CIRCULAR ECONOMY IS SAVING THE PLANET AND BOOSTING PROFITS
Tuesday, 16 July 2019
Posted by: SAPICS
Shoes made from ocean plastics, packaging material made from mushrooms and a green partnership between Ford and Heinz to build car parts from tomato fibre are examples of the circular economy in action.
In a traditional linear economy, materials flow in a line; they are taken from the earth, made into an item in an affordable way, and waste goes into landfills when we are finished using the product. Circular economy has been inaccurately referred to as “recycling on steroids”. It was shown to be much more in an impactful presentation by United States based supply chain specialist Deborah Dull at the recent SAPICS Conference in Cape Town. She contends that supply chain management - and the circular economy - can save the planet. In her current role as Principal, Supply Chain Management, at General Electric subsidiary GE Digital, Dull works across the supply chain community to accelerate the transition to a circular economy. Her goal is to progress past a linear “take-make-dispose” approach to one in which supply chains around the world are supporting a “make-reuse circular approach to dramatically lengthen the lifecycle of the things around us”.
“Circular economy is already well under way around the world and it is much more than recycling on steroids,” Dull informed delegates in her presentation at the annual SAPICS Conference, which this year attracted some 800 supply chain professionals representing 28 countries.
Organisations and governments are investing in these initiatives because of the capabilities of the circular economy, including profits, she said.
Challenging the misconception that saving the planet always comes at a cost, Dull reported that the circular economy is on track to add USD4.5 trillion to the global economy by 2030 and create hundreds of thousands of new jobs. “I believe that the true focus of circular is first on the ‘economy’ part; on expanding profits,” she stated.
Dull cited the example of Ford Motor Company’s circular economy-based initiative to reduce the 136 kilograms of plastic on each of its vehicles. “Ford’s aim was to develop a strong, lightweight material that would meet vehicle requirements, maintain margins and reduce the company’s environmental impact. Ford turned to the concept of bio plastics and needed to find a company that produced bioproduct waste from food manufacturing.” They went to Heinz, which has almost a million tonnes of tomato leftovers a year from ketchup production and was looking for an innovative way to recycle and repurpose peels, stems and seeds. Using tomato fibre to develop a more sustainable bio-plastic material for vehicles is now driving profits as Heinz avoids paying to dispose of its waste.
Sports brand Adidas is embracing circular economy principles in its partnership with “Parley for the Oceans”, an environmental organisation that is fighting environmental threats posed by ocean plastic pollution. “In 2017, Adidas sold one million pairs of its Parley brand shoes, which are made with ocean plastic. In 2018, five million pairs were sold; and Adidas has announced that it will make 11 million pairs in 2019. These are not cheap shoes, but they are in demand,” Dull said.
Proctor & Gamble is making bottles from recycled plastic and ocean plastic. “In doing this, they have taken all of their manufacturing facilities to zero waste and have saved over USD2 billion.”
She revealed that there is growing emphasis on designing products for the circular economy. EcoCradle is one such product. Designed to replace Styrofoam, it is a mushroom-based packaging material that is now being used by furniture giant IKEA. “It grows relatively quickly. It is cost effective; and it decomposes in 30 to 90 days,” explained Dull, adding that the global market for sustainable packaging is expected to reach more than USD140 billion in coming years.
She explained that the circular economy also encompasses “share” approaches like Uber or car sharing programmes where an item or asset’s utilisation rate is increased, as well as reuse initiatives, materials exchanges and industrial symbiosis.
“In industrial symbiosis, the idea is that a series of factories are set up next to each other; the biproduct or residual product of one factory process is used as a resource by another. Through local collaboration, public and private enterprises buy and sell residual products from one another, both making money and saving the environment.”
Google offered practical examples of building blocks of the circular economy at its data centres, Dull stated. “Assets are maintained and their lifespan prolonged. Mostly refurbished spare parts are used. Servers are remanufactured and deployed back into the data centres. Google showcases the reuse aspect of the circular economy by selling over two million units of refurbished items into the secondary market a year.”
With materials exchanges starting to emerge across the world, Dull believes we may not be far from seeing “parts passports”, which record an asset’s details and history, including market analysis for valuation, and pair up potential buyers and sellers. “Consider how much of the circular challenge could be solved if everyone switched, tomorrow, to using recovered materials only – and no longer used new, virgin materials,” she concluded.
Established 40 years ago, the SAPICS Conference is the leading event in Africa for supply chain professionals. It is hosted annually by SAPICS, The Professional Body for Supply Chain Management.