The Circular Supply ChainWhat is the Circular Supply Chain and Why Does it Matter?
Traditionally, the supply chain is linear in nature, goods are consumed and eventually discarded in the trash. The flow of goods originates with raw materials.
With today’s emphasis on sustainability and reclamation of used materials, the supply chain is adapting, transitioning to meet changing demands. In a circular supply chain, there is a transition from raw materials to the manufacturing process to distribution to the consumer then to waste. By embracing the journey of reverse logistics process, goods and materials that were set to become waste can be given new life.
Involved in the circular supply chain is the creation of new product-to-service approaches as well as methods of recovering new materials, and an emphasis on generating “smart” projections and preparedness for costs in the future.
Consumers Power Reverse Logistics and the Circular Supply Chain
Today’s consumers are more aware, interested and involved in learning about the products they purchase. There is substantial interest in ethical sourcing of raw materials as well as production, fair trade and labor, environmental, ethical treatment of animals and product disposal or recycling. With the use of RFID, barcodes and software, consumers can now often track and trace goods back to the point of origin. In addition, they can gain insight into the supply chain partners that participated in the production, handling, storage, transportation and logistics of the goods.
Millennials have demonstrated increasing concern about sustainability and ethical production, trackable by how they spend their money. With the advanced technologies on the market today, consumers fully expect to be able to dispose of and recycle goods in a manner that does not create adverse effects for the environment or society.
Transitioning to the next generation of supply chains, these characteristics must apply:
Ability to react rapidly to changing circumstances including those in the operating environment such as natural disaster, terrorism, economic instability and more
Speed of operation and responsiveness has become the currency of the supply chain industry.
With today’s consumer power, companies can no longer limit the delivery of their products but rather need to have expanded supply chains on a global scale. Global supply chains must be able to react at a local level.
Effective, Optimized Inventory Levels
In order to keep consumers happy, it is essential that you have the correct amount of inventory in the warehouse. Inventory levels must be appropriate as having excessive inventory results in expired, unsold product that may end up as waste. Too little inventory will mean lower sales and dissatisfied customers. Using big data, predictive analytics and WMS reports can help you make critical decisions in a timely manner and optimize inventory levels appropriately.
So now that we know what a circular supply chain means, how do we get there?
In the circular supply chain, waste materials and returned goods are transformed into products which have value and can be resold. In order to bring balance, we need to transition away from the point-to-point linear supply chain that results in end products as waste in the trash and landfills. By adding a link to connect the origin and end of the supply chain, returns and recycling can be added, enhancing sustainability and environmental health. Costs can be reduced as sustainability benefits are passed to various trading partners.
Waste is viewed as opportunities, new ways to create value. Across the world, countries are viewing byproducts and waste in new ways. Manufacturing byproducts often can be reclaimed and re-used within the manufacturing process. This can sometimes assist companies develop new revenue sources for products which had previously been discarded.
Much of the waste produced by the supply chain industry is due to retail returns. Post-retail sales, including returns and overstock goods is increasing at an estimated rate of 7.5% annually, according to Zac Rogers, an operations and supply chain professor at Colorado State University. In some fashion categories, the returns rate is estimated to be as high as 70%. Fast fashion is acknowledged to be one to be one of the highest categories for returned goods. These goods largely end up in landfills.
The circular supply chain is more than a sustainability framework but rather a completely new way of conducting business. It empowers companies and organizations to collaborate, innovate in ways that take into account resource scarcity and climate risk, provide a response to consumer community pressure to reduce waste. The circular supply chain also holds the key to potentially unlocking a $4.5 trillion economic opportunity.
European Union Packaging Directive
Initiated in 2001, this directive requires all countries in the E.U. to recycle 50% of their packaging waste or incinerate it to provide energy.
Japanese Recycling Laws
In Japan, businesses are responsible for recycling packaging materials into reusable materials.
California Recycled Content Laws
California requires manufacturers to recycle 25% of all plastic containers.
UK Landfill Directive
In 2007, an addition was made to this legislation that requires all UK-based companies to recycle or treat their waste products, regardless of their size or turnover.
