Rapid growth in emerging markets is causing a dramatic increase in demand for resources, and supplies of many raw materials have become more difficult to secure.
Consequently, manufacturers' variable costs have increased. But companies that take steps to increase resource productivity could unlock significant value, minimizing costs while establishing greater operational stability. Experience suggests that manufacturers could reduce the amount of energy they use in production by 20 to 30 percent. They could also design their products to reduce material use by 30 percent while increasing their potential for recycling and reuse.
Indeed, companies could cut their product costs in half by reusing materials and components. Some companies have even begun to pioneer new business models that enable them to retain ownership of the materials used in the products they sell. This can involve establishing mechanisms that prompt customers to return a product to its manufacturer at the end of its consumer utility, enabling the manufacturer to extract additional value from it.
A number of manufacturers have launched resource-productivity initiatives that are already paying dividends.
