Circular Supply Chain Transition Model
Today’s supply chains are linear
Our supply chains are designed and optimized to flow one way: towards the consumer. We take materials from the planet, we process it and make items, and we consume them. It flows in a line.
Tomorrow’s supply chains are circular
What would happen if, instead of a line, materials moved in circles? After it’s used by one supply chain, it’s used by another? Materials offer more value than what we’re using today. In a circular supply chain, every operation becomes a source of raw materials for another operation. Every material has value.
This transition model offers a bridge from linear to circular
How in the world can we change the entire global economy from linear to circular? By changing the operations. Supply chains around the world can shift their operations from linear to circular with the transition model we’ve developed as a community.
Phases | Purpose | Measure | Happening Today | Will Happen Tomorrow |
|---|---|---|---|---|
1. Identify | Find and define what materials/ resources move through our processes | in:out ratio of a given process. How much of what goes in, and comes out? The target is 100% | Value stream mapping: shows us what flows in and what flows out. | These value stream maps will begin to track “waste” as value. Use of Industry 4.0 technologies will allow near-real-time vision for better material tracking. |
2. Intensify | Increase the utilization of materials so they add the highest value possible | Utilization of a given item. The target is 100% | Outsourced services such as Flexe which allows multiple organizations to share warehouse space, leasing flexible pallet locations, so each pallet location is used as often as possible. | Outsourced services like Flexe will continue to increase to ensure highest utilization of supply chain assets |
3. Narrow | Reduce the number of resources needed: water, heat, gas, materials, consumables, etc. | Eliminating waste: often referred to as “zero waste.” The target is 100% | This strategy uses many Lean Management / Kaizen principles. See the 3 Mus of Kaizen! | The three Mus will expand to include a new one: capturing the wasted materials / “fugitive value” |
4. Predict | Predict when, where, how, and what resources are ready for others across the supply chain network to use.
| “Forecast accuracy:" The ability to predict availability of materials and resources. The target is 100%. | We all use forecasting and forecast accuracy today! | Forecasting waste / “secondary value streams” in addition to primary value streams. This will be in order to serve the new types of customers that will emerge to buy our “waste.” |
5. Slow | Elongating the life of products so they can be used at their highest value for as long as possible. | Version improvement: how long an item lasts compared to its previous version. The target is 100% longer. | MRO (maintenance, repair and operations) including the spare parts industry | Broader use of Industry 4.0 technologies for prescriptive maintenance to get even more life from supply chain assets. |
6. Close | “Close” material use. Source only secondary or regenerative materials/ resources for all processes in the supply chain. | Secondary sourced: Amount of an operation’s inputs that come from a secondary source. The target is 100%. | Recycling old tires into rubber pellets that can be used in future manufacturing processes, new roads, and even more tires. There are many secondary materials flowing through the economy! | Use of technology to match material “uses” to needs, and introduce new types of substitutions previously not used – expanding the market and new possibilities |
7. Capture | Locate and transform secondary materials that are available and affordable for supply chain operations | Capacity: the secondary materials market captures only what is needed by demand. The target is 100%.
| Plastics taken from the ocean and other areas by companies like the Plastic Bank, creating the start of a secondary materials market by capturing “fugitive value.” | Urban mining: mining landfill previously covered up in search of materials to circulate (think: WALL-E) |