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The Inventory Mentor

Jan 29, 2020


How ready is your business to join the circular supply chain?

According to national geographic, about 8 million pieces of plastic pollution find their way into our oceans each year. That’s the equivalent of putting five garbage bags full of trash on every foot of coastline around the world. Millions of animals are killed due to entanglement or starvation. Microplastics are ingested by fish and often block their digestive tracts or pierce their organs resulting in death. Sometimes their stomachs are so packed with plastics; it reduces the urge to eat, and they starve to death.

Furthermore, a new study suggests that the fish that ends up on your dinner plate could be a delivery method of human exposure to microplastics. Microplastics are said to create a medium that facilitates the transport of other harmful toxins such as heavy metals and organic pollutants. When entering our system, these chemicals could be released, causing toxicity.  

Retailers are using their initiative in an attempt to reduce their packaging footprint. Although package-less fresh produce has been around in countries like the USA for some time, New Zealand supermarkets have now started their “food in the nude” campaigns, whereby all their fresh produce is sold without packaging. Pick n Pay in South Africa is piloting a packaging-free shopping zone in their Cape Town outlet. The zone consists of dry goods such as baking goods, cereals, dried fruit, flour, grains, ground coffee beans, nuts, pasta, pulses and beans, rice, seeds, spices, superfoods, olive oil, and vinegar. Customers are encouraged to bring their reusable containers, but for those who forget, the store will offer free paper bags and a range of reusable containers that can be purchased. Suppliers have needed to change how they deliver products and now do so in large reusable containers. The product is then decanted into other containers in the packaging-free zone. The absence of packaging means less cost for the retailer and a decrease for the consumer. 

Plastic is just one of many products that, if not recycled, reused or remanufactured, end up in our ever-growing landfills. Agricultural waste, as well as solid waste, industrial, and construction waste, end up polluting and contaminating our air, land, and water resources. Additionally, the economic and social costs of managing landfills are very high. Being able to design effective strategies and facilities for managing landfills takes high capital investment. From developing recycling initiatives to managing the gases coming out of the landfills to groundwater contamination management and ensuring compliance with environmental regulations, all drains a lot of cash from municipalities and ultimately from you, the taxpayer.

The picture painted here is not pretty. The good news is that companies and consumers are becoming a lot more environmentally aware, and we are seeing a shift from our traditional linear supply chain model to a circular one. By reducing our demand for manufactured products and embracing a reuse or recycle mindset, we can reduce the toxicity and volume of waste that end up in our landfills. 

The traditional linear model shows the lifecycle from the cradle to the grave. 

The circular economy attempts to minimize the inputs of resources as well as the generation of waste leaking into the environment. Here we look to reduce the number of primary raw materials used as much as possible and to get every percent out of the raw materials with as little waste as possible. Then, at the end of life, we look to recycle, remanufacture, or reuse the product. Or, in the case of services, the ongoing serviceability and maintenance of a product.

Recycle –  Collecting materials so they can be used in the manufacturing of new products.

Remanufacture – Taking an existing product that has ceased to function from wear and tear or damage and refurbishing or replacing components for those that can’t be repaired and then reintroducing the product into the supply chain. 

Reuse/Resell – Transferring or selling the product from one user to another.

Companies that do not have a sustainability strategy should be considering one if they hope to be around in the future. The circular economy will change many things for companies in the supply chain. These companies need to relook how they produce and deliver products along the chain as the retailers and consumers will be insisting on more environmentally friendly ways. 

Here are a few things to consider before you kick off your sustainability project:

Circular Inputs – How can you change the materials you are using to ones that are renewable or recyclable, and how can you use fewer materials in the initial manufacturing process?

Product design – How can you design products to last longer, be used more intensely, or perhaps used in a sharing system. How can you design products that can be easily disassembled at the end of life without incurring immense labor or energy?

Process design – When looking at your processes, how can you make the product using renewable or recycled materials?

Circular flows – At the end of life, how do you recover materials or products so they can be used again?

Business models enabling circular supply

Many new business models are emerging to manage circular flows. In South Africa, for example, where unemployment is extremely high, and there are no sophisticated recycling services in place, young entrepreneurs walk from housing complex to housing complex collecting plastic, paper, and glass, which they take to the recycling plants. They are paid per ton, which enables them to feed their families and at least keeps them away from crime. On a larger, more global scale, Uber provides a platform to supply resources (drivers) only when needed. This model beats having a five-seater car in the garage that gets used to transport one person for an average of 2 hours per day. Solvent companies that sell solvents as a service is another business model enabling circular supply. They can control the usage of the solvents, recover the remainder – clean it up and reuse it for other purposes.

