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What goes around, comes around: The circular economy

  • Posted on June 30, 2020
  • Estimated reading time 3 minutes

This article was co-authored by Camellia Ho, intern with the Avanade Emerging Technology Team. 

One of the future scenarios we’ve imagined is a world where you save time and effort by not going to the store and purchasing everyday goods you need. You save money from not making impulse buys at the grocery store. The products can be ordered online, delivered straight to your door, and refilled once they run out. 

Also, companies will be able to save money with return optimization platforms and through consumers sending back products they don’t need or use anymore so companies are using those returned products instead of repurchasing supplies. That means they can decrease the prices of products, saving you even more money. Companies will also have more stable production processes because they aren’t so dependent on suppliers, so you won’t have to worry about huge price fluctuations.

This can all be made possible with the circular economy. We’ve seen many retail, consumer packaged goods, and other companies, create new initiatives and recycling programs to become more environmentally friendly; however, recycling doesn’t solve the problem of waste creation – it’s a reactive solution, not proactive. The circular economy, however, tackles that problem head-on. It is a systemic shift in how the economy operates – moving from a take, make, waste model to a no waste model where products can be reused for longer, repurposed, or even shared among consumers (product as a service). At its core, the circular economy is centered around the idea that businesses should not only be adopting circular practices to save the environment, but also to create resilience within business operations, discover new business and cost-saving opportunities, and cultivate stronger relationships with customers. 

Circular economy initiatives require more than just throwing together a program on recycling and calling it a day. It requires a company to be invested in developing new processes/platforms/systems and understand that this is a long-term commitment that requires not only companies, but also customers to shift how they do business, their thinking, and relationship.  

Currently, we’ve seen Unilever recently roll out a new program with Loop, a circular shopping platform designed to eliminate waste through durable, multi-use packaging, that emulates the milkman model where customers have products delivered to them and empty reusable containers are picked up, cleaned, and prepared for another customer’s order. 

Looking at what’s currently developing within implementing circular economy practices, most companies tackle the circular economy with an ecosystems approach – choosing to partner with smaller startups or businesses that specialize in enabling technologies rather than develop their own platform or technology.  

It’s also important to highlight that an important factor in the success of implementing circular practices is how feasible or accessible they’ll be to consumers. While ideally, processes that lend a hand in saving the environment are commendable and should be adopted, the reality is that consumers will not want to give up their convenience. Having grown accustomed to having the world at their fingertips and being able to get things done and delivered with a click of a button, consumers will be unwilling to put in the time or effort to learn multiple platforms or to learn a platform that is not user friendly. For the company to be able to sustain the process or platform, it must be easy enough that eventually the consumer won’t have to think twice when using it – much like “Alexa, order Colgate toothpaste” – and can integrate it into their daily lives. 

With the rise of resale platforms such as Trove, there’s a huge shift in the company-customer relationship as the customer becomes a supplier to the company by selling goods that they’ve purchased back to the companies that produced them. Companies are no stranger to looking for ways to optimize their supply chains and processes, but closing the loop is a completely different ballpark that requires the development of new systems and processes, so it makes sense to fill that gap with an ecosystem approach and partner with smaller companies that have expertise, rather than building it on their own.

If companies can properly leverage enabling technologies while being conscious of customer behavior and expectations, they can propel their business towards a more sustainable and eco-friendly business model that benefits their cost savings, their relationships with customers, and society.

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