Circular Economy, Supply Chains and Landfills

Has the pandemic impacted your ability to secure raw materials? Are you looking for opportunities to keep products and materials in use?

APICS Milwaukee Chapter serves the supply chain community with education and information needed to compete in today’s world.

Per the Ellen MacCarthur Foundation, a circular economy is based on the principles of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems.

Supply Chain managers globally have felt the impacts of the pandemic and disruptions to raw materials. Gartner recently shared, “The global pandemic adversely impacted raw materials availability, pricing and the ability to get products to market. Complex globalized supply chains remain fragile in the face of global disruptions. This challenges chief supply chain officers (CSCOs) to look for opportunities to improve raw materials availability and reduce uncertainty.”

Gartner further recommends supply chain leaders move away from the traditional linear consumption-based model to a circular economy strategy. “The move to a circular economy is the right move because it decouples material consumption from financial growth,” said Watt. “The circular economy also has the potential to provide a new avenue of raw materials through end-of-life reprocessing.”

The Gartner 2020 Opportunities After Crisis Survey found that 51% of supply chain professionals expect their focus on circular economy strategies to increase over the next two years. Below are suggestions on how to leverage reprocessing and recycling strategies.

  1. Commit to the circular economy. Develop a long-term vision. Profile and pilot products that may be suitable candidates for raw materials refurbishment, parts harvesting or recycling.
  2. Engage with customers. Identify opportunities to retain control of materials by shifting to a product-as-a-service arrangement, such as leasing. When relying only on customer goodwill for product returns, make the returns process as easy as possible.
  3. Scale through collaboration. Select and build an ecosystem of partners to enable access to and processing of end-of-life materials. Partnerships must be built on joint value creation and shared rewards. Start by collaborating with waste contractors to access end-of-life materials, reverse logistics providers to centralize these materials and raw materials suppliers to identify the best reprocessing routes.
  4. Move beyond residual materials value. You’ll need to balance and make trade-offs among residual material value, raw material price volatility, customer sentiment, and global and local regulation. Update these assessments periodically as the business landscape changes.
  5. Participate in the design process. Supply chains must get involved earlier and more deeply in product design. Criteria for materials selection must include potential for end-of-life reprocessing and end-of-life environmental impacts.
  6. Check the balance sheet. Assess the impact of moving toward a circular economy on the company’s metrics. Holding materials for reprocessing may have a negative impact on working capital, but a positive one on raw materials security.

Keeping products in use keeps them out of landfills. One such example is the #WearNext collaboration project in New York that has collected over 1.2 million pounds of clothing likely headed for landfills. New York City landfills a staggering amount of clothing every year equal to about 200 million pounds at a significant cost to residents of $300 million. In 2019, New York City joined forces with the Ellen MacArthur Foundation’s Make Fashion Circular initiative to launch #WearNext and developed a map of 1,100 clothing collection points across the city, allowing New Yorkers to easily find their local drop-off point.

As the world works through the impacts of the pandemic, supply chain managers play a key role in helping keep materials and products in use and developing circular economy strategies that are smart for business and the environment.

Looking for more information on the circular economy? Join us on January 20th, 2021 to hear from Chuck Nemer, CPIM, CLTD, trainer and consultant with over 40 years experience in Supply Chain management! Learn more...