Flea markets and boot sales were popular, and some are still in existence today. This concept of a “market” where people can go to buy and sell has led to companies such as eBay, Gumtree, Craig’s List and Facebook community groups popping up to provide an online platform to do the same thing – assisting in the selling of previously owned goods.  

Enablers and accelerators

These are systems and technologies that are designed and built to recycle or remanufacture. Technologies such as 3D printing, Big Data, IoT, and also different ways of thinking, like green chemistry, are just a few of these that play a part in enabling and accelerating a circular economy.

Start your journey – your business model

If you are looking to a greener future and adopting a circular approach, start by making small steps in the right direction. As opposed to restructuring your entire business, start with short term projects, and reinvest the benefits into long term wins. Consider developing your business model where you take back and remarket your products. If you don’t take back your goods, then you can’t profit from the end of life. Designing smart goods that are environmentally friendly only to have some other businesses benefit at the end of life doesn’t make too much sense. You can then decide what happens to your products — do you recycle, resell or remanufacture.

 How can you get more value from your waste?

What can you recycle from the end of use as well as from the waste along the supply chain?

If you are a food manufacturer, for example, are you using every last percent of your raw materials? Are there bits left behind that can be used as a by-product for another product? Perhaps another business in a different industry has a use for one of your by-products. 

As an example, let’s look at Oranges. Two primary products exist, namely the whole fruit and the juice of the fruit. However, there are many by-products from the Orange that can be used or sold to other product manufacturers.

  •  Peel oil – Manufacturers use this for the production of various flavor compounds used in the beverage, cosmetics, and chemical industries.
  • Essence oil – Flavor companies commonly use this for the manufacture of mixtures for the beverage and other food industries. 
  • Peel – Pectin, found in the fruit peel is used as an ingredient in the making of jams, marmalade, and jelly.
  • Citrus Molasses – This is used in the production of animal feed pellets or as raw material for the production of citrus alcohol by fermentation.
  • D-Limonene – This is oil found in the orange peel and used by the plastics industry as a raw material in the manufacture of resins and adhesives. It is also found in the electronics industry where it is used as a solvent.

The object is to try and use up as much of your raw materials as you possibly can so you can maximize profits and minimize waste.

What can you do at the end of use stage?

At the end of use stage, what options exist for that product? Could it be fit for reuse or resale? If it can’t be resold, can it be repaired, refurbished, or remanufactured?

Processing inputs

Look at your processing inputs such as water and energy, is this being brought back into the process? If not, could it be?

Waste Consolidation

Could you consolidate your waste flows with a few companies in the area? This will turn a cost into a revenue stream as you collect more waste volume, and by bailing it up, you would make it worth something to a waste buyer.

Offcuts

If you are in discrete manufacturing, what are you doing with your offcuts? Could they be used to build another product OR is there an opportunity to sell offcuts to other companies?

Companies in the packaging industry are under heavy scrutiny, specifically the plastics packaging manufacturers. These companies will have to look at alternate business models. With supermarkets promoting packaging-free shopping, packaging companies will need to find alternative ways to package or deliver their products. Consumers are becoming more and more aware of the hazards that come along with packaging, and it won’t be long before all products are sold without fancy packaging. 

Besides packaging companies, all other supply chain companies should look carefully at their current business model and see if they, too, are under threat of extinction in a circular supply chain. If you think you are at risk, you need to look at ways to reinvent yourself.

Professor Walter Stahel sums up the benefits of a circular economy when he said, “The goods of today become the resources of tomorrow at yesterday’s prices. So, let’s all do our bit to make this a reality.


Written by Barry Kukkuk

Barry comes from a systems architect and application development background. He started his career as the co-founder and chief developer for Icon Retail Management, a full-fledged retail management system that integrated with mainstream ERP. Barry later conceptualized and developed Inventory Optimiza for Barloworld Logistics and provided technical support for the application. It was here where Barry’s passion for Inventory Management solutions began and the industry where he would later return. Barry went on to start his own business in 2008, where he was an avid user of cloud-based apps and would only use online solutions for his business. In 2010 Barry began his journey with NETSTOCK. His enthusiasm for Inventory Management and his strong belief in “all things Cloud” collided, and we saw the release of the Inventory Management solution - NETSTOCK. Barry is the CTO at NETSTOCK, where he is responsible for all customer-facing technologies and systems that keep thousands of NETSTOCK customer instances working correctly.

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