Triptych the vision of New Economy: Longer in the chain
New Economy is working on the transition to a new economy. One aspect of this is the circular economy. In a three-part series, we'll discuss what's important for shaping the transition to a circular economy. This blog post focuses on the importance of keeping products in the supply chain longer.
Triptych of the New Economy vision:
This blog focuses on the strategy for keeping products in the supply chain longer and thus increasing revenue with existing resources. Current revenue models are generally sales-oriented, and therefore revenue primarily comes from selling as many products as possible. This system creates an incentive for manufacturers to design products with a relatively short lifespan, with a new product sold after use. Much value is lost in the process. The circular economy is an economic system based on the idea that raw materials, components, and products retain their value for as long as possible within the supply chain and can circulate indefinitely within the economy. Although recycling has recently received considerable attention in the business world, extending the lifespan of products goes far beyond simply recycling materials. It involves retaining a product's most valuable components in the use phase for as long as possible, utilizing them efficiently, and thus creating maximum value with fewer resources.
Merit
Many companies believe that adopting circular production requires redesigning their entire product, which often requires a significant investment. However, numerous smaller steps are possible by adjusting the business model, extending product lifespans and saving resources for developing new products. One example is offering products through sharing platforms, which encourages more efficient use. Another is charging consumers for services or access to a product, with the manufacturer acting as a service provider. These models ensure that products are used more efficiently and remain in the supply chain longer because they are repaired instead of replaced. This reduces the need for raw materials to be used in the production of new products. The entire production process doesn't necessarily have to be redesigned. It's actually possible to extend the lifespan of current products using a different revenue model. This also creates a new target group that can utilize secondhand or refurbished products, and allows manufacturers to generate more service-providing revenue, strengthen existing customer loyalty, and provide them with a product or service.
Furthermore, there are some rules of thumb that can be used to determine how long a product or component should last. Keeping a product in the supply chain doesn't always make sense, both economically and ecologically. For example, in product innovation, cheaper and more sustainable alternatives have entered the market that are more efficient during use and therefore generate short-term profits. For example, replacing single-pane glass with double-pane, HR+, or HR++ glass. The single-pane glass can then be recycled and reprocessed into new products. If wood is chosen as a material for a product, for example, to capture CO2, the product must last at least as long as it took the tree to grow. The true value creation of wood, therefore, only occurs when it can be used longer than it took to produce it. When something is used for a shorter period, it essentially only drives deforestation or a shift in land use (which often involves deforestation).
Inspiring examples
The beauty of it is that it's not necessary to design a new product to achieve a circular business model. Several companies are actually using products already in the market. Saneral offers used production machinery (granulators and shredders), Labmakelaar trades in used laboratory equipment, and Octopi is an online platform for second-hand industrial materials and tools. Products extend their lifespan through reuse and, combined with proper maintenance, can provide the necessary service at a lower cost, avoiding the production of new goods. Currently, thousands of products are in circulation that will be destined for the incinerator in ten years, while their quality, with proper maintenance, could last at least twice as long. These are opportunities, and they're there for the taking!
What does New Economy do?
New Economy always works towards implementation. By no longer just discussing objectives and ambitions, but by taking concrete steps towards circular design. Organizations can achieve a huge impact by designing parts of their production process circularly, thus gradually creating circular products.
Triptych of the New Economy vision:
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