Renault’s circular thinking towards circular economy

Photo by Josh Power on Unsplash

Companies have followed the traditional “take, make, and throw away” model for hundreds of years. However, that process is a dead-end in today’s world due to the rising waste disposal costs and environmental taxes. Companies are adopting the new economic model, which focuses on reuse, remanufacture, and recycle. Furthermore, one of those companies is the French automobile manufacturer Renault.

The idea of an effective and efficient supply chain seems impossible considering the costs of recovering, remanufacturing, reusing, or recycling materials. The core principle of circular economy is “zero-waste,” which leads many to think about recycling. However, the circular economy is more than just recycling. Like the traditional cycle, the zero-water supply chain includes managing and optimizing resources, whether human, digital, or physical.

Renault recovers materials from vehicles and mechanical parts from the car’s engine at the end of their lifespan and transforms them for new vehicles.

Building a circular economy comes with challenges like intensive investment, reverse logistics to bring back damaged products, setting factories for processing used parts, coordination with existing suppliers, controlling outgoing products, and material price fluctuations. When a product is dumped into a landfill or incinerated, the embedded costs of procuring, manufacturing, labor, and time are also wasted. This indirectly costs more to the company. Renault has set up a joint venture with waste management specialist Sita to collect and dismantle vehicles at the end of their life, which is already recovering parts and materials from 100,000 cars per year.

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