By Rob Stummer, Asia Pacific CEO at SYSPRO
It has been hotly debated for two decades, but adopting “circularity” at scale in the manufacturing and industrial sectors in Australia will have a significant impact on whether we achieve the net zero emissions target by 2050.
Circularity refers to a system aimed at the continual use of resources and eliminating waste, so keeping parts, products, equipment and infrastructure in use for longer. Waste from one process, should be an input into another process either as a by-product, as a recovered resource for another process, or as a regenerative resource that can be put back into the environment, like compost.
The Australian Prime Minister Scott Morrison supports the role the manufacturing sector will play and he said recently that he believes that the road to net zero is paved by: “the factories of our regional towns and outer suburbs.”
A circular economy can only be achieved through investment and collaboration with customers, suppliers, local communities and governments, so we can dramatically reduce waste, reduce fuel and energy consumption and create a cycle of repair, reuse, refurbishment and recycling. It is critical that they all work together to shift the Australian economy more aggressively toward circularity.
Cost savings of circularity
Several industries in Australia are already involved in circularity, mostly by using waste or scrap as input material for products including packaging (plastics, glass, tin cans), automotive (remanufacturing of parts) and construction (reusable abrasives).
The World Economic Form produced a report that predicted that circularity in EU manufacturing could result in cost savings of $809 billion, but only nine percent of the global economy is circular at present. So, there are proven financial benefits for manufacturers to consider adopting a circular approach and the circular economy could be a $5.8 trillion business opportunity globally.
One incredible example of excessive waste has been generated by the increased use of personal protective equipment (PPE) since the start of the pandemic, with much ending up as pollution in our oceans and waterways. An estimated 6.8bn disposable masks are now used across the world daily and are discarded after just one use.
An innovative example of circularity that seeks to solve this incredible amount of PPE waste by RMIT University’s research team is to develop road-making material that meets civil engineering safety standards by using a mix of shredded single-use face masks and processed building rubble. Using the recycled face mask material to make just 1 km of a two-lane road would use up about three million masks, preventing 93 tonnes of waste from going to landfill.
Analysis revealed that the face masks help to add stiffness and strength to the final product, designed to be used for base layers of roads and pavements. The material would both meet civil engineering safety standards and help tackle the vast amount of waste generated from PPE.
Using ERP to achieve circularity
Due to its significant resource use and waste, the manufacturing sector has for many years been an obstacle to the circular economy. Now many leading manufacturers are starting to take circularity more seriously and are building it into their everyday operations.
Manufacturers with modern ERP systems can easily implement a circular economy initiative by immediately incorporating digital technology to preserve and extend what is already made and collaborate to create joint value.
Using advanced ERP capabilities such as ‘Inventory Optimisation’ can help manufacturers run lean production lines, with functionality such as ‘Just in Time Materials’. This can also lead to a reduction of materials or products that may be spoilt due to reaching the end of their shelf life or the mismanagement of stock.
Using artificial intelligence (AI), manufacturers can not only reduce the downtime of machines and identify that equipment is about to fail before it fails, but they can also use AI to ensure machines are in use for longer and fewer full replacements are required.
ERP provides the solutions, processes and tools to assist you to manage your data and gain insights into your business. Using this, manufacturers can contribute to the circular economy by processing inputs and raw material more efficiently, while reducing waste and protecting the environment. The added benefit of improvements in operational efficiency ultimately improves productivity and ultimately bottom-line results.
It is an opportunity for companies to play a greater role in circularity, as good corporate citizens for the sake of future generations.
Changing the business model
Rethinking an organisation’s business model is becoming an increasingly important requirement as manufacturers progress their digital transformation journeys. An ERP system has several tools within the manufacturing and distribution areas of the software that already support circularity and can help to improve circularity implementation.
A manufacturer or distributor can immediately incorporate digital technology, preserve and extend what is already made, and collaborate to create joint value. Replacing the business-as-usual model that threatens our very existence on the planet with circular solutions that offer real hope and prosperity for the future is what all manufacturers and distributors should be striving for.