How SAP Can Help Support Organizations’ Circular Economy Efforts

With a focus on responsible sourcing, production, and recovery, SAP is making responsible design and production a reality for companies around the world

Consumers and regulatory compliance standards are holding organizations to increasingly higher environmental standards, and for a good reason. The information and communications technology space currently makes up 2% of global emissions. This number is expected to increase to 20% over the next decade. Because of this, more vendors are focusing their attention on developing tools that can help organizations reach their sustainability goals.

The truth is that the concept of a circular economy is not new, with the term first appearing in 1988 in “The Economics of Natural Resources.” A circular economy means maximizing reuse, recycling, and resource sharing among industry partners to reduce waste and make the most out of valuable resources. Until now, an infrastructure capable of providing insights toward sustainability has not been executed on a large enough scale to make a difference.

SAP seeks to change that to minimize the need for new resource inputs, conserve natural planetary reserves, and reduce waste. SAP can help support organizations around the world in their efforts to integrate a circular economy and help producers take responsibility for their own environmental impacts.

SAP Responsible Design and Production Solution

SAP Responsible Design and Production is a new solution that helps develop a response to extended producer responsibility and other commitments regarding sustainability. These regulations have expanded in scope and scale over the past few years as public pressure for greener options increases.

This solution brings together data points that describe every material element in use and other regulatory materials requirements so that organizations can accurately view different regulations and materials scenarios. These insights can then be passed to stakeholders to track corporate commitments and deliver standardized reporting.

The combined efforts of WRAP, World Wildlife Fund (WWF), and the Ellen MacArthur Foundation have created a paradigm shift in producer-driven action. SAP has been working with industry leaders, non-governmental organizations (NGOs), regulators, and partners for the past three years on a project called Plastic Cloud to tackle the problem of supply chain waste.

SAP Responsible Design and Production seeks to allow businesses to manage their operational costs associated with meeting regulatory requirements. The insights provided by this application are meant to be used by companies to make better decisions through increased visibility of material flows overall.

SAP Focus on Sustainability

To drive sustainability at scale, it’s crucial to embed operations, experiences, and insights into your business processes while maintaining a secure environment safe from hackers. Managing a circular economy internally can be challenging without adequate visibility and intimate knowledge of the marketplace and resource availability.

The SAP initiatives and areas of focus have framed a few strategic system enablers where technology can play a role in accelerating environmental solutions:

Responsible Sourcing and Marketplace

To replace virgin materials with recycled or alternatives, organizations need to rely on steady streams of sources. SAP technology can help gather information on such marketplaces and formalize the sector of recycled and reusable materials. Expanding the trade of alternative materials by incorporating both new and existing marketplaces can help drive responsible sourcing through multi-supply strategies.

Responsible Production

Intelligent product design can help solve recycling and reuse issues by enabling cooperation between chemical, packaging, and consumer product companies through the use of blockchain visibility and traceability. With data silos limiting the view of post-consumer component materials, it is nearly impossible for organizations to generate a comprehensive map outlining where products end up and how they can be reused. SAP implementation offers companies the ability to track, calculate and optimize their material usage to perpetrate circular practices.

Responsible Consumption

Business to business (B2B) customers are critical partners in creating a closed material loop that creates sustainability for organizations and consumers. For example, they can reach for greener products and materials to develop for their customers, but only if they are available. SAP enables traceability through deep insights into consumers’ relationships to more sustainable product options to help companies create better opportunities for B2Bs.

Resource Recovery and Reuse

A big piece of the puzzle is missing when it comes to bringing the circular economy to fruition. That piece is granular, high-quality data. Companies and stakeholders want to know whether or not products and materials are designed for reuse and recyclability. Still, a lack of data insights prevents them from supporting these investment decisions. Real-time analytics enables investors, startups, and waste managers to understand and build the infrastructure to increase the cycling of materials at their highest value.

The idea of a circular economy gained much attention since the pandemic revealed the challenges and vulnerabilities of widespread global supply chain disruptions. As more and more consumers shift their values toward sustainable products, in addition to investors funding greener initiatives and regulators pushing for new legislation, there is a lot of momentum driving businesses to turn to responsible growth practices.

According to SAP, more than 430,000 companies worldwide use SAP software, with 77% of transactions touching SAP systems. This puts SAP and its users in a unique position to play a significant role in the impact of circular business processes.

Conclusion

With a focus on responsible sourcing, production, and recovery, SAP is changing the digital world for the better. Not only do sustainable practices ensure that our environment will continue to provide us with the tools and supplies that we need to thrive, but it also ensures business continuity and cost reduction.

By working in conjunction with other prominent players in business and supply chain, SAP is making responsible design and production a reality for businesses all over the globe. To learn more about SAP, visit our SAP insights page, where you can access our SAP whitepapers, webinars, data sheets, and much more.