How can Industry 4.0 support the circular economy?

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The fourth industrial revolution, or Industry 4.0, is defined by the way it merges the digital and physical worlds together to create a fully connected production process. Similarly, the circular economy requires supply chains to be linked together to minimize environmental impact as much as possible.

Today, the manufacturing industry faces unique challenges, including increased competition and pressure to make its operations more sustainable. As manufacturers, including components manufacturers, develop new business models with the resilience to face these challenges, both Industry 4.0 and the circular economy will be influential trends.

This article will outline the circular economy, Industry 4.0 technologies and how they can be brought together to benefit manufacturing businesses, including:

What is the circular economy?

The circular economy is a system where production processes and supply chains are connected together to create a continuous cycle of manufacturing and consumption. The purpose of the circular economy is to minimize waste wherever possible. This may involve recycling materials from products, optimizing energy usage and reducing production pollution.

Generally, to become part of the circular economy, businesses need to reform their models according to the following principles, each of which can be applied to any part of their operations and production process.

  • Reduce: the consumption of new raw materials, production of carbon emissions and energy use are all potential targets for reduction.
  • Reuse: wherever possible, the reuse or repurposing of materials and resources should be prioritized.
  • Recycle: using innovative thinking to turn products or materials from their original form into something more useful when required.
  • Recover: when it's not possible to reuse or recycle, recovering as many useful materials or resources should become the priority.

As well as following these principles, all products made in the circular economy are designed, created and disposed of with minimal waste in mind, unlike a linear manufacturing process or supply chain. From sourcing raw materials to minimizing emissions during operations and considering end-of-life processes, each product's life cycle management process is considered alongside the circular economy model.

What are the benefits of the circular economy?

The main benefit of the circular economy is improved sustainability. For example, the Ellen MacArthur Foundation has estimated that developing the circular economy could reduce carbon emissions production by half up to 2030.

For businesses, being part of the circular economy can enhance an organization's green credentials in a variety of ways. This includes helping them to:

  • Reduce their carbon emissions production levels.
  • Minimize their resource consumption, such as their use of fossil fuels.
  • Optimize their energy usage across their whole operations.
  • Lower waste management costs and less impact on landfill.
  • Maximize their resources, including raw materials and equipment.

This progress was recently noted by a study from the World Bank. This reported that the total raw material use has reduced by 9.4% in the last 20 years, with recycled waste increasing by nearly 50%.

Reuse and recycle

In addition to the fact that being part of the circular economy can enhance company sustainability performance, manufacturers can enjoy plenty of business benefits too. This is because those that develop new circular business models have to thoroughly review and rethink their business and manufacturing processes.

As a result of this, they can enjoy extra advantages within their business, including:

  • More resilient and sustainable production processes thanks to increased efficiencies, such as reused waste product, Industry 4.0-enabled production processes and designing for durability and disassembly. 
  • Being able to meet tough environmental legislations and standards.
  • Reduced operational costs thanks to optimized energy usage and the reuse, repurposing and recycling of raw materials.
  • Increased competitiveness with greener credentials and, in some cases, better product prices due to operational cost savings. These savings can be achieved through initiatives such as reverse logistics and components re-manufacturing.

As a result of the combined business and sustainability benefits, more manufacturers are looking to enter the circular economy.

What are the challenges of building a circular economy?

Although being part of the circular economy has the potential to bring huge advantages to manufacturing businesses, there are significant challenges to implementing the changes required. As the World Bank's recent study identified, even those businesses that have begun to adopt circular economy models are finding difficulties in scaling these changes quickly and in any real depth.

One of the main difficulties in implementing a circular economy model is putting effective circular supply chain management in place. From raw materials suppliers to the final end customers, each stage of the supply chain needs to be reviewed and connected for it to be integrated into a circular economy cycle.

Connected green icons

Yet balancing sharing this information while maintaining their data security and intellectual property is a main concern for original equipment manufacturers (OEMs). How do OEMs share information about their operations with their partners without making all their sensitive data visible to competitors?

Similarly, supply chain management in the circular economy extends beyond the moment a product arrives with the customer. When the product (a plastic component for example) comes to the end of its life, any usable materials need to be reused, repurposed or recycled. As such, manufacturers need to consider how to help their customers complete this cycle to truly become part of the circular economy.

Though the real value of circular economy can't be realized until the entire supply chain is linked together and optimized, it is still possible for manufacturers to make changes to their own production processes and operations. This includes integrating Industry 4.0 technologies.

How can Industry 4.0 help overcome these challenges?