Let’s take a look at some goods that can be transformed, producing new value
Chemical Recycling of Plastics
It seems as if nearly every week we hear reports of how plastics are choking the oceans and its wildlife. Approximately 8 million metric tons of plastic are thrown into the world’s oceans every year. The amount of plastic in the oceans is set to increase by a factor of 10 by the year 2020. By the year 2050, it is anticipated that there will be more plastic in the oceans than there are fish. Marine organisms are often unable to distinguish between common plastic items and food. Plastics fill the stomachs of marine animals, keeping them from eating nutritious food.
From consumers to businesses and governments, millions of people every year try to recycle plastics. The effort to recycle plastics worldwide continues to fail. 91 percent of the plastic in the United States that is potentially recyclable ends up in landfills or the oceans. Instead of putting plastic goods into different containers and hoping that another country will recycle them, it turns out there may be a better way, one in keeping with the circular supply chain.
Chemical recycling operations are beginning to emerge from the experimental phase but provide enormous promise to resolving a critical problem. Typically, plastic goods are chopped up then treated with a combination of water, heat, pressure, catalysts or enzymes to break down the resin into its constituent parts. The chemicals then then be repolymerized into virgin-quality resins. The recycled plastics can also be used as fuel or even as the raw materials for producing other goods. This would provide the means to repurpose end-of-life plastics, a much better way to value plastic goods that typically are incinerated or placed in landfills.
Currently only “food grade” unrecyclable plastic (PET) can be used to make new food grade plastic goods. There is a limited supply of acceptable quality, food grade PET on the market, making it more expensive than new PET. Because of the food grade quality requirement, much of the plastics available for recycling (80%) and reuse cannot be recycled. This ends up in landfills and oceans.
With chemical recycling, any waste plastic can be used to make food grade PET. This includes waste recovered from oceans, plastics recovered from other sources including polyester textiles. Implementing mass chemical recycling worldwide would have a transformative impact on the planet and eliminate the world’s packaging waste problem.
Transforming Raw Materials and Scrap into Innovative Textiles
There is an innovative movement afoot to transform waste into valuable new materials that can be used for textiles. What can you do with scraps that litter the factory floor? Rather than incinerating flax and hemp stalks, Circular Systems turns the scraps into yarn. Often up to 20% of textiles that make it into clothing factories end up on the cutting room floor.
The fashion industry has been undergoing a major makeover in past years, churning out new seasons of fashion rapidly for consumers who may wear the clothing only a few times. The fast fashion craze has resulted in a huge influx of recycling.
According to the EPA, in 2015 alone, 11.94 million tons of clothing and footwear were produced. Additionally, 1.35 million tons of towels and sheets were produced in 2015.Conversely in that same year, 8.24 million tons of these materials were estimated to have been disposed of in landfills. These materials were primarily textiles, leather and rubber. This overall trend has continued.
To combat the problem of increased waste, businesses are turning to innovation to help mine waste products for the production of fiber. Ideas that seemed farfetched years ago have now taken hold. Scraps of material that would previously have been incinerated are now being woven into yarns. Agricultural components not suitable for human consumption are being fermented.
From sourcing to manufacturing and operations, the mining and usage of alternative materials has begun to permeate the supply chain. As these are new materials, there are new properties and challenges to be faced and accommodated.
Here are some innovative examples for how scraps and waste are transformed into valuable, usable textiles:
- Texloop, a product by Circular Systems utilizes fabric scraps to make new yarns and fabrics
- Agraloop another product by Circular Systems transforms food crop waste into natural fiber products. Products such as banana, pineapple, oilseed hemp and oilseed flax can be transformed into high value cottonized fiber which traditionally is spun.
- To avoid the 400 million tons of corn that go to waste annually, items such as banana stalks, squeezed oranges, mushroom roots, spoiled milk, pineapple leaves, chicken feathers, wood pulp and soybeans are used to make textile fibers.
In Germany, one factory working at full capacity can process 500 tons of spoiled milk and turn it into Qmilk fabric. The spoiled milk is dried out and reconstituted into a dough. No chemicals are added but additives are combined with the dough to make it waterproof. The dough is then extruded into fibers thinner than hair.
