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Automotive’s Latest Model: Redefining Competitiveness through the Circular Economy

To sharpen competitiveness OEMs need to move beyond car sharing to gain the full value of the circular economy.

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Automotive’s Latest Model: Redefining Competitiveness through the Circular Economy

  1. 1. Automotive’s latest model Redefining competitiveness through the circular economy
  2. 2. 2Copyright © 2016 Accenture All rights reserved. Now is the time for car manufacturers to harness the power of the circular economy At any given moment, $7 trillion worth of passenger cars sit unused around the world Car and ride sharing have transformed this waste into wealth with 3 to 5x higher usage rates & improved resource/asset efficiency $
  3. 3. 3Copyright © 2016 Accenture All rights reserved. But car sharing is just the tip of the iceberg… Doing the circular economy math Vehicle Design, Manufacturing/Distribution Product as a Service Product Life Extension + 14% potential cost base reduction + = $400 - $600 billion by 2030 potential revenue for automotive companies from selected circular economy business models =
  4. 4. 4Copyright © 2016 Accenture All rights reserved. OEMs need to embrace circular principals across the value chain As circular business models gain more traction New passenger vehicle sales will be threatened Automotive players—especially OEMs—need to widen the number of plays they make within the circular economy from design to material reuse
  5. 5. 5Copyright © 2016 Accenture All rights reserved. The circular economy value chain for automotive companies
  6. 6. 6Copyright © 2016 Accenture All rights reserved. The circular customer connection Transforming operations to harness circular business models means gaining a direct connection to the customer. More profitable revenue streams - ongoing service over one-off sales The result?
  7. 7. 7Copyright © 2016 Accenture All rights reserved. Gaining the circular advantage Map out a circular economy strategy - and determine where to position the business in the value chain. How can circular value be maximized? 1 Where can the company best utilize it’s capabilities to outcompete others?
  8. 8. 8Copyright © 2016 Accenture All rights reserved. Gaining the circular advantage Create the right ecosystem, allying with leaders from other industries. Jaguar Land Rover + aluminum recycling giant Novelis1 • Vehicles designed to utilize aluminum more effectively • Manufacturing processes minimize waste • Built-in recycling processes for products at end-of-life Ford + global food manufacturer Kraft Heinz2 Collaboration to develop new component parts based on food waste—tomato skins 2
  9. 9. 9Copyright © 2016 Accenture All rights reserved. Gaining the circular advantage Develop the right capabilities3 Embrace circular Continuous customer engagement can mean major organizational and operational changes Enabled after- sale service Proactively manage a products’ lifecycle – keep track of assets, optimize performance/ return, and measure the product’s impact Establish trust Build relationships with customers to maximize a product’s utility across its lifecycle, and encouraging responsible return or disposal at the end of a product’s life
  10. 10. 10Copyright © 2016 Accenture All rights reserved. •About Accenture Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions— underpinned by the world’s largest delivery network— Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 375,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. Join the conversation: @AccentureStrat Download the full report: www.accenture.com/circularoem This document is intended for general informational purposes only and does not take into account the reader’s specific circumstances, and may not reflect the most current developments. Accenture disclaims, to the fullest extent permitted by applicable law, any and all liability for the accuracy and completeness of the information in this document and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit, or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professionals. About Accenture Strategy Accenture Strategy operates at the intersection of business and technology. We bring together our capabilities in business, technology, operations and function strategy to help our clients envision and execute industry-specific strategies that support enterprise wide transformation. Our focus on issues related to digital disruption, competitiveness, global operating models, talent and leadership help drive both efficiencies and growth. For more information, follow @AccentureStrat or visit www.accenture.com/strategy Sources 1 Jaguar Land Rover + aluminum recycling giant Novelis http://www.sustainablebrands.com/news_and_views/chemistry_materials/sustainable_brands/novelis_recycled_aluminum_builds_jaguars_light 2 Ford + global food manufacturer Kraft Heinz https://media.ford.com/content/fordmedia/fna/us/en/news/2014/06/10/ford-and-heinz-collaborate-on-sustainable-materials-for-vehicles.html Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. Follow us on LinkedIn