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WHITE PAPERManufacturingRedefining ProductLifecycle Managementin a Circular EconomyAbstractIncreasing demand for products has caused anincrease in the demand for resources. However,dwindling natural resources result in high inputand conversion costs. Companies can move to acircular economy by implementing the 5Rapproach (reduce, reuse, repurpose,remanufacture, and recycle). This shift will drivesustained growth, and impact how ProductLifecycle Management (PLM) capabilities arede ned, implemented, and measured.
WHITE PAPERManufacturingPhilips, has begun totreat lighting as aservice, likeelectricity or theInternet.¹ Thecompany now sellslighting as a serviceto businesscustomers who onlypay for the use oflight, while it takescare of thetechnology risk andinvestment inhardware.Such innovation notonly requires newstrategies but alsodemands new skillsand capabilities.Emerging Business Models Change theGameSome leading organizations are adopting and framingstrategies to support a circular economy (CE), while others arepiloting business models around it.A circular economy is:nAn alternative to the linear ‘take, make, and dispose’ model.nRegenerative, closes loops and keeps products, components,and materials at their highest utility at all times to eliminatewaste.nA framework built on various schools of thought such asCradle to Cradle, biomimicry, industrial ecology, naturalcapitalism, and performance economy.Key Trends of a Circular EconomyKey trends that directly in uence the realization of a circulareconomy include:nPromoting the ‘product as a service’ concept: Visionarymanufacturers are adopting the concept of product as aservice (PaaS). This model ensures that the product is usedelsewhere if it has not reached end-of-life, and if it has, itsparts can be recycled or reused.nEncouraging reconditioning and remanufacturing:Redeployment of products results in additional income.Original Equipment Manufacturers (OEMs) are discoveringcreative ways of offering reconditioned products at nearlyhalf the price, with the same warranty.nEnabling product transformation: This new approach todesign focuses on reuse, remanufacturing, reconditioning,and recycling in an organization.nImproving recycling: Affordable and user-friendlytechnology is making it easier to extract core materials fromproducts, and ensure better and faster recyclability.nCultivating reuse: Many products such as books andclothes are discarded before they reach end-of-life. Socialmedia is making it possible for sellers and buyers to connectand trade in a safe and cost-effective manner, exponentiallyincreasing reach.
WHITE PAPERManufacturingCon ict mineralssuch as coltan,cassiterite, gold ore,and wolframite arenatural resourcesobtained fromcon ict areas andsold to fund combatoperations and tocreate otherproducts.Making the Case for a Circular EconomyComponents and materials ow through various lifecycles untilthey ful ll their useable life.Currently, the demand for commodities is growingexponentially and this trajectory is unsustainable over the longterm. Natural resources are rapidly depleting due to increasedmanufacturing needs. The availability of resources needed fordifferent industries is also constantly shrinking. This could soonlead to severe environmental, economic, and socialrepercussions.There is also a growing trend of managing con ict mineralsthrough policy decisions and reporting. In essence, increasingscarcity of resources and rising costs are the key drivers of acircular economy.Challenges to Adopting a Circular EconomyOrganizations need lifecycle and real-time product informationto plan and design scenarios that enable optimal reduction,reuse, remanufacture, recycle, and repurpose strategies.However, owing to a CE poses challenges such as:ninsuf cient value chain collaborationsnDisconnected internal change managementnSub-optimal policy conditionsnShortage of next generation technological supportnLack of awarenessnUntimely or unavailable systematic information systemsAnother signi cant constraint is the continued unwillingness ofgovernments to use suitable economic and nancialinstruments to complement the preferred governance andadministrative approaches required for implementing a circulareconomy. Insuf cient nancial support from banks andinadequate public tax incentives further prevent enterprisesfrom adopting more environmentally-friendly technologies.As a result, manufacturers nd little or no economic incentivein saving tightly controlled resources such as energy, material,and water. Even if these resources become more expensive,they are able to transfer the cost to consumers in the form ofhigher price markups.
