This is the second part of a two-part blog series that analyzes waste reduction in circular economies through a systems thinking lens, taking into consideration product design and supply chain operations.
In the first blog post of this series, I examined the question: Can circular supply chains help solve our global waste problem? I touched upon some of the specific benefits that a circular supply chain can bring by highlighting an example with beer bottles in the beverage industry and utilizing the Ellen MacArthur Foundation’s infographic as a roadmap.
In short, the answer is yes – circular supply chains can help solve our global waste problem, but there are multiple caveats with no easy or quick fix. Instead, reducing waste will take a dedicated and collaborative re-tooling of supply chains. And this will require a systematic change which one company alone cannot accomplish. The good news is that a successful circular supply chain is one of the transformative pieces needed to shift the status quo, which can drive full-scale adoption of a circular economy.
How it works
This post will illustrate successful examples of how specific operations can serve as a catalyst for circular supply chains to reduce the amount of waste we produce. They will also redefine long standing linear industry practices to create a more self-sustaining world.
1. Recommerce through recovery and revitalization
Recommerce has recently been vitalized for large brands in the US by Yerdle, a company founded by the former Chief Sustainability Officer of Walmart. Typically, consumers discard goods or products before they have reached the end of their lifecycle. This is a lost economic opportunity for both the consumer and the brand. Yerdle capitalizes on consumer waste that has not yet reached the end of its usable life by recovering and revitalizing these products.
Before Yerdle, very few brands or companies outside the high tech and automotive industry had proven that a large-scale recovery and regeneration business was viable. Yerdle has demonstrated that a third-party company can serve as an invisible hand to close the circular supply chain loop, and that brands themselves do not have to tackle these areas of operation. Patagonia, Eileen Fisher and REI are some of the pioneering retail customers working with Yerdle in this new business opportunity.
Patagonia’s Worn Wear program is a clear example of a business being able to profit many times over from the initial creation of one highly durable, repairable product that is better for all stakeholders. Below are key benefits of this program:
- Consumers receive credit for returning used items, which increases brand loyalty and contributes toward the formation of a strong circular economy, fueled by a circular supply chain rooted in reverse logistics collection and repair
- Product designers have stronger justification for the use of more sustainable, higher quality materials and components that can easily be repaired without increasing initial product cost
- The planet’s landfills are less full and its natural resources are less depleted
2. Advanced remanufacturing
Remanufacturing is the rebuilding of a product at the end of its life to its original specifications utilizing reused, repaired or replacement components.
This is not a revolutionary idea but modern-day supply chains have not been constructed to embrace this concept. However, innovation in physical and digital technologies has enabled the growth of circular supply chains through cost-effective returns processing, robotic disassembly and advanced material sorting. Above all else, the key technological accelerator has been 3D printing.
3D printing has significantly grown over the past five years, given its widespread applicability, especially in the field of advanced remanufacturing. Regardless of the application, one common benefit is that it simplifies the logistics of remanufacturing. A large-scale recovery and regeneration business model is difficult to launch and maintain, and one of the paramount reasons is the cost and complexity associated with recovery. 3D printing removes this from the equation and will continue to play a role in redefining remanufacturing as companies experiment to find its best fit within their offerings.
3. Material sourcing based on cross-industry collaboration
There are new and novel materials that are poised to play a greater role across multiple industries in the near future as they become better (and cheaper) than traditional materials – all thanks to advances in nanotech, biotech, green chemistry and smart lab technology. Examples include new types of packaging materials, green electronics and alternatives to plastic, leather and other animal products. A particularly promising example is the personal electronics device Nimble, which uses materials such as bioplastics and organic hemp. Larger, industry-wide advances, however, will depend on the speed at which new material processing technology and investment can be scaled from research and development to commercial production capacity.
The examples above demonstrate just a few of the economic opportunities that exist when products are designed with the circular economy in mind. Most importantly, the tangible benefits of sustainable design that lead to reuse, repair and regeneration can further many of the United Nations Sustainable Development Goals.
The role of data
A key commonality in each example above is the need for data continuity across multiple supply chain operations that have been traditionally siloed. There are two parts to data continuity that I would like to briefly highlight:
1. Data availability
One key to enabling circular, connected supply chains is making data available across the value chain. Blockchain is a popular proposed solution that certainly has its merits, yet full adoption is an extensive process. In the short term, data microsystems between a small number of connected entities will likely serve as a stepping stone until industry wide solutions are more manageable in the future.
2. Data applicability
While achieving data availability is terrific, it is only relevant if that data is applicable, complete and of high quality. Thus, all stakeholders have a responsibility in a circular supply chain to ensure that data is not only available, but can properly quantify environmental factors during the planning process to assess forward looking impact. If impact assessment only exists in post execution reporting, then the opportunity to affect change is lost for that time period. There are a number of life cycle assessment (LCA) or inventory databases on the market today that provide varying levels of data. It is absolutely critical that adequate research and testing is performed to assess what database best fits a supply chain.
Data availability and applicability are areas of continuous focus for Quintiq as we look to partner with more organizations to best construct and utilize life cycle databases.
Assuming that all the applicable data is available and flowing freely through economic systems, what does that enable? For starters, products can be more accurately priced incorporating factors such as the environmental impact of packaging. With a more mature, quantifiable understanding of the supply chain and corresponding environmental impacts of product, brands and companies can start to better influence or shape customer demand. It is extremely inspiring that there are already leaders in this regard such as France’s discount on items with recyclable plastic packaging, but we need to go further and make these initiatives more ubiquitous.
As we enter Industry 4.0, it is evident more than ever that we cannot just automate our current processes in order to dramatically change the course of economic development. We need a transformative shift in the scope of those processes to enable new technologies to achieve higher levels of efficiency and productivity.
While there isn’t one magic bullet to solve our global trash problem, change is attainable with collaboration. Circular supply chains present a promising option; yet their reliance on a coordination between many parties adds complexity. Despite this, examples such as Yerdle and Nimble leave me optimistic.There are exciting possibilities for brands that have the courage to rethink their supply chains and adapt to a more circular economy driven by conscious consumers. Dassault Systèmes and Quintiq can support this journey that fulfills market demands as well as our mission to harmonize product, nature and life as the world’s most sustainable company.