FEATURE Cutting costs
UNLOCKING THE CIRCULAR ECONOMY
Manoj Mehta, EVP and President, Cognizant Europe, Middle East and Africa, presents the case for bending the linear trajectory of business into a regenerative cycle
W
hen businesses recognise the new market opportunities created by
circular practices, they will see the commercial incentive to drive meaningful change. Ask any business leader about the circular economy, and they’ll likely provide a knowledgeable answer. Yet initiatives remain small-scale pilots rather than widespread transformations. Estimates suggest the world discards over two billion humanity is using resources gleaned from the earth 1.7 times faster than the planet can produce them. Moving away from these deeply ingrained linear economy practices requires a fundamental mindset shift. The key incentive lies in recognising the commercial potential of circular models. Once businesses see the market opportunities that circular Today, we are in the early stages of exploring circularity as a business model, not billion market. However, companies both proof points. To deliver circularity at scale, businesses must adopt four systems of change into their operations:
1. Design for Sustainability: The principles of Design for Manufacturability/ Reliability (DFM/DFR) are traditionally driven by product economics. Design for Sustainability (DFS) complements many of these established practices but also contradicts some. Serviceability, extensibility and recyclability become important principles to retain and recapture value throughout a product’s lifecycle and beyond. AI-driven models can help simulate and optimise the lifecycle value of a product, making it more valuable to maintain or upgrade, including through software-driven lifecycle extensions.
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DFS also drives changes to
product structure and material supply chains to enhance in transport, by reducing material consumption promoting
recyclability and draw down on raw material consumption. For instance, plastics and hazardous materials, such as the PFAS used in textiles, should be minimised. Car manufacturer Volvo intends to be a
material reduction and sourcing more durable materials that can be reused and recycled into of 17% recycled materials, and Volvo hopes to increase that to 25% recycled or bio-based materials in its new car models. 2. Supply chain traceability: Data which enables traceability in the supply chain is critical to re-engineer carbon-intensive, one-way supply chains and create more economic opportunity across communities, including the ones in which the products are used. Rather than exploiting the environment or labour for raw materials, the idea is to extract parts, components and materials and reintroduce them into the supply chain or use them in new applications. 3. Manufacturing, remanufacturing and reverse logistics: Businesses must establish strategies for the reintroduction of recovered material and the reduction of single-use and intermediate materials in the manufacturing process. Data models, such as Digital Product Passports and Lifecycle analysis (LCA) are critical in enabling the design of the extended supply chain, contract manufacturing arrangements and logistics processes. For example, when GE Healthcare’s older medical equipment is not suitable for refurbishment, desirable components are redeployed as reusable parts or recycled. be recyclable.
4. Lifecycle revenue models: Finally,
circularity requires a rethink of the product itself, the market in which it’s sold, the ecosystem that supports that market, and the value delivered
Cognizant
www.cognizant.com
Automation | March 2025 29
to customers. Manufacturers of large assets, such as turbines and earthmoving equipment, have had to think beyond being assets which deliver revenue ‘by the hour’. It is also critical to consider an integrative view of lifecycle costs to maximise value beyond manufacturing. Remote asset management, levers for reducing Scope III emissions and improving sustainability. In summary, establishing a scalable,
circular business model requires transforming many operating processes. Generative AI (Gen-AI), IoT and a whole spectrum of technology levers play a critical role in designing, simulating and ultimately scaling circular transformations across organisational stakeholders and supply chains. Businesses can jumpstart their circular 1. Tweak and transform: It’s important to companies to capitalise on near-term value opportunities to prove the concept, then work toward a more transformative opportunity. 2. Integrate downstream visibility: Whether through takeback programs, subscription services or reverse logistics processes, businesses need to track what happens to their products and the materials they contain throughout their lifecycle. 3. Use technology to drive collaboration and empowerment: Gen-AI, machine learning and IoT enabled operations all help solve a crucial transformation challenge. 4. Establish correlation between business and customer goals: Circular business models Re-interpreting ESG data for business performance and creating more authentic, material value propositions for customers will accelerate this transformation.
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