How and why to build them
No matter how spread out they are, all supply chains are pretty much a straight line. Raw materials get collected and made into a product, that product goes to the consumer, and the consumer throws it out when finished with it. Sometimes the consumer returns the product to the seller in an example of reverse logistics, but more often than not the seller ends up tossing it out. Some raw materials do get recycled – aluminum the most among common packaging materials at 75% – but even then a lot goes to waste. Creating circular supply chains requires buy-in from all participants along the chain, most importantly the end consumer. If they don’t recycle, the circle is broken. Younger generations are enthusiastic about recycling and the circular economy, though, so they’re actually the ones pushing businesses in that direction. There are good reasons to adopt a circular supply chain and ways to get started.
Have you ever gotten a discount on a new phone by bringing in your old one? If so, you’ve taken part in incentivized recycling. The same goes for trading in a car. Somebody else buys your old phone or your old car, you get a discount on a new one, and the seller makes two sales. Everybody wins. That’s not only a good way for businesses to get repeat customers, it’s also an easy way to reclaim materials without having to break them down and reform them into something else. The phone is already a phone, presumably one that works or can with a few fixes. The car is already a working car, and somebody in the market for a used car can now get one. Those don’t have to be the only examples, however. The model works for clothes, books, all sorts of everyday items.
It might require companies to use less specialized materials than they’re used to now, but 3D printing with plastics and even metals as the technology improves and scales can make circular supply chains more economical. There’s abundant recyclable material (less than 10% of plastics currently are recycled and almost all metals are recyclable). 3D printing can make objects of just about any shape, and it can enable more widespread automation in the manufacturing process. Parts that are 3D-printed can extend the life cycles of many machines.
If it seems everything under the sun these days can have -as-a-service attached to it, that’s because doing so makes things simpler for everybody. In the product-as-a-service model, instead of buying the product, customers more or less rent it for all or part of its lifespan. Homie, for example, supplies customers with energy-efficient appliances and charges them either a monthly fee or by the use rather than charging the entire upfront cost of the appliance. When the subscription is up, Homie takes the appliance back, thus assuming responsibility for its reuse if it’s still functional or recycling at the end of its life cycle. The same goes in warehouses, where instead of buying pallets upfront, companies can rent from services like iGPS. In periods when the warehouse needs fewer pallets, it simply rents fewer and the product-as-a-service provider rents them to others or recycles them when they’re no longer useful.
Why A Circular Supply Chain?
As with a lot of innovations, the initial investment in building a circular supply chain can be high but pay huge dividends down the line. That’s especially true given shifting consumer expectations of the companies they buy from and new governmental regulations targeted at reducing waste. As we’ve seen throughout the COVID pandemic and its aftermath, raw materials can be both expensive and volatile, especially when in short supply. Supply chains will undoubtedly see more of that as climate change alters growing seasons and increases forest fires. While it might seem a difficult proposition, imagine how much money companies could save in their supply chains if they’re reusing as much of their raw materials as possible.
Circular Supply Chain Examples
As part of its Move to Zero sustainability initiative, Nike allows customers to drop off their old shoes at participating retail stores. Nike then grinds them up and remolds them into new shoes. Adidas has partnered with Parley for the Oceans to make shoes out of plastic retrieved from oceans and beaches. Along the way, Adidas decreased its use of virgin polyester by more than half and has made more than 30 million pairs of shoes from ocean plastic. Fashion retailer H&M Group wants all of its products to be recycled or more sustainably sourced by 2030. To accomplish this, it has partnered with the Ellen MacArthur Foundation to overhaul its operations. Brand stores have clothing recycling drop-offs, and the group aims to have all new products designed by its Circulator team by 2025. Ball Corporation has rolled out its infinitely recyclable Ball Aluminum Cup™ to more than 30,000 retailers in all 50 states. “As a company, we are relentlessly focused on enabling the circular economy and finding new ways to help solve the packaging waste crisis with aluminum beverage packaging,” Ball president and CEO Daniel W. Fisher said.