The natural anti-microbial properties make Qmilk fabric good for medical use. Founder Anke Domaske discovered that fabric woven with Qmilk fibers were comfortable for her father who had developed a textile allergy while undergoing chemotherapy for leukemia. Production of Qmilk fabric began in 2015. Now the nonwoven textile is used in Italy’s Tenderly facial and toilet tissue. Qmilk fibers will soon be in a German outdoor manufacturer’s collections soon. Because Qmilk is a protein fiber similar to wool and silk, factories and supply chains do not require major adaptation to use them. In terms of cost, Qmilk is more akin to cotton or viscose fibers and less expensive than wool.
The Italian company Orange Fiber takes orange juice byproducts and extracts the cellulose. This generates a spinnable silky polymer that can be blended with other materials or used alone. According to Orange Fiber, Italy disposes of 700,000 tons of the citrus byproduct every year after industrial juicing. Famous fashion designer Salvatore Ferragamo used this fiber in a 2017 collection.
Inspired by the strength of a spider web, Bolt Threads in Emeryville California decided to make their own version. Using fermented sugar, water, salts and yeast, the company created thread. $213 million in funding was raised from investors. Bolt Threads is now working with Patagonia to use the threads in their products, including knit tie prototypes and hats.
Also inspired by arachnid webs, Japanese company Spiber developed synthetic proteins using a fermentation process. This material is now used in a North Face parka and a Lexus seat concept which uses spider silk protein material that resembles plastic.
What began in 1989 as a research project at Cargill by a PhD student who was attempting to develop sustainable plastics by using the plant carbohydrates from feedstock corn is now a line of products by Ingeo. Named for “ingredients from the earth”, Ingeo produces fibers used for clothing, bedding and facial wipes. It also creates 3D printing, toys, cosmetics cases and plastics. Ingeo was born of a collaboration between Dow Chemical and Cargill’s efforts to develop a corn-based fiber.
Approximately 5-10% of the corn produced goes to waste in silos at the end of each season. This is an ideal waste product to transform into new materials. The corn is broken down into polylactic acid (PLA), a biodegradable thermoplastic from renewable agricultural products. PLA is 100% bio-based and requires a sugar source to create it. The production of PLA can result from using other sugar sources including sugar cane and sugar beets.
NatureWorks sells PLA for nonwoven fabrics used in items including diapers, wipes, industrial horticultural fabrics and carpet backing. PLA material dyes well and does not fade in the sun, making it ideal for window blinds. Naturally fire-retardant, PLA has found use in the production of industrial carpeting.
Faux Animal Leather Products
Bolt Threads has recently been collaborating with Ecovative to grow faux animal leather from the underground root structure of mushrooms. The cells are grown with additional nutrients in corn stalk beds. Next they are compressed into a two-dimensional material which is later tanned with English Breakfast tea rather than caustic chemicals. The faux animal leather, Mylo can be grown in 10 days. In comparison, animal leather takes years to develop. Mylo material is also biodegradable. Partnered with famous fashion designer Stella McCartney, Bolt Threads produced a handbag for a Victoria & Albert London exhibition, coined “Fashioned from Nature”.
Pineapple plantations account for approximately 10% of the agricultural land in the Philippines. Since pineapple leaves naturally have excellent fiber, they are being transformed into faux leather, reducing some of the refuse from the pineapple plantations. Designer Hugo Boss uses pineapple fabric maker Pinatex’s fabric in the production of some sneakers. No chemicals on the Cradle2Cradle list of banned substances are used. The faux leather fabric is biodegradable and is priced similarly to mid-range leather
Sustainable, Alternative Fibers, Fabrics and Textiles
To be successful in producing new types of raw materials using recycled or new materials, companies must be capable of consistently producing the materials in sizes of tons. The production of these new materials also adds income to the farms that supply the raw materials instead of sending them to landfills. While these innovative new fibers are not a replacement for cotton, wool and polyester, they are an important supplement to the market.