Circular Economy Assignment Timberlands Renovated Business Model
You are required to discuss how companies that adopt circular economy principles
increase their economic and social efficiency and minimise their environmental impact.
More specifically, you are required to write a report that provides two perspectives of the topic above: A theoretical and a practical perspective. The report as a whole should be no longer than 3000 words (excluding cover page and references).
A circular economy mainly deals with an economic system which facilitates the elimination of waste and helps in continually using resources. In this report on circular economy assignment, the various concepts and characteristics of the circular economy have been discussed. This report also deals with how the circular economy plays a vital role in promoting job creation. The practical aspects of the circular economy and how it is implemented by a UK based company named Timberland has also been discussed in this study. The report on circular economy assignment also sheds light on real-life examples of business attempts where circular economy practices are being incorporated.
About the company
A recent article in Financial Times states the way in which VF Corporation which is the owner of Timberland LLC was looking out for further acquisitions during these uncertain times of the corona virus spread (ft.com, 2020). Timberland is one of the best performing companies that is owned by VF Corporation which has also undertaken a circular economic regime to carry out its business processes.Timberland LLC is manufacturer of the outdoors wear which mainly focuses on footwear. The company also sell goods like clothes, glasses, sunglasses, watches and various other leather items (timberland.co.uk, 2020). The main customer base of Timberland comprises of travellers, hikers and trekker who frequently venture out in rough terrains and other such adventurous journeys.
Concepts and characteristics of the circular economy
Sustainability has gained prime importance for businesses in recent years as the finite resources of our plant are getting depleted at a rapid rate. As per the view of D’amato et al. (2019), it can be stated that sustainable economic growth is the only feasible way in which business processes need to be carried out so that future generations do not face scarcity of resources. Circular economy mainly refers to an economy in which the products lose their value in a negligible manner. As suggested by Zink and Geyer (2017), there is no wastage of materials in a circular economy because the residues that are generated from the main products are being used to produce a completely new product. This, in turn, enables the companies to reduce the overall amount of wastage that is being produced. In a circular economy producer of the products take back the products after they are being used. These products are repaired in such a manner so that they can be used for a new life. In a circular economy, it is of paramount importance that the recycling is done properly and the components of the raw materials remain high in quality in the cycles. As commented by Kirchherr et al. (2017), shifting to a circular economy would not limit the negatives of a linear economy but it would also help in building a long term sustainable business and provide economic opportunities for the company.
The various characteristics of the circular economy have been discussed below within this circular economy assignment:
- The materials used in production are being recycled at a continuous high value. As suggested by Prieto-Sandoval et al. (2017), in a circular economy the materials are not mixed in such a way that it cannot be separated or recovered.
- The system is designed in such a way that it runs on renewable sources without affecting the performance or output. The energy that is being used is efficiently conserved and is cascaded when lighter values of energy are at hand for use.
- One of the important characteristics of the circular economy is that the wellbeing of human beings and all other living beings are being taken into account before designing the production system. The hazardous and toxic substances are always kept at bay in a closed economic cycle.
The main drivers of the circular economy
The circular economy is a restorative in nature which facilitates the regeneration of products and keeps the materials and the various components at their highest value. As per the view of Morseletto (2020), it can be stated that a circular economy enables in preserving the natural resources by using the finite stocks in a controlled manner. The circular economy helps in optimising the overall yields of the resources by circulating the materials and components at their highest utility rates. This model of the economy mainly relies on cheap renewable sources of materials and energy which would not endanger the finite stock of non-renewable resources. The ever-rising numbers of the human population in the world has led to the crisis of the available materials on the planet. This crucial supply of raw material has also forced several countries to depend on other raw material rich countries for meeting their supply.
The extraction and further usage of the conventionally available raw materials negatively affect the overall environment of the planet. Furthermore, these processes lead to excessive CO2 emissions as well as the emissions of other greenhouse gases. As suggested by Kweku et al.(2017), it can be stated in the circular economy assignmentthat these greenhouse gases act as one of the major contributors to global warming in the entire planet.
One of the major benefits of incorporating circular economic methods is that it would help in reducing the use of the conventionally available non-renewable resources. This, in turn, would reduce the overall emission of greenhouse gases in the world (europarl.europa.eu, 2020). This would enable companies to provide more durable and creative products to their consumers which would last for a longer period and would also save their money for the long term. Moreover, it has been calculated that circular economic practices like waste reduction or prevention, ecological design and reusing of the materials would save around a total of €600 billion for the Europe Union companies annually (europarl.europa.eu, 2020). This humongous amount of saved money would enable companies to invest in newer projects or research or development. These practices would facilitate the development of new job opportunities. In this way, the implementation of practices as laid down by the circular economic theory would benefit the society as well as help in uplifting the overall economic condition of the country.
