How SAP Technology Helps Build A Circular Economy

How SAP Technology Help Build A Circular Economy

According to Maggie Buggie, Chief Business Officer at SAP Services, SAP technology focuses on five key areas that lead to a circular economy– responsible design, responsible sourcing and marketplace, responsible production, responsible consumption, and resource recovery and reuse.

The circular economy paradigm has been gaining more traction recently especially with the pandemic revealing the vulnerability and challenges of a disrupted global supply chain. Today, many businesses are looking into technology to help them solve supply chain issues and accelerate their transformation to a more sustainable, circular business.

In an article written by Buggie “The Circular Economy: Enabling the transformation to circular business”, she highlighted that achieving a circular economy needs the conscious effort of businesses to start small by embedding circularity in every part of the production– from design through to execution. She stated:

“The only successful circular approaches seem to rely on clear resource ownership – in many cases within one company – throughout the entire value chain. Crucially, moving classical linear value chains toward circularity also requires trustworthy collaboration between participating industries.” 

SAP’s Focus

SAP identified these five key areas that together lead to a circular business while minimising costs; increasing customer satisfaction; mitigating risk; growing profits; and enabling resilience.

Responsible design. This key area focuses on designing out waste and pollution through model-based systems engineering.

Responsible sourcing and marketplace. This key area centers on creating value and sustainable sourcing solutions.

Responsible production. This key area leverages real-time tracking technologies to trace products and material’s progression through the value chain.

Responsible consumption. This key area means creating greater transparency around products and processes through technology like Traceability apps.

Resource recovery and reuse.  This key area enables SAP to track waste flows, supply, and valuation.

Embracing Technology and the Circular Economy

Much like SAP, many orgnisations across industries have already embraced the concept of circular economy leveraging technology to accelerate their transformation. 

Take for example paper manufacturer Steinbeis, which produces around 300,000 tons of recycled paper every year. Steinbeis is a leader in the sustainable, closed-loop manufacturing of recycled paper that leverages efficient IT systems.

Sharing his insight about the circular economy and the company’s initiative to use recovered paper instead of wood, Steinbeis’ Managing Director Ulrich Feuersinger said:

“It doesn’t just save energy and resources; it encourages people to think more carefully about how raw materials are used and consumed.”

“We use significantly less energy and water to produce our paper than manufacturers of comparable paper made from fresh fibers. We reuse waste paper, so trees aren’t being felled directly for our products,” he stressed.

Dr. Michael Hunold, head of New Processes at Steinbeis, shared how the paper manufacturer was able to create an infrastructure anchored on the two decades of using SAP technology and the “Industry 4.0@Steinbeis Paper” project, which leverages SAP HANA. He said:

“The key to our strategy is this: all the data from our paper factory is now available on one technology platform rather than – as in the past – in two separate places, production, and the SAP world.”

“Our Industry 4.0 project and SAP technology have given us the infrastructure we needed. We now want to use that infrastructure for any process in paper manufacturing, paper sales, and raw materials procurement. That’s the challenge we’ll be tackling next,” he added.

On Creating a Closed-Loop

Another organisation that works toward a circular economy is eXXpedition, a series of pioneering all-female sailing voyages to raise awareness of, and solutions for, the devastating environmental and health impacts of single-use plastic and toxics in the world’s oceans.

eXXpedition Co-Founder and ocean advocate Emily Penn said that today’s consumers are expecting sustainable options and legislation, which should be strongly considered by businesses. According to her, creating a circular economy is about living and producing in circles, as seen in nature.

“The idea of a circular economy is to think in that same mindset. If you can close the loop then we can avoid living how we live now, which is this very linear society where we take something, usually oil from the ground to make something like fuel or plastic, and then there’s a waste product at the end, like the plastic ends up in the ocean or landfill, or in the form of fuel it’s waste carbon dioxide that ends up in the atmosphere. We’re trying to close that linear system into a closed-loop,” she explained.

In Episode 2 of the virtual event e’ffect 2020: The Ultimate Innovation Experience Event, Emily Penn will talk about the importance of sustainability and the critical role of businesses in the circular economy.

For free access to e’ffect 2020, register here 

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