Bringing the circular economy closer to small and medium enterprises: improving water circularity without damaging plant productivity

Abstract

From a shop-floor perspective, this piece of research addresses how lean practices (5S) simultaneously affect circular economy (CE) objectives and plant performance. Using the lens of the "Theory of Swift, Even Flow" and combining quasi-experiments with financial time series data, the case study proposed assesses the evolution of the Water Circularity Index and labor productivity in a lean environment. The paper highlights 5S practices that enable the creation of a proper working environment to simultaneously improve water efficiency and plant performance. In fact, the results obtained confirm that the join implementation of lean-CE initiatives can reduce water usage about 45% by improving the water circularity at the same time that labor productivity increases by 20%. These findings not only bring valuable lessons to managers, but also show policymakers a truly viable path in which firms (particularly small and medium-sized enterprises) may be more interested in the transition toward a more circular economy. There are also some side social implications to public budgets and their opportunity costs. The reduction in water withdrawal requirements will deliver additional savings regarding the reduction of daily operations and maintenance (i.e., monetary and environmental) and on future investments in public utilities (e.g., water and sewerage infrastructure).