Circular supply chains and their role in supporting circular economy processes in organisations
One of the major areas in which the circular economy can play a huge part in reducing the overall amount of waste production is in the supply chain operations of an organisation. As per the view of Meherishi et al. (2019), it can be stated in the circular economy assignmentthat incorporation of reusable or recyclable materials for packaging and parcelling of products by a company would help a company to reduce the cost of packaging with the help of traditional materials. Moreover, it would also enable the companies to go a long way in reducing the overall waste that is being generated by a typical organization and carry out their business operations in a sustainable manner. Furthermore, a company might also incorporate partnering with supply chain teams who might have global logistics capabilities for logistics. As commented by Govindan and Hasanagic (2018), these practices, in turn, would facilitate in the reduction of the overall logistics cost. Moreover, it would also help in reducing the overall negative impact that is caused by carbon emissions from trains, ships or trucks. As suggested by Khalil et al. (2016) polyethylene free coatings are one of the most popular alternatives that are being incorporated by many companies in the world.
Micro fibrillated cellulose and sustainable coatings are being utilised by companies to provide sustainable packaging solutions. The incorporation of newer technologies like the magnetic sorters, optical sorters and airflow would help companies following a circular economy to reach the target of zero waste shortly. These newer technologies would also enable companies to reduce their investments on packaging materials as these would facilitate in recycling complex materials by separating them into their basic forms.
Circular economy and its role in promoting job creation
Incorporation of circular economy strategies in a company would go a long way in reducing the cost of a lot of business operations including logistics, packaging, and raw materials spending and so on. As per the views of Velenturf et al. (2019), it can be stated that more jobs would be created once companies start shifting labour away from current raw material extraction works to recycling plants and other repair works. Herein circular economy assignment, it has been found out that the usage of renewable energy at the workplaces would create around 5000 new jobs annually (iisd.org, 2020). Moreover, utilizing renewable sources of energy and recycling materials would enable companies to save a large amount of money annually. This, in turn, would also enable the companies to spend the saved money in expanding their business or even new areas of research and development to further improve the production processes. These would create newer job opportunities and would also contribute to improving the livelihood of the existing employees. Inculcation of circular economic plans in different industrial sectors would lead to the generation of 12000 new jobs in the city of London (iisd.org, 2020). Incorporation of innovative and sustainable methods in the construction sector would also lead to the creation of new jobs. Moreover, implementation of circular economy guidelines in the industries would create an upsurge in the research and development of the new practices which would also create new job opportunities in the market. Furthermore, the huge amount of data and information that would be generated due to the incorporation of new procedures in the organisations would lead to the increase in the number of jobs related to data analysis and data science in general.
Timberland and its Circular Economy Aspects
The concept of circular economy has brought concurrent changes within Timberland's supply chain operations as the company has taken corrective measures and transformative leadership practices to acquire streamlined resources consumption, leverage global value chain, incorporated energy-efficiency production practices and sustainable development policies. The company has extensively focused on its product acquisition policies, waste and recycling strategies and regenerating natural systems to cope with increasing environmental consequences and resources unavailability issues. Timberland has launched its Environmental Product Standards to extensively use recycled materials, and more than 80% of its products contained at least one recycled material (timberland.co.uk, 2020). Earthkeeper products including Eagle Bay boot have created ample opportunities for Timberland to incorporate a continual improvement plan towards sustainability and environment-friendly credentials (Geipeleet al. 2016). As sustainability-consciousness among consumers, government interventions and regulatory compliances have imposed enormous challenges on take-make-waste extractive industrial models; the company significantly incorporated recycling and reuses strategies, and articulated an effective commitment to reduce waste and inventories.
The company introduced a take-back program in Germany, called The Second Chance in the footwear industry to recycle and reuse resources and transform business operations through intuitive and environmentally friendly processes. As the availability of rare resources, society consumption rate and the global population continues to grow rapidly, Timberland has adequately invested in circular economy initiatives to redefine growth and provide society-wide benefits. Such relatively early transformative initiatives have amplified the company's competencies as reduced waste, long-term resilience and fact-driven entrepreneurship spirit have assisted to generate new business and reduce negative impacts of the linear economy. Timberland has adequately utilised recycled plastic for Earthkeeper products and reported that 270 million plastic bottles are used in footwear production. The fact outlined in the circular economy assignmentsignifies that the company has acquired its 94% leather products, and adequately invested in R&D pipelines to produce customized and disruptive innovations to nurture creativity and imagination for society-wide benefits (Lacy and Rutqvist, 2016). As global consumers are becoming more conscious and aware regarding industrial impacts on the environment, such sustainable development policies have fuelled the company's reputation and revenue streams in recent years.
Implementation of Circular Economy Practices by Timberland
The fundamental purpose of Timberland's newly renovated business model is to become a closed-loop company by generating recycled products through concurrent changes in business operations and adjustments in production activities (Lindner et al. 2017). The company took proactive provisions, and introduced reshaped marketing, designing and product positioning strategies to transform business towards sustainability and zero-waste ventures.
