Advances in technology and innovation driving the circular economy in manufacturing: Sage study
by CM Staff
“The State of the Circular Economy” report shows that the manufacturing industry is paying greater attention to the need for, and benefits of, the Circular Economy (CE).
TORONTO — A new study by Sage, a company involved in accounting, financial, HR and payroll technology for small and medium-sized businesses (SMBs), reveals the significant hurdles faced by manufacturers and distributors shifting to a sustainable Circular Economy business strategy, despite widespread acknowledgement of the many benefits it will deliver.
“The State of the Circular Economy” report shows the industry is paying greater attention to the need for, and benefits of, the Circular Economy (CE). It comes in response to the growing importance of sustainable business practices to over 60% of employees, customers, shareholders, and supply chain partners alike.
CE is based on the principles of designing out waste and pollution, keeping products and materials in use, regenerating natural systems, and supporting environmental sustainability. 84% of senior leaders say building and implementing a CE strategy is now part of their role, with 32% stating it is central to their duties.
Rob Sinfield, Head of Business Unit, Sage X3 and Sage Intacct Manufacturing, said: “Sustainability is increasingly becoming a non-negotiable for modern manufacturers and distributors. While business goals remain front of mind, the industry equally recognises the importance of environmental drivers, with energy-efficiency and helping the environment as key motivations for pursuing a sustainability strategy.
“As a result, 32% of organizations globally and 43% of North American respondents adopting circular economy strategies are already reaping the rewards – from greater profitability and productivity to improved resource usage and an enhanced brand reputation. Better yet, a further 32% believe they will achieve benefits within the next three years.”
Manufacturers and distributors see new technology and innovations (72%) as a key enabler to adopting CE and sustainability strategies, and concerns arising from inaction such as damaged brand perceptions (46%) and reduced long-term profitability (46%) are consolidating the need for investment.
Overcoming the barriers to sustainable transformation
Organizations want to take advantage of the opportunities presented by becoming more sustainable, such as improved reputation (50%), increased energy efficiency (47%), increased business resiliency (46%) and a reduced impact on the environment (46%).
But despite recognizing the many advantages, global manufacturers and distributors are struggling to realize the full benefits. Navigating a turbulent external market, with its own immediate challenges of rising costs (72%), supply chain disruptions (71%) and changing customer demands (68%), is taking up valuable resources that leaders could otherwise invest in future-proofing their business.
Furthermore, two-thirds (67%) of manufacturers and distributors still need to transform their business operations in order to shift to CE. 64% of those companies say transformation is a significant barrier and is hindering their pursuit of greater sustainability. Finding people with the right expertise (71%) is the biggest challenge, along with cost and budget limitations (68%) and updating technology integrations and processes (68%).