AS2 Report – Job Creation and the Circular Economy

Managing Operations and the Supply Chain
(BSOM046-SUM)
AS2 Report – Job Creation and the Circular
Economy
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Word Count: 2639
Table of Contents
Introduction……………………………………………………………………………………………………………………………………3
Section 1 …………………………………………………………………………………………………………………………………………3
1. Theoretical aspects of Circular Economy ………………………………………………………………………………..3
1.1 Concepts and Characteristics ………………………………………………………………………………………………….3
1.2 Key benefits of CE ………………………………………………………………………………………………………………6
1.3 Circular supply chains ………………………………………………………………………………………………………..8
1.4 Promoting Job Creation ……………………………………………………………………………………………………..9
Section 2……………………………………………………………………………………………………………………………………….10
2. Jaguar Land Rover Plc (JLR) ………………………………………………………………………………………………..10
2.1 Introduction ……………………………………………………………………………………………………………………..10
2.2 Business Description…………………………………………………………………………………………………………10
2.3 Economic factors ………………………………………………………………………………………………………………12
2.4 Environmental factors ………………………………………………………………………………………………………13
2.5 Social factors …………………………………………………………………………………………………………………….15
2.6 Job Creation……………………………………………………………………………………………………………………..15
Conclusion and Recommendations……………………………………………………………………………………………….15
References…………………………………………………………………………………………………………………………………….17
Introduction
With increasingly growing industries, escalation in production scale and population,
environmental problems and crisis of resource scarcity are aggravating; unlike
conventional linear economic model of attaining economic growth at the cost of
environment and resources, circular economy harmoniously integrates natural
ecosystem and economic system by continuous recycling and reusing the resources
(Farong and Nan, 2013a). The first section of the report will address theoretical
aspect of circular economy; the concepts and characteristics, the key economic,
social and environmental benefits, the role of circular supply chain to support circular
economy and its role in creating jobs. The second section of the report will
commence with an introduction and business model description of Jaguar Land
Rover (JLR) and further it will describe how JLR implements circular economy
principles through its circular operations and circular supply chain. Later it will argue
on economic, social and environmental benefits due to company’s circular practices
and finally the report will conclude with recommendations for the company.
Section 1
1. Theoretical aspects of Circular Economy
1.1 Concepts and Characteristics
World Commission on Environment and Development (WCED) defines sustainability
as “an economic activity, meeting the needs of present, without compromising future
generation’s ability to meet their own needs” (Portney, 2015 p.3). There is an
imperative need to move more towards smart, inclusive and sustainable system to
overcome Environmental issues, Social challenges and Economic problems, hence
the concept of Circular Economy (CE) has gained attention in past years
(Geissdoerfer et al., 2017).
K. Boulding in 1966, analysed fundamental environmental problems and first
introduced the concept of Circular Economy (CE); while conventional linear model
simply focused on financial growth at the cost of environment and resources –
perceived as ‘from cradle to grave’ approach, conversely, Circular Economy model
establishes core contents of 3R (reduce, reuse and recycle) and implies ethical and
sustainable approach ‘from cradle to cradle’ (Farong and Nan, 2013b). Many literary
work describes circular economy as a closed-loop system having three ‘R’s: Reducelower the consumption of raw materials and amount of waste, Reuse- use the
products and services repeatedly and Recycle- convert waste material into new
product (Goyal et al., 2016)
While other experts have advanced definition of CE with 4R- Reduce, Reuse,
Recycle and Recover resources and energy during the process of production,
distribution and consumption to ensure sustainability (Skawińska et al., 2018).
After reviewing various literatures, Geissdoerfer et al., 2017b integrated definition of
CE as a regenerative/restorative economy in which resource input and waste,
energy leakage and emissions can be minimised with slow, close and narrow
material and energy loops; this can be gained by long-lasting designs, regular
maintenance, repair, reuse, remanufacturing and refurbishing, and recovering and
recycling. As shown in Fig 1, in contrast to, take-make-consume-dispose approach
of traditional linear model, chief objective of CE is to enhance the value by keeping
highest utilisation of products, material and components and looping them back into
the value chain at all times (Niero and Rivera, 2018).
