For years, pioneers in sustainability have been talking about “closed-loop” and “cradle to cradle,” focused on bringing individual products and processes into a more circular life cycle. All the while, this life cycle concept has been evolving, from individual companies to a larger scale concept of an entire circular economy. But how do we get there?
As part of a panel discussion in the Circular Economy Connect Theatre at the Resource Efficiency and Waste Management Solutions (RWM) 2014 conference, I joined sustainability experts and fellow practitioners to address this question and share best practices. As we all continue to work toward similar goals, we find that many key learnings are not only replicable across companies and industries, but also potentially scalable across an entire economic system.
Supply chain is one area where such versatility and scalability is possible, making it a great starting point in building a more circular economy. After spending much of my career in the UK resource economy, including local and central government, as well as in the private sector, I’ve come to realize three fundamental best practices in establishing a more closed loop supply chain, on any scale.
- Strong relationships based on shared goals are critical. In a closed loop system, supply chain partners must work together to ensure both inbound and outbound shipments are moving efficiently, enabling the success of partners at either end of the loop, and every step in between. However, strong relationships do not mean inflexible relationships. In my experience, companies and organizations that work together to continuously improve and innovate their joint processes have a greater likelihood of achieving success.
- Open collaboration is the foundation to developing strong relationships. One way to foster supply chain collaboration is to clearly define a common resource efficiency goal that you and your supply chain partners share and establish benchmarks and strategies for achieving that goal together. Another common barrier to open collaboration is limited visibility and access to partners further down the chain. Being able to speak to your customers’ customers or your suppliers’ suppliers can make all the difference in establishing a more collaborative relationship.
- Value chains take supply chains to the next level, establishing value for each partner in the chain from improved profitability, material recovery and resource control, to a reduced carbon footprint and waste to landfill. Making the transition from a supply chain to a value chain realizes the benefits of a circular business model and is a critical pillar in achieving success in a closed loop system.
While these best practices are by no means exhaustive, they are just a few of the core strategies that companies employ in developing a successful closed loop supply chain. When applied on a macro scale, imagine what they could do for the circular economy.