Are you ready to add circular elements in your business?
Updated: Oct 6, 2022
The first of companies that have production based on the usage of virgin materials are already running circular pilots. Some of the pilots are commercial, and some are just pure prototypes. The goal in both cases is to see how circularity affects the business model, flow of money, and cost base.
Un/known has been privileged to participate in planning some of these pilots and we have also benchmarked what global players are doing. Below are some questions you might wish to address with a circularity pilot:
Who gets paid what if our product is re-used? Who has what decision-making power in this set-up?
Changes in negotiation power within value chain affect everyone involved. These are the moments where new success stories are created, and some companies loose their ability to keep up high margins. Many companies wish to better understand how the power within value chain changes with re-use, repair, or circular raw materials.
How does money flow between the players with reused products and circular materials? Is this a business case only for the second hand sales party, or could the original producer somehow have a role in for example material reuse.
The companies that do their pilots now, know what is important - what should you keep control over - and are ready when the real business negotiations begin.
Customer preferences and how that differs between geographies and cultures: What is “green” or “sustainable” for your customers?
Another question is, of course, about the business potential. How much and to whom are customers willing to pay for reused products, recycled materials etc? Is a product that is made of reused raw materials worth more or less than one made of virgin materials? Can we reach quality standards with reused materials? What right or wrong assumptions do stakeholders have about circularity?
What and where are the costs related to circular products? Are they quality related? Increased production or material costs? Or something else?
As the regulation on virgin material sourcing, production and recycling are surely only tightening in this decade, now is a good time to start learning!