Circular Economy a Footstep toward Net Zero Manufacturing: Critical Success Factors Analysis with Case Illustration

Abstract

Increasing populations and the extravagant consumption of virgin resources are key issues in developing economies these days. The Paris Climate Accords of 2015 have also highlighted the importance of resource conservation and sustainable consumption. Developing economies, which rely on linear practices and traditional resources, require urgent attention regarding such issues. Practices of the circular economy (CE) provide an edge to achieving self-sustainability in materials and energy and lead a guiding path towards net-zero manufacturing. Net-zero manufacturing practices can significantly reduce environmental impact, conserve resources, and contribute to a more sustainable economy. In the current research paper, the authors have studied the critical success factors (CSFs) for implementing the circular economy in Indian small and medium enterprises (SMEs). The authors identified the CSFs through a literature review and expert opinions. To categorize and establish a structural model among the identified CSFs, the authors used Fuzzy Decision-Making Trial and Evaluation Laboratory (DEMATEL) techniques. The model’s robustness and expert bias were checked through predisposition analysis. To verify and validate the findings of the analysis, the authors conducted a case study of an Indian SME using the Strengths, Weaknesses, Opportunities, and Threats (SWOT) methodology. The authors of the current study observed that government policies and regulations on CE, consumer awareness and demand for CE products, economic incentives available for CE products, and new global business opportunities due to CE are the leading cause groups of CSFs. A reduction in energy and waste-related costs, the availability of infrastructure for CE practices, and an improvement in information-sharing transparency among supply chain members are the leading effects of CSFs. The influence graph shows that ‘Govt. policy and regulation on CE’, ‘Consumer awareness and demand for CE products’, ‘Economic incentives available for CE products’, and ‘New global business opportunity due to CE’ have a higher out-degree influence on other factors. From the case study, the authors observed that the strategic implementation of CE practices, green policy, reverse logistics, staff training, and new technology adoption have improved the use of repaired and refurbished materials in the case organization from 1–2% in 2019 to 9–10% in 2023. The findings of the current study imply that management commitment and strategies for building a ‘Green image’, coordination with suppliers, technological upgrades, reverse supply chain practices, workforce skills and training, and customer awareness and demand for CE products are crucial factors in successfully adopting CE and transitioning towards net-zero manufacturing.