While definition of sustainability given by WCED broadly blends social,
environmental and economic issues; it is usually applied in the industry through a
concept called Triple Bottom Line (TBL) (Gimenez et al., 2012). The TBL concept of
3P- Profit, People and Planet (fig 2) argues that the organisation should not only
focus on the bottom line of financial statements but also on the bottom lines of
environmental and social aspect and this has become an integral part of Corporate
Social Responsibility and sustainability over the years (Rocio et al., 2018a)
1.2 Key benefits of CE
Within the concept of TBL, authors interprets social, environmental and economic
benefits; Social sustainability- identifying and managing positive business impacts on
employees wellbeing, welfare and safety and local community development,
Environmental sustainability- reducing or avoiding depletion/degradation of natural
resources and emissions of pollutants and nullifying firm’s environmental harmful
activities, and Economic sustainability- to achieve financial growth over time
(Longoni and Cagliano, 2018a). Although business ethics needs to willingly accept
sustainability development in terms of TBL, organisations are confronted with this
approach in many ways, for instance, meeting present needs without compromising
future needs and the three aspects are complex and interrelated (Longoni and
Cagliano, 2018b).
Moreover, some authors are sceptical on organisation achieving profits by focussing
on TBL, as usually, social values are an afterthought for companies which are mainly
designed for financial gains (Rocio et al., 2018b). Additionally, Schulz and Flanigan
(2016) concurs that it is not possible to quantify the three different dimensions of 3BL
model with similar metrics – as social and environmental impact cannot be measured
in the way financial data is recorded, therefore, TBL is often a prey to prioritization –
usually economic factor overpowers environmental and social aspect. With better
strategies like waste management and recycling, businesses can save money,
improve efficiency and simultaneously become environmental friendly (Forbes,
2020).
European Waste hierarchy model (Fig 5) acknowledges nature of waste as
ambiguous, circumstantial and transient, aiming to orient waste towards
sustainability; it groups waste management options into five levels, depending on
their environmental impact – the topmost is the most preferred option of prevention
and the least favoured option of disposal of waste to landfills (Corvellec and Stal,
2017a).
Conversely, many authors question this model on several accounts:
• It is hard to spot from where reuse and waste prevention starts
• This model supports end-of-pipe approach to waste, deviating attention from
reducing demand and making an efficient production
• The model is contradictory to present waste, something that should be both
prevented and valorised
(Corvellec and Stal, 2017b)
1.3 Circular supply chains
Ellen MacArthur Foundation (EMF) (2014) has promoted CE as a restorative and
regenerative industrial system whose key objective is to always keep products,
components and raw materials at the best of their utility and value, both in biological
and technical cycles (Fig 3).This means that biological materials can be returned to
biosphere without harming biosphere and similarly, technical (geosphere) material
can be designed and recovered by remanufacturing, refurbishing and recycling, thus,
keeping them circulating within the sphere and finally making a significant
contribution to the economy with minimum wastage( Farooque et al., 2019)
On the other hand, Batista et al (2018b) interprets EMF’s depiction of circular supply
chain enabled restorative flows; they may contain closed-loop flows, referring to the
reverse flows with companies within a supply chain of target organisation (Fig 4a) or
these flows can be cascaded through linear, open-loop flows, linking firms across
other supply chains, from other companies (Fig 4b)
1.4 Promoting Job Creation
CE is a tool to decouple financial growth from utilisation of resources and
environmental impact, opening a resilient way to upcoming economic prosperity, by
reducing resource dependency, lowering environmental footprints and creating new
jobs (Ellen McArthur Foundation, 2017). This implies employment in various sectors
like second-hand goods sector, machine repairing and equipment sector, repair of
electronic and domestic product sector, recycling activities by closed and open loop
flows generates employment in waste and scrap sectors and service jobs are
proxied by creating employment in lease and rental service sector (Ljubomir and
Tatjana, 2019). Cape times (2017) argues that discarded product without recycling is
a definite waste but so is the premature ending of a working life of a product and
allowing it to sit idle; with the right business model, resources can be used for
longest possible time by introducing innovative sharing models, enabling companies
to ponder upon designing, producing and marketing of goods with an idea of reuse.
