Circularity: the next sustainability frontier
For Scania, circularity is changing not just how we design and manufacture products, but also how we do business. We sat down with Michael Lieder, Scania’s business developer for circular economy, to discuss why circularity is so important for Scania, and learn more about the business opportunities it can create.
Q: Why does circularity matter to Scania?
A: It’s important for two main reasons. Firstly, circularity is the next big frontier in sustainability as it decouples business growth from resource use. Secondly, it’s vital for our business. As the earth’s resources dwindle, competition for key materials such as rare earth minerals becomes more intense, leading to price volatility and supply challenges. Adopting a circular business model ensures that we have access to the materials we need, and that we stay competitive by keeping product costs down. It also opens up big opportunities to create value for our customers along the vehicle lifecycle. In other words, we can’t afford not to do it!
“There’s so much potential – we’re only just scratching the surface”
Michael Lieder
Business Developer Circular Economy
Q: How do you approach circularity at Scania?
A: For a large, heavy-duty manufacturer like Scania, there’s no one-size-fits-all approach. So we’ve begun to develop different roadmaps for circularity for different parts of our business that are spread across our value chain. These roadmaps outline ways of decreasing the use of virgin materials, through circular practices such as increasing recycled or renewable options, increasing reused or remanufactured parts, increasing service offerings and reduce operational waste.
Q: What impact will circularity have on how Scania develops, produces and sells its products?
A: Circularity challenges us to rethink not just how we design and manufacture products, our impact and knowledge of the value chain, but also how we develop business models and provide value for our customers along entire vehicle lifecycles.
We have lang-standing principles and methods in our DNA that found a great basis for circularity. Elimination of waste is one of the core values of the Scania Way. Our modular production system and lean production methodologies support circularity. However, to support our sustainable transport mission, we now need to expand these principles beyond our internal processes and apply them to the entire vehicle lifecycle. That requires engagement and commitment across the organisation, and we’re working on getting everyone onboard.
Q: What progress have you made in circularity? Can you give some examples?
A: We’ve come a long way in terms of innovating and testing. Now we need to implement at scale.
One recent breakthrough was to introduce remanufactured parts in our production flow. This test was a major milestone for Scania, making us the world’s first OEM to reuse components on the main assembly line. The test showed that we can achieve “as-good-as-new” quality by re-using old parts in manufacturing, although there’s more work to be done to understand how quality is affected over consecutive uses.
That’s just one example. Other exciting innovations in circularity at Scania include harvesting waste sand from our foundry and turning it into construction mortar, instead of sending it to landfill. Our colleagues at our São Bernardo do Campo plant now use recycled plastics from PET bottles in the production of truck front grilles, removing around 1.5 million PET bottles from the environment each year. The seating in our vehicles now contains material from old work clothes. There’s so much potential – we’re only just scratching the surface of what’s possible.
We shouldn’t forget that some of our existing business activities could be considered circular – such as our used vehicles and remanufacturing spare parts business. However, these are currently operated with a linear mind-set, leaving the great lifecycle potential of our vehicles untapped.
Q: You said that circularity opens up new revenue streams for Scania. Can you expand on that?
A: Through circularity, we can maximize value along the entire product lifecycle and not only in the first few years. Like other OEMs, we’re strong in the first part of the vehicle lifecycle, i.e. our initial sales. To generate new business opportunities in the second half of the lifecycle after the vehicle is sold, we must either change our fundamental business model, or expand our existing approach, or do both. We’re then talking about new offerings enabled by cost-efficient reverse flows and circular practices such as dismantling and remanufacturing.
Q: What does circularity mean for the way we design products?
A: Designing and optimising products for circularity is basically about designing for disassembly and incorporating recyclable materials. By adapting our designs in this way we can increase the efficiency of the loops. Here we need to expand the principles of our modular toolbox from production to the end-of-life handling of vehicles.
To give an example, we need to ensure remanufactured parts are compatible, which means considering the lives of our vehicles when in use by their second and third owners. Then more technical questions need to be answered, like: can we remove large components fast, dismantle and modify them, so they can be reassembled on the vehicle? It’s about thinking ahead. This is something we’re working on collaboratively through TRATON Group R&D.