Proactive Marketing Approach
Timberland has introduced The Second Change as a potential take-back program to collect used products and transformed those into new products which increased the product life cycle.The company’s Second Chance take back project is one such initiative which enables customers to return their used footwear. These are reused by the company and as a result of which the overall lifecycle of footwear gets extended (edie.net,2020). Various distinct initiatives noted in the circular economy assignment such as sustainability-conscious marketing policies and return schemes have influenced and encouraged existing consumers, and Timberland has adequately retained higher customers.
Unique Collaboration and Partnership
As a prominent part of Timberland's sustainability and continual improvement plan, the company signed an agreement with Thread to emphasize collaboration to extend the benefits of a circular economy. The company has also collaborated with seven partners all over the globe in order to plant around 50 million trees that would help in improving the quality of our planet (timberland.com, 2020).This movement known as “Plant the Change” movement would not only contribute in cleaning the air but also would help in strengthen the communitiesand creating economic opportunities.Such collaboration facilitated Timberland to collect recycled materials and plastics to diversify its portfolio. Collaboration with Thread also assisted to minimize waste and allowed us to focus on Human-centred design thinking, creating employment opportunities and location-based marketing policies.
Target Settings and Corporate Culture
Within its Environmental Product Standards in 2016, Timberland has taken proactive measures such as mandatory use of recycled materials in footwear and PVC free products to create a standardized dialogue regarding recycling strategies and collaborative efforts. 270 million plastic bottles are used, and 80% of the products are recycled (Golev et al. 2016). The company also effectively engaged firm-centric collaboration with leatherworking groups to amplify collective efforts towards sustainability.
Zero- Waste Management System
The company intended to become a technology-driven company that widely relies on recycling and reuse strategies to minimize carbon footprints and resource consumption. The company also maintains and oversees its leather tanneries so that water, energy and waste management is carried out in a responsible manner (timberland.com, (2020).Timberland adequately invested in R&D pipelines, and applied circular economy concepts within their entire ecosystem (Martinez-Oviedo and Medda, 2017). Newly developed product quality and aesthetic values are becoming more prominent in the current marketplace as government interventions and regulatory compliances are creating comprehensive limitations regarding resource consumption and energy-efficiency production practices.
Various distinct products such as Earthkeeper, boots, Eagle Bay and other recycled footwears are creating new market niches as these products uphold greater value chain and lifespan.The company explored in the circular economy assignment has aimed its products to become 100 per cent circular in nature in order to effectively achieve zero waste (timberland.com,(2020).For instance, the Earth-keepers boot that was launched by the company in 2007 was made with recycled PET linings and rubber soles. The company has also emphasises ion using waste materials like scrap wool, scrap leather and plastic bottles to manufacture their newer products (timberland.com, (2020). Consumer interactions are becoming more seamless due to extensive allocation of waste material.
- Timberland needs to increase the visibility of globally distributed supply chains through distributed information systems and streamlined communication channels to reduce complexity and vulnerability. Real-time inventory data and automated supply chain management practices can be incorporated to maximize organizational capabilities and competencies.
- Timberland must incorporate different innovative technologies like artificial intelligence, IoT, automation, robotics and business analytics to effectively control and process production and distribution channels. Such automated services can allow reducing inventory costs and delays.
- Creation of a dedicated IT team with multi-generational and multicultural workforce can be significant to improve current operating systems as cloud-based services and data visualization tools can assist to create standardised Human-centred designs and sustainability-conscious strategies to mitigate the shortage of resources, expertise and techno-centric visionaries.
- Integrated software solutions for warehouses, subsidiaries and suppliers can facilitate reducing complexity and overhead expenses, and it will be beneficial to evaluate stocks, availability of resources and information systems.
- International HRM practices and effective employee engagement policies are necessary to implement to effectively manage and retain top talents. Attractive compensation packages, ICT based training programs and performance-focused recognition schemes are necessary to provide.
The necessity of a circular economy in a globalised commercial context has become an inevitable part of modernised commercial ventures due to increasing global population, higher demands and lack of resources. However, Timberland has adequately invested and reshaped its business development policies and procedures to safeguard future transitions towards sustainability. As activities around globally distributed supply chain and logistics services are significantly affecting environmental well-being and regulatory compliances, Timberland must incorporate proactive provisions and sustainability approaches to reduce operational disruptions and delays. Adequate investment in R&D pipelines, technological advancements in recycling engineering and technology and integrated information technologies are necessary to confine to enhance productivity and profitability within a circular economy. This systematic empirical framework developed in the circular economy assignment has provided extensive knowledge regarding the efficacy in the circular economy within the global supply chain of Timberland, and described the necessity of a circular economy within business ventures to protect Environment and natural resource system.
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