ManufacturingImplementing Circular Economy Principleswithin an OrganizationWhile companies are aware of the importance of moving to aCE, they fail to act on the assumption that they will not beimpacted. To facilitate the move towards a circular economy,businesses must proactively:nBring the concept of circular economy into executivedashboardsnMake products circular by designnCreate a fundamental change in mindsetnHarness technology to transform PLMThree Steps to Implementing aCircular Economy1. Embrace social media, gami cation, and certi cation:Organizations can create awareness about the circulareconomy and exponentially spread the message.2. Prepare to adopt circular economy principles:Organizations can prepare to adopt circular economypractices by leveraging supporting technology, gettingreverse logistics right, and improving information availabilityfor collaboration and decision-making.3. Realize the potential of a circular economy:Organizations need to establish transparent business modelsthat provide incentives to adopt circular economy initiatives.IncreasedValueValue realization over timeWHITE PAPERPossibleIncremental ValueToday2025Traditional EnhancementsLinear EconomyTodayReduce2025Reuse RepurposeReconditioning/RemanufactureCircular EconomyValue Potential of Products in the Circular Economy ApproachRecyle
WHITE PAPERManufacturingConclusionCustomers, OEMs, and organizations—all bene t by goingcircular. Over 100 global companies have already partneredwith the Ellen MacArthur Foundation to put circular economyconcepts into practice as a business proposition, and notmerely as a CSR initiative.2 Companies that rethink PLM tominimize waste can greatly enhance their competitiveadvantage.In this age of natural resource scarcity and the rising need forsustainability, organizations can carve out a leadership positionin the marketplace by innovating circular economy practices togain resource ef ciency, deliver superior customer value, andrevolutionize their operations.References[1] Ellen MacArthur Foundation, Towards The Circular Economy - Volume 3, January 2014,accessed on June 1, ess/reports/ce2014, Page 18[2] Ellen MacArthur Foundation, Towards The Circular Economy Volume 3, January 2014, accessedon June 1, ess/reports/ce2014, Pages 6 and 68
WHITE PAPERAssurance Services UnitAbout The AuthorsAbout TCS' Manufacturing Business UnitEdzil GonsalvesTCS helps global manufacturers reduce operational expenditure, utilize capacityoptimally, and increase efficiencies while meeting safety and regulatory norms.We are the preferred partner for a third of the Fortune 500 manufacturers, andhave a record of enabling business innovation that helps them meet theobjectives of global operations.Edzil Gonsalves is a lead NewProduct Introduction (NPI)consultant with themanufacturing innovation andtransformation group at TCS.He has over 25 years ofexperience in areas such asproduct development, supplychain and programmanagement.Babu K NagiligariBabu K Nagiligari is an NPIconsultant with themanufacturing innovation andtransformation group at TCS.He has over 11 years ofexperience in manufacturing,supply chain, engineering, andproject management.Vikram ShahThe core strength of our solutions lies in our rich experience across discrete(automotive, industrial manufacturing, and aerospace) and process industries(chemicals, cement, glass, and paper). Our vertical focused Centers of Excellence(CoE) leverage this rich database to cross-reference learning and drive innovationin business solutions for standardized processes, assets and templates, ERPimplementation, and continued support services.Our solutions and services portfolio spans IT-led business transformation; design,development, and support for IT solutions; and value-added services such asinfrastructure management and consulting.ContactVisit TCS’ Manufacturing unit page for more informationEmail: manufacturing.solutions@tcs.comSubscribe to TCS White PapersTCS.com RSS: http://www.tcs.com/rss feeds/Pages/feed.aspx?f wFeedburner: http://feeds2.feedburner.com/tcswhitepapersVikram Shah is an NPIconsultant with themanufacturing innovation andtransformation group at TCS.He has over 14 years ofexperience with Fortune 500companies in automotive andoff highway equipmentmanufacturing.Tata Consultancy Services is an IT services, consulting and business solutionsorganization that delivers real results to global business, ensuring a level ofcertainty no other firm can match. TCS offers a consulting-led, integrated portfolioof IT and IT-enabled, infrastructure, engineering and assurance services. This isdelivered through its unique Global Network Delivery ModelTM, recognized as thebenchmark of excellence in software development. A part of the Tata Group,India’s largest industrial conglomerate, TCS has a global footprint and is listed onthe National Stock Exchange and Bombay Stock Exchange in India.For more information, visit us at www.tcs.comAll content / information present here is the exclusive property of Tata Consultancy Services Limited (TCS). The content / information contained here iscorrect at the time of publishing. No material from here may be copied, modified, reproduced, republished, uploaded, transmitted, posted or distributedin any form without prior written permission from TCS. Unauthorized use of the content / information appearing here may violate copyright, trademarkand other applicable laws, and could result in criminal or civil penalties. Copyright 2016 Tata Consultancy Services LimitedTCS Design Services I M I 11 I 16About Tata Consultancy Services Ltd (TCS)
Organizations need lifecycle and real-time product information to plan and design scenarios that enable optimal reduction, reuse, remanufacture, recycle, and repurpose strategies. However, owing to a CE poses challenges such as: n insuf cient value chain collaborations n Disconnected internal change management n Sub-optimal policy conditions
