August 3, 2016

Consumers Are Driving the Need for a Closed Loop Supply Chain in the Automotive Industry

Together with ABN AMRO, Circle Economy has investigated the trends in consumer demands and how car component suppliers can stay ahead of the curve by applying circular strategies to meet them.

The emergence of digital technology and social media has given consumers more power than ever before. With smart devices connecting every aspect of their lives, they are increasingly controlling how and where they engage with companies. With increased access to information and transactions occurring in real time, consumers have come to expect more, making it harder for businesses to keep up. Greater trust, convenience, and a sense of community are pushing the adoption of the sharing economy forward. Lower entry barriers for technology are resulting in rapid innovation and this is expected to speed up in the future. These trends are having an significant impact on the automotive industry.

"Private ownership of cars will disappear - though not completely - and cars will be owned by the manufacturer in the next 10-15 years. This will result in fewer cars, due to the fact that cars will be more heavily utilised through sharing."- Thijs Jasink - COO, ACtronics

The growing role of consumers is transforming the function of cars, making them smarter and more connected. The ever more rapid development cycles of new products and services and increasing technological complexity, require a complete restructuring of the automotive supply chain. As a result, car manufacturers are pursuing new differentiation strategies and engaging with their supply chains in order to meet these new, consumer demands.

"Suppliers need to be able to adapt to these changes quickly in order to stay relevant and avoid becoming the ‘Kodak’ of the automotive industry."- Ralph Ramaekers - Marketing Director Automotive, DSM Engineering Plastics

The report On the Road to the Circular Car, published by ABN AMRO and Circle Economy argues that car parts manufacturers are in a unique position to answer to these rapidly changing and increasingly dominant consumer demands by adopting circular strategies.

"Together with ABN AMRO and industry leaders we have created a vision for the automotive sector, showing them that by introducing circularity into their manufacturing practices and business models they can become future proof and stay successful in a fast paced, ever-changing industry".- Marc de Wit - Director of Strategic Alliances, Circle Economy

Circular strategies include using materials that can be easily reused, integrating modularity into the design of the car in order to make quick and affordable repairs and upgrades and shifting ownership so that car manufacturers remain owners of the cars themselves.

"Consumer needs require new business models that radically alter the traditional automotive chain. We have to redesign the car completely and reorganise the chain". - Jan-Paul Kimmel, CLAUT

To drive successful innovation, the automotive industry needs to collaborate across the entire value chain; this is where bottom-up, circular innovation from parts and component suppliers will play a crucial role.

Read the full report featuring examples of leading circular innovators and recommendations on how to future proof the Dutch automotive industry with circular business strategies through the link below.

[cta link="" ]Download the report[/cta]
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