Implementing the digital technologies of Industry 4.0 requires significant financial investment from manufacturers. However, making these changes has already been proven to enhance the efficiency and sustainability of industrial production.

A survey by McKinsey found that 'lighthouse' businesses which have already brought into these technologies said they were key to facing the challenges of productivity, resilience and sustainability.

As such, for manufacturing companies looking to become part of the circular economy, implementing the right Industry 4.0 technologies can be highly beneficial.

Enhanced data analysis

Big data technologies supported by cloud computing are key to tracking products across their entire life cycle. From the raw materials or OEM parts used to build the product, to the amount of energy used to produce it and the total emissions released from its creation and distribution. 

Using technology to measure environmental impact

Installing smart technologies within the production system means manufacturers can collect and analyze a range of data to understand their product's life cycle. Once they've gained this knowledge, they can use it to optimize this life cycle according to the circular economy's principles.

Improved operational efficiency

Improving the efficiency of production processes doesn't just benefit customers, but the planet too. By taking an innovative approach and selecting the right technologies, businesses can track and identify areas of wastage more easily, giving them the insights, they need to minimize this waste.

Smart manufacturing tools such as machines equipped with AI, additive manufacturing techniques, predictive maintenance and a smart waste management system can all give manufacturers data that can be actioned to improve efficiency.

Machines equipped with artificial intelligence automatically track and optimise energy and material use across the whole production cycle. Plus, machine-learning data can be fed back into the design process, meaning better, less wasteful products can be created. 

Additive manufacturing techniques are seen as one of the main enablers of the circular economy thanks to its focus on minimal resource consumption and waste. This is because additive manufacturing enables different products to be designed, developed and tested more quickly. As a result, manufacturers can more quickly develop products that meet the requirements of the circular economy. 

Predictive maintenance helps to keep machines running as long as possible and minimizes the number of parts that need to be replaced, so nothing needs to be thrown away until absolutely necessary. Plus, keeping machines running efficiently prevents any energy or material wastage in the production process. 

Smart waste management systems work with IoT technology to track resource usage and waste across a whole business. It can identify materials that can be recycled, report back on the amount of materials disposed of and schedule any waste removal so fuel is only used for required trips. 

Meeting strict legal requirements

Integrating Industry 4.0 technologies into a production system doesn't just enable businesses to monitor and reduce their wastage, but to report data back to regulators too. This is key as environmental regulations and industry standards become stricter, particularly those around carbon emissions.

For example, the US Environmental Protection Agency (EPA) is set to bring in stricter regulations around the greenhouse gas emissions of vehicles and tighter controls over the release of pollutants such as coal ash into the ozone layer in 2023. Both are examples of the steps the US government is taking to reach green objectives set out in the Inflation Reduction Act and the Paris Agreement. These objectives are ones the US manufacturing industry will play a key part in reaching. 

Greater supply chain visibility

To enhance supply chain performance under the circular economy, businesses need to have a complete picture of their many suppliers and customers. As such, having a secure, data-driven supply chain management and analysis system in place is key to tracking each product through its life cycle.

Using tablet in warehouse

Eventually, it's hoped Industry 4.0 technologies such as cyber security will enable businesses to open up their supply chain to customers. With this transparency, customers can make informed, environmentally focused purchases and leading manufacturers can gain a competitive advantage.

How are components manufacturers using technology to support a circular economy?

Leading components manufacturers like Essentra Components, are meeting ambitious sustainable development goals, including being part of the circular economy with the help of emerging technologies.

For example, Essentra Components is using the following technologies to support a circular economy:

  • Adding heat jackets onto the injection molding machine barrels, reducing energy use by 15% and significantly cutting carbon emissions.
  • Implementing new manufacturing and plastics technologies to produce an LDPE range with 98% recycled polymer, helping to minimize raw material usage and carbon emissions.
  • Working closely with customers such as Iracroft to optimize products' end-of-life processes and minimize the number of components going to landfill after use.
  • Introducing advanced technologies into our fulfillment centers including in Nettetal, Germany to make our supply chain more predictable and efficient.

Essentra Components is also optimizing its operations to monitor and reduce waste and aims to have all of its sites certified Zero Waste To Landfill by 2030. It is working to divert at least 99% of all its business waste from landfill, choosing more sustainable disposal methods alongside implementing the waste hierarchy.

By turning the circular economy and Industry 4.0 trends into practical outcomes, manufacturing businesses such as Essentra Components are helping to improve their sustainability while still delivering quality products and hassle-free service to customers.