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CIRCULAR ECONOMY
KEEP YOUR CIRCULAR ECONOMY STRATEGY ON THE MOVE...
...says Rob Sinfield, SVP Product, Sage X3 and Sage Intacct
Manufacturing at Sage
or modern manufacturers and distributors, sustainability is increasingly becoming a non-negotiable. While business objectives remain paramount, the industry is increasingly recognising the value of incorporating environmental objectives as part of Environmental, Social, and Governance (ESG) programmes.
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The Circular Economy is making this possible. Manufacturers' commitment to reducing waste through a cyclical model of "make, use, reuse, remake, recycle" is already producing tangible benefits such as saved costs and a smaller carbon footprint.
However, many manufacturers and distributors are struggling to implement a sustainable Circular Economy strategy in the face of significant industry challenges. The immediate need to address higher costs, disruption in supply chains, the shift to "just-in- case" inventory strategies, and changing customer demands is seeing businesses pull back on their sustainability focuses. Sage and Deloitte recently discovered that momentum is essential for Circular Economy initiatives to reach their full potential, according to Sage's new research on The State of the Circular Economy in Manufacturing and Distribution. It finds that organisations can thrive in the short, medium, and long term if they have the right tools and approach. Here's how it's done: Increase your agility to overcome industry barriers
Manufacturers and distributors continue to work under immense pressure – not least those navigating a shift to the Circular Economy. 72% of those Sage surveyed said their organisation is struggling with the immediate challenges of rising costs. Supply chain disruptions (71%) and changing customer demands (68%) are further challenges
The pressure to deliver products and services to customers amid tough circumstances could easily see sustainability side-lined. But, the negative impact of that decision doesn’t stop with the environment, 46% of those Sage surveyed said this could damage their brand perception and reduce long-term profitability. So, how can businesses survive and thrive, sustainably? One solution to overcoming these barriers is also the solution to kickstarting a great Circular Economy: agility.
Agility starts with a cultural change supported by the correct technologies. When it comes to
technology, adopt platforms that promote efficiency and innovation. These will aid the impetus to reuse and recycle, because they give leaders the ability to look at existing assets, consider solutions, and make data- driven suggestions that could be far greener. Say, for instance, a disruption next week sees one of your suppliers unable to deliver parts. Technologies such as advanced ERP can quickly suggest new options, reduce losses and recover costs down the line. Such insights drive a culture of flexibility and agility that forms the perfect foundation for the Circular Economy to thrive.
Champion data in order to accelerate the Circular Economy
Almost all (84%) senior leaders say building and implementing a Circular Economy strategy is now part of their role.
A data-driven approach is key for this – and must replace the current system of simply listening to the floor manager for advice on how to make operations flow more smoothly, as digital transformation expert Isaac Sacolick, president and founder of StarCIO, comments in Sage’s report. When you integrate data capture, analytics and insights into your workflows, the results can vastly streamline processes, cutting waste and boosting efficiency.
For example, ARA Foods was able to reduce its raw materials waste by 1.5% within six months by simplifying workflows. The snack food manufacturer, which is a make-to-order enterprise, deployed an enterprise resource planning (ERP) system that has enabled them to better track processes in real time. It allows ARA to optimise raw material use, better manage seasonal variations and reduce the time from order to shipment. Another way in which tech can drive
efficiencies in manufacturing and distribution is through the Internet of Things (IoT). When
devices like sensors are included in your processes, the insights could proactively point out where there are reductions in Operational Equipment Efficiency (OEE) metrics impacting effectiveness or when you need to replenish stocks, or blockages that could be costly later on.
A comprehensive understanding of your Circular Economy
Sage’s research found manufacturers and distributors ranked cloud applications (74%), data analytics (68%), and automation (67%) as the most important technologies for running a business more sustainably. But despite 61% citing cloud apps as helpful in collecting, analysing, and reporting on their CE capabilities, public cloud usage is far from universal among manufacturers and distributors, according to the research. In fact, only a minority of respondents say they use public cloud for core apps such as supply chain (39%), CRM (38%), and business intelligence (35%).
Only with the visibility provided by cloud- based applications can businesses truly prove the value of Circular Economy initiatives internally and externally. A cultural shift towards sustainability that’s embraced willingly by all stakeholders will unlock the long-term benefits of the Circular Economy: 50% of respondents said it improved reputation, followed by the assertion that it increased energy efficiency (47%), increased business resiliency (46%) and a reduced impact on the environment (46%). With the right cloud-based tools to analyse performance, the momentum of businesses who start thinking with the “make, use, reuse, remake, recycle” model at the heart of their planning will increase.
Sage
www.sage.com/en-gb/
FEBRUARY 2023 | PROCESS & CONTROL 45
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