Circular Economy Models and Their Relevance to Manufacturing GCCs

The following are the real-world models that GCC manufacturing can consider following and the abilities they need to establish.

• Regenerate — Use virgin inputs and substitute them with renewables and bio-based materials; GCCs conduct lifecycle assessments and materials sourcing plans.
• Share — Empower product-as-a-service and refurbishment networks; GCCs bring about the digital platforms and customer-data models.
• Optimise – Minimise yield loss and energy usage by analytics and digital twins; GCCs provide the analytics that minimise waste.
• Loop — Close material loops through reverse logistics and recycling; GCCs have material-tracking systems and supplier circularity scoring.
• Virtualise – Substitute prototyping with simulation and AR/VR to reduce scrap and speed up the design process.
• Exchange – Exchange of piloting additive manufacturing and alternative materials; GCCs are operating rapid-experimentation labs to screen new inputs.

All models are naturally mapped to the prevalent GCC functions: product engineering, data analytics, supply chain orchestration, and digital platforms.

Circle strategies generate quantifiable economic results. Less utilisation of raw materials and energy directly reduces the cost of goods sold; reuse and remanufacture generate new pools of margins; design-for-reuse reduces the lead times and enhances supplier resilience. 

Industry studies indicate that waste stream conversion to feedstock with optimisation yields can provide cost reductions in the order of digits in selected product lines and that circular services tend to fetch greater customer lifetime value. 

By centralising the scale through the deployment of such capabilities, GCCs can implement similar innovations across their manufacturing footprints at a lower incremental cost.

• Digital twins and EM integrations to find waste hotspots and maximise yields.
• Remote diagnostics and predictive maintenance to increase asset and product lifespan (enabling the Share model).
• Engagement programs and reverse logistics analytics to operationalise Loop
• GCC R&D teams hold LCA and eco-design skills to future-proof product portfolios.
• Cross-functional teams (engineering + data science + sustainability), also known as circular innovation pods, pilot proofs-of-concept and scale successes worldwide.

These levers transform strategy into cost savings, readiness to comply and speedy time-to-market of sustainable products.

Efforts by regulators, like the recent increased waste directive and textile EPR schedules by the EU are compelling companies to internalise the lifecycle expenses and to take responsibility for the disposal of the products. 

GCCs developed to create compliance-as-a-service and supplier carbon/packaging tracking will transform regulatory requirements into competitive advantages as opposed to becoming cost centres. The increasing scope of GCCs (many of them are already heads of the global ESG and analytics functionality) makes them the key to this compliance-to-innovation shift. 

The top manufacturing GCCs will have explicit circular mandates in the next five years: the ownership of product circularity KPIs, operating reverse-logistics platforms, and providing cross-border remanufacturing playbooks. 

Those organisations that put GCCs in charge of such roles will minimise the total lifecycle expenditure, minimise the effect of commodity shocks and access differentiated sustainable products that satisfy ever-tougher buyer and regulatory requirements.

The models of the circular economy are no longer an optional design activity anymore. They are a crucial strategic instrument that a manufacturer plans to achieve when they seek international business expansion. Global Capability Centres, with a high concentration of engineering talent and digital capability, are the only ones able to transform the circular ambition into tangible economic outcomes. The question that manufacturing leaders must address is not whether or not to go circular, but how quickly their GCCs can be organised to transform circular models into global benefit repetition.