Section 2
2. Jaguar Land Rover Plc (JLR)
2.1 Introduction
Tata Motors Limited, a leading Indian automobile manufacturer, acquired two British
iconic brands- Jaguar and Land Rover from Ford Motors in the year 2007 (Pathak
and Arun, 2016). Tata Motors is listed under London Stock Exchange (Financial
Times, 2020)
Jaguar Land Rover Plc is a global automotive manufacturer, that chiefly design,
develop, manufacture and sell high end cars, premium vehicles and luxury sports
vehicles under the name of two British iconic brands – Jaguar and Land Rover. The
product range of Land Rover includes premium sports saloons and SUVs like Range
Rover, Discovery, Evoque and Defender whereas various models of Jaguar are E
pace, I Pace, F Pace, XJ, XF, XE. The company also offers related components and
accessories (MarketLine, 2020a)
The company employs 40,000 people worldwide and supports nearly 250,000
through suppliers, retail network and local businesses. JLR possess three vehicle
manufacturing units, two main design and engineering sites, an Engine
manufacturing Centre and upcoming Battery Assembly Centre. Out of seven
technology hubs of JLR, three are in the UK- Manchester, Warwick (NAIC) and
London. JLR has vehicle assembly plants globally- in Britain, Brazil, Austria, China,
India and Slovakia (JaguarLandRover, 2020a).With revenue of $29,337m, its key
competitors are BMW, Mercedes, Audi, Nissan and Volkswagen (MarketLine,
2020b).
2.2 Business Description
JLR business model (fig 5) allows to generate sustainable, long term value from
manufacturing and branding to logistics and finance partnership (JLR annual report,
2020)
Mass customisation: A twenty million pounds, Special Vehicle Operation division of
Jaguar Land Rover based at Ryton-on-Dunsmore, UK, builds various types of
bespoke cars (Autocar News, 2020). Key products and services include F-Pace
SVR, XE SV project 8, SV Premium Paint Palette, and SV Bespoke
(JaguarLandRover, 2020b).
The company is dedicated to preserve motoring heritage for future generation
through Jaguar Classic and Land Rover Classic. It divides its geographic operations
into five regions- Britain, USA, China, Europe and rest of the world (MarketLine,
2020c)
The company invested £150m in National Automotive Innovation Campus (NAIC) at
Warwick for research and development (Warwick, 2019)
Due to looming Brexit uncertainty, JLR split its production line in the UK and Slovakia
in Europe, where its focus is on production of Discovery and New Defender models
(Ma and Wooton, 2019). JLR is UK’s largest automotive manufacturer; spending
£13b annually on production purchasing, the company has more than 2600 suppliers
globally and awards its top supplier annually. (JaguarLandRover, 2016).The
company maintains long term relations with suppliers, for example, JLR selected
Novelis as supplier of aluminium sheet for its Range Rover Evoque, continuing the
20-year-old history of close co-operative partnership (Palmen, 2012).
2.3 Economic factors
Recognising that ‘take-make-waste’ processes would jeopardise natural resources,
JLR is an adopter of circular economy, underpinning its approach of ‘Destination
Zero’(zero emissions, zero accidents, zero congestion) by reducing waste, reusing
waste and material, recycling them, minimising environmental impact and working
towards zero emissions (JaguarLandRover, 2020c).
As a key to this approach, the REALITY aluminium project researched by JLR,
reduces carbon emissions by an innovative recycling process, to make society and
environment cleaner and safer; this is practised by upcycling aluminium waste (Fig
6) from beverage cans, bottle-tops and end-of-life vehicles and then mixing it with
lower amount of aluminium to form a new alloy into making of future luxury cars. This
reduces CO2 emissions up to 26%, helping the company to close the loop on
manufacturing and usage of raw materials (Legget, 2020).
A significant reduction in weight in chassis and main body with the usage of
aluminium, along with aerodynamic design, maximum usage of recycled material
and low energy consumption during production process, wholly contributes in
reduction of carbon footprints in JLR vehicle (White,2015). However, despite of
increasing demand of aluminium in car industry, some experts believe that carbon
fibre which is lighter than any lightweight metal will soon become material for mass
market technology for cars (Reade,2011)
Furthermore, supporting 3Rs, JLR is working with Econyl to design sustainable
premium interiors from ocean and landfill waste. Annually, Econyl recycles nearly
40,000 tons of nylon waste reclaimed by Aquafil, lowering the global warming effect
of nylon by 90% compared to the material produced from oil; the waste is further
analysed, treated and fed into chemical plant where they are turned into Econyl yarn,
which is finally used to manufacture high-quality floor mats for new JLR models (Fig
7) (JaguarLandRover,2020d).
