The MIT Center for Transportation and Logistics (CTL) convened participants from industry, non-profits, and academia to discuss circular supply chains during the December 2019 roundtable.
Participants came from industries spanning technology, apparel, food, beverages, finance and furniture as well as from product makers, retailers, and carriers. Despite the diversity of participants, the day revealed that they faced similar challenges. The five sessions of the day-long event covered the following topics: e-commerce consumer channels, managing end-of-life products, business and government ecosystems, a business model brainstorming session, and discussions of the future of circular supply chains. View the insights infographic below.
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Seven drivers for circular supply chains
Companies cited seven drivers for their circular supply chain efforts: motivated employees, mission-driven leaders, high-level sustainability goals, waste stream economics, access to materials, customers’ demands, and regulation. All these drivers were important because “if the conversation is about cost, you’ve already lost.” Participants advocated a systems-level view.
Growing e-commerce consumer channels affect circularity in positive and negative ways. Increased last-mile product deliveries offer new opportunities for reverse logistics even as they have increased product returns and packaging waste streams. Companies can partner with retailers for collection of returns, used goods, and end-of-life products. The sharing economy dovetails with the circular economy through renting, sharing, and reuse of products.
A key insight was, “Waste is just a resource in the wrong person’s hands.” Many companies were turning what had seemed like waste streams of materials, packaging, and products into value streams. For example, plastic bottles become shoes, shoes become playground surfaces, flex film becomes decking material, food waste becomes electricity, and so on. Making waste tangible to those who affect its creation helps get that wasted resource into the right hands.
Building circular supply chain ecosystems
The circular economy depends on building ecosystems of partners. The group discussed three such ecosystems: public-private ecosystems comprised of consumers, municipal waste collectors, waste haulers, materials recovery facilities (MRFs), and materials processing firms; supply chain ecosystems of individual corporations that provide (or accept) diverse recycled materials; and industry ecosystems for pre-competitive collaboration on standards for circularity at scale. In every ecosystem, all partners must be viable and motivated in order to play their role.
A brainstorming session asked independent breakout groups to pick seven business model elements from a list of 18 that will be essential to circular economy businesses. The groups converged on three universal elements: first, product design for circularity reduced waste, increased recyclability, and extended the life cycle; second, reverse logistics (e.g., last-mile returns and municipal recycling programs) recovered end-of-life packaging and products as a prelude to reuse and recycling; third, industrial symbiosis created webs of companies to convert byproducts to products and convert waste into assets across a multi-industrial ecosystem.
The future of the circular supply chains depends on economic ecosystems, pre-competitive standards, and matchmaking to find new uses for old materials. Thus, ongoing collaboration will be a key element of building the circular economy. Inspired by this desire for collaboration, MIT CTL is currently in the process of creating a consortium for shared research, conversation, and roundtables that help develop and adopt best practices for the future.
Highlights from "Closing the Loop"
1.1. Challenge: Going Beyond Cost
In talking about justifying corporate circular economy initiatives, one participant said, “If the conversation is about cost, you’re dead in the water.” The reason is that many, but not all, initiatives do come with a financial cost either up front (e.g., investment in equipment) or on an incremental basis (e.g., higher prices for a recycled material). Currently, the low price of landfills and fossil fuels makes them attractive to those focused only on the bottom line. Thus, several participants said companies need other motivators beyond short-term cost to drive circularity efforts. These motivators include the value of circularity for resilience and license to operate.
1.2. Employees Make It Happen
Three companies had employee-driven circularity efforts. At one shoe company, the motivation for recycling came from the employees who saw the waste and wanted to do better. The company’s culture emphasizes taking action. When employees discovered there were no recycling opportunities for their company’s products at end of life, they decided to take it upon themselves to repurpose the materials. In other cases, mid-level managers found ways to motivate employees to see waste and think of creative ways to do something about it, such as turning recycled materials into limited-edition runs of products that tell a story. The challenge with bottom-up initiatives is in harnessing them for replication at scale.
3.1. Best Practice: Make Waste Tangible
People can’t see CO2, but they can see waste. Some companies shared ways to make waste more visible to employees and decision makers in order to spur more ideas about its elimination or repurposing. For example, a maker of cleaning products has a zero-waste goal that they will likely meet in 2019. To help drive the effort, they hold an annual dumpster dive to show people what is being discarded and get them to think of how to reduce, reuse, or recycle it. The company also moved all the trash bins from individual offices to a central location to make people more conscious of discarding things. Another shoe maker brought designers to the factory floor to see the waste created by inefficient designs or wasteful embellishments. Indeed, employees at all levels need to see the waste that their decisions may be creating if they are to either eliminate it or find a use for it. Seeing the waste could help shift the mindset from linear thinking to circular thinking in which downstream is not over the horizon and out of sight. In closing the loop, what goes out the factory door as product or waste eventually returns to the inbound side, either at the company or at another company.