Second entry in the micro series of posts in which we discuss different business models for the circular economy. This time, we will talk about reducing the cycle.
There are different ways to approach the circular economy, reflected in different business models that offer different impacts on profits and sustainability. These solutions are important because the current economy is detrimental to the planet.
The circular economy aims to reduce waste and resource use by considering every aspect of a product’s life cycle. Circular business models attempt to find economically viable ways to continually reuse products and materials, incorporating renewable resources wherever possible.
Reducing the cycle
The cost reduction strategy involves incorporating fewer resources into the production cycle. This can be achieved through efficiency, by using fewer resources to create a product. If a company has invested in actions such as reducing energy use, saving water or making lighter products, it is already reducing the cycle.
Another restrictive strategy is to replace unsustainable materials with greener alternatives. A common example is switching to renewable energy.
The most common business models that reduce resource use maximize efficiency. For example, lean manufacturing aims to eliminate waste. Efficient practices attempt to reduce excessive use of resources.
Advantages and disadvantages of reducing cycle time
Efficiency strategies can deliver clear results with few changes to broader business models. Actions as subtle as changing light bulbs generate considerable savings and offer environmental benefits. This is particularly true for large companies.
Substituting more sustainable inputs, e.g. less toxic chemicals or local materials, can increase production costs and prices. As with many circular economy strategies, there can be benefits in terms of reputation and customer interest.
In the next post we will look at another type of business model, based on closing the loop.
Photo credit: PM
