Talking about the weather used to be a throwaway conversation. But for many consumers, changing weather conditions has become an important part of a larger conversation about global warming and sustainability. Consumers are worried about environmental sustainability, and “weird weather” supports and amplifies this concern.
For consumer packaged goods businesses, increased environmental sustainability both is a market imperative and an opportunity. Consumers want environmentally friendly products, and delivering on these wants both helps sales and creates added brand differentiation.
For a CPG business, taking part in the circular economy is increasingly important. An enterprise resource planning solution (ERP) can help a CPG business get there.
Understanding the Circular Economy
The circular economy concept is simple: Instead of using new materials for the creation of products, businesses create a relatively closed-loop system that reuses and recycles existing materials. This cuts down on waste and increases recycling since reuse is the purest form of environmental sustainability.
The core principles of the circular economy are design for longevity, where products are durable and modular; the maintenance of value through repair, refurbishment, and remanufacturing; closed-loop systems that recycle, upcycle, and lean on products-as-a-service; regenerative systems that use sustainable resources and are built for reuse; and manufacturing efficiency minimizes resource and energy use.
When these principles are used together, CPG businesses reduce the environmental impact of their products and sustainably meet customer needs. Participating in the circular economy is good for both business and the environment.
Where ERP Can Help a Business Participate in the Circular Economy
ERP systems support end-to-end visibility and collaboration both among the different parts of a CPG business and along its entire supply chain. This complete visibility is key for creating the conditions for the circular economy and environmental sustainability.
How ERP helps a CPG firm embrace the circular economy:
1. Increased Resource Efficiency
The inventory management and demand forecasting functions within ERP help CPG firms enhance resource efficiency.
The inventory management within ERP can help optimize inventory levels, and both reducing excess stock and waste. The forecasting tools within ERP also can predict demand more accurately, which helps align production with actual consumption.
This is crucial in a circular economy where minimizing waste and ensuring resources are used efficiently.
2. Enhanced Sustainability Integration
With the help of ERP, CPG businesses can track and manage supply chain data more precisely to ensure that materials are sourced from sustainable and ethical suppliers. This helps with making informed decisions about raw materials and their environmental impact.
The product lifecycle management functions within an ERP system also help manage the entire lifecycle of a product, from design and production to end-of-life. This PLM functionality assists with designing products that are easier to recycle or refurbish in a circular economy.
3. Improved Waste Management
For CPG businesses that are serious about recycling and reuse, ERP can greatly support better waste management.
ERP can track the use and disposal of materials, facilitating the identification of opportunities for recycling and reusing materials within the production process. Through the use of supply chain management modules within ERP, CPG businesses also can practice reverse logistics that make it easier to handle returns, refurbishments, and recycling processes.
4. Better Data for Smart Sustainability Decisions
Environmental sustainability within a circular economy is an ongoing process of continuous adjustment and improvement. For this, CPG businesses need good data.
ERP systems come with analytics and reporting tools that help a CPG business monitor sustainability metrics such as energy consumption, waste generation, and material usage. ERP also provides operational transparency and resource traceability throughout the supply chain, which helps ensure that all stakeholders are aware of the environmental impact and ongoing performance of the company’s sustainability practices.
5. Accelerated Sustainability Innovation and Agility
Participating in the circular economy requires thoughtful innovation and adjustment at the R&D level. ERP helps CPG businesses fully understand materials use and operational processes for the development of new products and the adjustment of existing products that align better with circular economy principles.
ERP also enables more flexible manufacturing processes, which assists CPG businesses in adapting to changing demands and incorporating sustainability practices more easily.
6. Enhanced Collaboration
Since ERP provides a unified platform for sharing information both within departments and with partners all along the supply chain, it also improves the collaboration necessary for participating in the circular economy.
With ERP, CPG businesses can tightly integrate operational practices with third-party systems, which is critical for operating in the closed-loop circular economy model.
ERP also integrates with other sustainability-focused tools and platforms, such as environmental management systems (EMS) and carbon footprint calculators, to provide a comprehensive approach to circular economy practices.
Learn More About How ERP Can Help
Functioning in a circular economy is hard without ERP, but sustainability isn’t the only place where ERP helps a business.
So don’t just talk about how the weather is changing. Learn more about the benefits of ERP for consumer packaged goods companies, or contact one of our experienced consultants at (801) 642-0123 for specific questions about how ERP can support your business.
