A Supply Chain Revolution: How the circular economy unlocks new value (Part 2)
17th January 2017 | Catherine Weetman
In this final installment, Catherine Weetman discusses the implications of the circular economy and how a business can get started
Part 2: Implications for the supply chain and how your business can get started
The circular economy is gaining momentum as a critical tool for future-fit businesses. Global businesses and new start-ups alike are developing circular products and services, helping their businesses become future-fit. In Part 1 of this article, we began with an overview of the circular economy, looking at some of the reasons why business leaders are adding it to their strategic toolbox. In this installment, we look in more detail at the implications for supply chains and how your business can get started.
From leaky to loopy: Extra dimensions for the supply chain
Circular economy terminology often categorises materials into two groups:
- Biological nutrients: food, fibres, timber – should be sustainable, renewed to meet or exceed the rate of extraction
- Technical nutrients: metals, minerals, fossil fuels – should cycle infinitely; product design can support effective separation at end-of-use for efficient recycling
This breakdown over-simplifies the choices but starts to encourage a different mindset focusing on material choices and the ease of separation at end-of-use. Another lens to use is 100 per cent yield rather than zero waste. Here, businesses create new value from by-products and co-products and look for ways to recover and reuse energy and water inputs. Green chemistry and bio-refineries are finding new ways to extract valuable bio-chemicals from waste streams, providing inputs for pharmaceuticals, food and cosmetics before using the residual materials to create energy.
When supply chains become multi-dimensional, they implement new flows and formats, service networks, more touch points, recovery loops for products and materials – they are ‘loopy’ instead of leaky. The diagram below shows some of the potential flows. Cycling materials and protecting their value (ready for resale, repair, remanufacturing or recycling) means re-thinking reverse supply chains and packaging design – not just Reverse Logistics 2.0.
The ‘loopy’ supply chain
Procurement processes and contracts should focus on outcomes, enabling a win-win approach for suppliers and buyers. Can your business swap finite materials for recycled or renewable materials (and ensure biomaterials do not displace a food crop or contribute to deforestation)? Do you purchase something that is recyclable, but not recycled? Can you change that?
New by-products could be chemicals, gases or bulk solids, with diverse handling and transport needs that contrast with the mainstream products.
New partners will emerge – perhaps supplying their by-products or high-quality recyclate to you as specialist repair and remanufacturing providers, or in eco-parks with symbiotic flows of materials, meaning waste from one company becomes a nutrient for a neighbour.
How can your business get started?
Talk about circular approaches with your colleagues across the business – what’s already happening in your sector or in other supply chains? There are likely to be a few quick wins you can investigate, so you can begin the circular journey with little disruption and risk. Your business can also follow the steps below.
- Prioritise: are there some high-risk products or materials you buy, with volatile prices, toxic or scarce materials that you could replace with something safe and secure? Where are the biggest opportunities for value – could you recover your own resources, or create value from a new by-product? Could you design something to be more easily disassembled for repair or recycling? Could you swap from buying a product to contracting for service or performance, such as tyres by the mile?
- Work with suppliers to share your vision, scan for ideas and specify the goal (not the how-to). Help your suppliers innovate for a win-win outcome.
- Use learnings from those quick wins, build your experience and gain buy-in from other stakeholders.
- Invest the learnings and benefits in the next projects – perhaps bigger scale or requiring more disruption to existing processes.
- Tell the story to suppliers and consumers – engage a wider group of stakeholders and create momentum
Strategies and initiatives will evolve and improve, as your business builds on lessons learned. As an individual, you could choose simple examples to use yourself: a repairable Fairphone, 3D printed sunglasses, some recycled pens. You don’t need to create a completely closed loop product or service, or reinvent your entire supply chain - just start somewhere.
About the author: Catherine Weetman helps businesses develop future-proofed, resilient strategies, assessing sustainability risks and value opportunities. She is a Visiting Fellow at the University of Huddersfield, a Vice-Chair of the Environment and Sustainability Forum at the Chartered Institute of Logistics and Transportation and gained an MSc in Logistics from Cranfield University. Weetman's background includes Industrial Engineering in manufacturing and retail distribution, logistics solution design, project management, business intelligence, logistics product development and supply chain consulting. Her career covers food, fashion and logistics, including Tesco Distribution, Kellogg Company, and DHL Supply Chain.
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