Schneider Electric: Circularity in Procurement

Frédéric Godemel has dedicated more than three decades to Schneider Electric, navigating markets from France to China and the UAE.

With the sustainability of supply chains now firmly in the spotlight, his work around circularity gains heightened importance. This approach challenges the traditional 'take-make-waste' model, encouraging businesses to reduce waste, reuse materials and reassess resource management.

Adopting circular practices not only reduces energy consumption and disposal costs but is also vital for building supply chain resilience in a fluctuating global market.

As Executive Vice President of Energy Management, Frédéric is leading Schneider's journey towards Electricity 4.0, integrating digital solutions with smart electrification to cut emissions and enhance operational efficiency.

His practical mantra is “use better,” emphasising responsible sourcing, intelligent manufacturing and collaboration with customers to instill sustainable practices throughout the supply chain.

Here, he delves into the significance of circularity in a company's value chain, alongside its potential benefits and hurdles.

What is circularity and why is it important for businesses to embrace it?  

Circularity is an economic model that aims to eliminate waste, preserve resources and reuse materials, in contrast to the traditional ‘take-make-waste’ model.

This holistic approach encourages businesses to rethink their energy use and materials management, contributing to both environmental and business benefits, such as reducing operational costs through energy efficiency, lowering waste disposal expenses, enhancing supply chain resilience and driving innovation in product design and materials usage.

With 91% of industrial businesses struggling with resource scarcity, the need for circularity has never been greater.

While resource consumption has surged, global circularity has alarmingly declined from 9.1% in 2018 to 7.2% in 2023. Transitioning to a circular economy could reduce material usage by up to 70%, resulting in a significant improvement in resource efficiency.

By adopting circular practices, businesses can meet sustainability targets, drive meaningful environmental change and gain a competitive edge by unlocking new revenue streams, such as maintenance services, rental and repair, that support long-term resilience.

As consumption continues to rise, embracing circularity is no longer just an option — it’s a necessity.  

What are the main challenges businesses face when implementing circularity?  

The biggest challenge facing businesses today is mindset.

Companies must shift from a traditional linear model of producing and disposing of products to one that prioritises longevity, repairability and recycling. This transition requires a fundamental change in how products are designed, produced and managed throughout their lifecycle.

While the perceived high upfront costs of implementing such changes can be a concern for many businesses, it’s crucial for organisations to recognise that the long-term benefits far outweigh these initial investments.

By embracing circularity, companies can not only address these initial financial challenges but also reduce resource consumption, minimise waste and unlock substantial cost savings over time.  

Research conducted by Oliver Wyman estimates that circular economy models could generate between US$883bn and US$1.5tn in new revenue for US businesses GDP. This demonstrates that sustainability and profitability are not mutually exclusive but can thrive together.

Ultimately, transitioning to a circular economy isn’t just a responsible choice — it’s a strategic financial decision that delivers lasting value.  

What is the first step businesses should take to implement circularity?  

It all starts with design. According to the Schneider Electric Circularity framework, the first consideration for achieving circularity is to adopt Eco-Design which directly impacts our product development and innovation. This means creating products for reliability and longevity, rather than quick disposal.

Designing and innovating for circularity enables our products to be used better, used longer and used again.

Building on this foundation, businesses must evolve from a traditional and transactional sales approach to an as-a-service model.

To support this shift, companies should consider supplementing sales with rental, repair and support services. This simultaneously extends product lifecycles, reduces waste and creates new growth opportunities.

By offering second-hand tech and trade-in programmes, companies can meet demand for affordable, eco-friendly options. This model reduces waste, boosts customer loyalty and drives long-term profits.  

What principles does Schneider Electric follow to ensure circularity across the entire product value chain?  

Schneider Electric has developed three key circularity principles to promote sustainability throughout the total value chain of any product. The first principle, use better, focuses on responsibly sourcing materials to minimise waste and optimise manufacturing.

For example, 32% of Schneider Electric products are made from recycled materials, with a goal of reaching 50% by 2025.

Our smart factory network, including sites in Monterrey and Shanghai, uses machine learning and Gen AI-driven maintenance to reduce resource consumption and improve productivity, earning Lighthouse status from the World Economic Forum.  

The second principle, use longer, emphasises extending product lifespan through condition-based repairs, digital maintenance and equipment modernisation.

Schneider Electric’s EcoFit program can extend asset life by up to 25%. For example, ArcelorMittal refurbished 13 switchgears, saving 26 tonnes of material and 170 metric tonnes of CO₂ emissions.  

Finally, use again encourages recirculating products and materials. Schneider Electric’s damaged Altivar drives can be sent to our repair centres for testing. Once refurbished, products come away with the same warranty as new ones, achieving up to 80% savings on resources, energy and emissions.    

How can circularity benefit a business beyond sustainability?  

Adopting circularity provides businesses with a competitive edge by driving cost savings and opening new growth opportunities.

It helps companies reduce waste, cut costs and attract customers and investors by promoting sustainability. Circular practices can also generate new revenue streams through services like repair, refurbishment and rental programmes.

Over time, businesses embracing circularity not only contribute to environmental goals but also improve profitability and resilience.

As global climate regulations tighten, companies that adopt circularity now will position themselves as sustainability leaders, ensuring compliance and future-proofing their operations. Circularity fosters innovation and efficiency, creating long-term financial benefits and enhancing operational excellence.

By integrating circular practices into their value chains, businesses can stay ahead of the competition, building strong reputations and securing future success.

Circularity is no longer just an environmental choice; it’s a smart, strategic decision for any forward-thinking organisation.

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