Manufacturers Are Driving Sustainability and Profits Through Circularity

In 2023, sustainability became top of mind for nearly every brand and manufacturer and will only become more of a priority in 2024. As an environmentally conscious consumer, I’m grateful to experience the steps our clients are taking to ensure that sustainability is addressed every step of the way in their manufacturing processes.

To have the greatest impact, forward-thinking manufacturers are leading by making sustainable choices at all stages of the supply chain—from sourcing to disposal and beyond. This ensures product journeys are no longer linear, but circular—which contributes to sustainability, efficiency, cost savings and more. It’s time for manufacturing and logistics leaders to understand circular product journeys and how they can take advantage.

Circularity Explained

Since the Industrial Revolution, most products have followed a similar life cycle: from manufacturing to use and then disposal. This linear product journey is uncomplicated, but it’s also unsustainable and at odds with the realities of modern society. Demands from consumers, regulators, internal stakeholders and more are changing the way brands and manufacturers think about their products and their product journeys. For instance, consumers are not necessarily investing in the latest models of products, with CCS Insight finding that sales of refurbished phones are skyrocketing to $13.3 billion, a 14% increase from 2022.

When manufacturers evolve from a linear to a circular product journey, a priority is put on product life extension, a central component to slowing resource depletion and reducing environmental footprints. Going circular is an evolution, not an overnight switch. Mindsets and processes need to shift to ensure that reuse, repair, and recycling remain at the forefront. 

The Role of Data

Having the right data plays a major role in moving towards circularity. All manufacturers know that a successful product is underpinned by data about every aspect of its production that will be needed downstream, such as tech specifications, materials details, and more. This data makes it easier to identify unsustainable parts of the process and areas for improvement and can even help end customers decide what to purchase. Data collection also extends to the use phase of a product and can further highlight opportunities for more clean and effective utilization.

A product information management (PIM) solution plays a key role in keeping product data updated across all touchpoints of the product lifecycle. Early-generation, off-the-shelf PIM solutions were built for a linear product journey, but some providers have now evolved to help manage the specific challenges that a more circular, interconnected product journey presents. The right PIM solution can support transparency needs and help product stakeholders make smarter decisions, from identifying ways to reduce environmental impact to optimizing design for recycling or refurbishment. Further, a PIM can help manufacturers meet environmental compliance needs for product data. Increasingly, brands are required to report on the performance, composition, and impact of their supply chains as well as the lifecycle of their products. The European Union’s forthcoming digital product passport (DPP) initiative will require companies (in specific sectors, at first) to make product information relating to every part of the product lifecycle publicly available.

The End Is Not the End

One of the key practices of a circular product journey is rethinking when a product reaches end of life. The first step is preventing users from discarding products too quickly. Premature obsolescence refers to when products lose their perceived economic value before their intended lifespan expires. The growing ‘Future Adaptive Design’ movement aims to design products that will not quickly become obsolete and can be updated for greater reuse.

Manufacturers and sellers can also play a role in engaging buyers after a sale. With detailed information and a clear picture of the product’s ecosystem, they can offer tailored services, such as selling warranties, offering maintenance services, and cross-selling related products. This process builds long-term relationships that foster valuable revenue-driving opportunities.

Once a product has truly reached the end of its use, the final step is not to send it to a landfill. When products reach the end of their lifecycle, there are several options to minimize their environmental footprint. Certain materials can be extracted and sent back into the supply chain and others can be reused in newer versions of the same product. Brands can refurbish and resell entire products, or their composite parts and materials. Product information is crucial to this process, as having a complete understanding of what went into a product at every stage makes it possible to maximize the value of every material and component at end-of-life.

An example of a company reimagining the later stages of the product journey through a circular lens is wind turbine provider Vestas. They have been  developing an online marketplace where contractors, customers, and maintenance workers can search through thousands of spare parts to extend the life of their products. With accurate links between products, accessories, spare parts, and customers, Vestas can drive increased profitability and sustainability.

What’s Next for Circularity?

More supply chain stakeholders are becoming aware of the importance of a circular product journey and the component steps. Once the decision has been made, the next step is taking action to make it a reality. There are still challenges, such as lagging technology to support circularity initiatives, according to the World Economic Forum. However, product information management technology is evolving to enable brands and manufacturers to take the pie-in-the-sky idea of circularity and translate it into practical and tangible processes that truly facilitate circular decision-making.

Ultimately, the producers who take these steps sell better products and a responsible and transparent approach to business. The benefits are clear, and the ripple effects of this change will have positive effects long into the future.

Niels Stenfeldt is the Chief Executive Officer of inriver, a leading provider of product information management solutions. He has more than 20 years of technology leadership experience in scaling high-growth, B2B companies like Oracle, SAP, and OpenText. Before joining inriver, he was an independent industry advisor and founder of boutique advisory firm Lanell.

Niels is a specially appointed member of the Danish Business Regulation Forum, where he advised the Danish government on future business-oriented EU regulation — particularly regarding green taxonomy, GDPR, and The European Data Act.