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How does SAP intend to support a circular economy?

SAP's circular economy efforts include its new software Responsible Design and Production. Learn how it can help producers take responsibility for their environmental impact.

Consumers and compliance standards are increasingly holding organizations to a higher environmental standard, and vendors are focusing more attention on tools that can help.

In particular, the concept of a circular economy -- or maximizing reuse, recycling and resource-sharing -- is rapidly gaining mindshare with business leaders. Economic circularity minimizes the need for new resource inputs, conserves the planet's natural reserves and minimizes waste, which in turn reduces plastics use and pollution. SAP Responsible Design and Production and other SAP efforts could help support organizations' circular economy efforts.

Software to promote reuse

Responsible Design and Production, which SAP plans to release later this year, is meant to help companies create more environmentally friendly practices in areas such as product design, sourcing, and sales and service. It is also meant to help manufacturers meet their obligations under Extended Producer Responsibility (EPR) principles. EPR states that companies should take responsibility for the environmental and social impact of their products, including upstream and downstream from production and sales.

SAP's Responsible Design and Production attempts to give producers maximum visibility into the supply chain, including full traceability of raw materials and packaging, and a detailed look at downstream impact. When producers view all this information, they can decide what changes should be made, if any, to improve the company's sustainability. For example, a company could revamp product design to focus on recovery and reuse. If enough organizations take similar action, whether through SAP's software or some other method, the trend toward "throw-away culture" could reverse and landfill use could decline.

Other projects

SAP is also partnering with waste analytics specialist Topolytics to launch the COP26 Waste Insights Project. The project will provide a unified view of data from consumers, retailers, waste managers, non-governmental organizations and government agencies that could reveal opportunities for economy circularity. Possible approaches include recovering and recycling materials more frequently and sharing or reusing resources.

In addition, SAP, the World Economic Forum and the Global Plastic Action Partnership are using SAP Rural Sourcing Management for plastics recovery in Ghana. Local waste pickers collect discarded plastics, then the plastics are recycled and sold to socially responsible companies at a premium, with the SAP software providing full traceability. The effort recaptures discarded materials and supports Ghana's economy.

About the author
Jim Kofalt is president of DX4 Research, a technology advisory practice specializing in ERP and digital transformation.

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