event
Op 25 & 26 maart 2015 vindt in Rotterdam het Circulaire Economie Event plaats gericht op een nieuwe visie, samenwerking en nieuwe financierings- en businessmodellen.
Bekijk de website van het Circulaire Economie Event voor meer informatie.
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