2.4 Environmental factors
JLR is certified by Carbon Trust for meeting international standard for carbon
neutrality across its manufacturing, operation and product development sites; the
carmaker commits to offer electrified range for all new models of jaguar and Land
Rover from 2020 (jaguarlandrover news,2019). However, some experts believe that
even Electric vehicle emit considerable amount of CO2- only difference not being
released at the exhaust but at power plant (The Guardian,2019). Moreover, lithiumion batteries used in EVs pose serious threat to human health as they emit toxic
gases and catch fire/explode when encounter abnormal conditions or misused (Peng
et al.,2020).
As a move towards zero congestion, in Feb 2020, JLR unveiled futuristic electric,
driverless vehicle concept of Project Vector (Fig 8); the vehicle is a flexible part of
urban mobility network allowing private, shared or commercial applications (The
Economic Times, 2020).
There are numerous benefits of autonomous cars from comfort to safety; they
improve road safety by substantially decreasing number of road accidents,
furthermore, enhancing new business opportunity (mobility-as-a-service), reducing
ownership of cars and diminishing parking space problems, reducing congestion and
improving fuel efficiency (Hussain et al.,2018a). Conversely, negative implications of
autonomous car include job loss for drivers, ethical challenges, difficulty in managing
traffic, software errors, reduction in car sales, data related issues like data privacy,
storage and sale (Hussain et al.,2018b)
2.5 Social factors
The car maker suspended its production in March 2020 due to spread of corona
virus and designed face visors on its 3D printers for frontline NHS workers; the
company supplied hundreds of NHS approved face visors, distributed free of charge
by JLR volunteers (BBC News,2020).
Moreover, the car giant has donated 700 school desks in schools of rural India,
under the project of ‘Crates to Classrooms’ by upcycling wooden pallets and crates,
supporting the education of more than 1000 disadvantage local children (Contify
Automotive News,2019).
2.6 Job Creation
Backed by Royal Foundation and Ministry of Defence, JLR works in partnership for
‘Mission Automotive’ supporting veterans, ex-service personnel and their families to
find jobs in various automotive sectors like engineering, manufacturing, logistics and
infrastructure (European Union News,2019).
JLR offers advanced, higher and degree apprenticeship opportunities to talented
young females interested in STEM (Science, Maths, Technology, Engineering) and
furthering their future careers (jaguarlandrover News,2019).
Moreover, Jaguar Land Rover Learning Academy offer education support not only
for the employees but also for apprentices, undergraduates and graduates through
various programmes, for instance, Retailer Apprenticeship Programme support
young people to reach their full potential with around 200 state-of-art retailers and
five Academies located across the UK (jaguarlandroverretailerapprenticeships,2020).
Conclusion and Recommendations
Conclusion
In the first section, this report discussed theoretical aspects of Circular Economy; the
key concepts and characteristics of circular economy like closed loop system using
3R, Triple Bottom Line concepts (3P), close-loop supply chain operations, European
waste hierarchy model and restorative value chain- discussing its economic and
environmental benefits and potential to create new job openings to support society.
In the second section, the report provided brief introduction and business model of
JLR, followed by implementation of circular economy principles which highlighted
company’s REALITY aluminium project and working with Econyl. Finally, the report
critically assessed JLR circular implications on environmental and social factors and
illustrated how the firm creates job opportunities for the niche.
Recommendations
Key enablers to optimise circular supply chain
• Design – The company should design the entire life cycle and not only the
product to optimise the recovery and reuse of resource- according to
research, about $7 trillion worth of cars are not used globally, at a given point
in time.
• Use the same channel – collection channel of used products and the
distribution channel and partners of new cars should be integrated.
• Technology- economic and environmental-friendly technology should be used
for cost competent recovery and reuse of resources. For example, using
Artificial Intelligence and machine learning, traffic congestion could be
predicted, and the vehicle can be rerouted to optimise the energy usage.
• Constant monitoring and improvement- The company should continuously
identify, monitor and fix the issues that impede the value.
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