Posted: 28 Jan. 2021 4 min.

Circularity: A game changer in supply chain?

Topic: Operational Excellence

Sometimes it’s good to see the world with new energy. Like when the 22-year-old poet Amanda Gorman read her poem at the recent presidential inauguration in Washington. So much passion, so much hope, and so much will to move forward. Whether in society or in business, we are witnessing this massive force of change driven by the young generation – and I love it.

I’ve often found that we, as humans, don’t realise exactly how far we’ve come until we stop for a second and see the broader picture. Sometimes we even become impatient because progress seems so slow from day to day – but then looking just a few years back, the world was completely different.

I had that feeling when Deloitte recently launched its first sustainable innovation hub, Deloitte Acacia, here in Copenhagen. The idea to create an actual hub was the result of helping more than 60 Danish companies over the last 3 years accelerating sustainable business models together with ambitious partners such as the Danish AM Hub and UNDP.

For me, this kind of launch is a huge event. Going back just a few years in our Deloitte organization we had only a small team of consultants trying to wave the flag of ‘corporate social responsibility’. Today, responsibility is no longer just about doing good, but actually exploring and taking advantage of business opportunities: From rethinking supply chains and re-evaluating material consumption. From engaging with stakeholders to working in untraditional partnerships. And as Deloitte Acacia’s executive director Bahare Haghshenas puts it: ‘From a commercial perspective, the Sustainable Development Goals are simply market needs that should be met.’ I couldn’t agree more!

However, what’s far more impressive than our own efforts here at Deloitte are of course the many, many Danish and Nordic companies that, at this very moment, are using their innovation, transformation and leadership capabilities to develop new solutions to navigate the most complex issues facing the planet.

From collecting and using Ocean Waste Plastic to building climate-friendly fish farms and meat production. From 3D prototyping and spare parts printing to entirely new value chains of sustainable fashion. From turning used car windshields into glue for the paint industry to producing blood proteins to fight malnutrition. From developing software that anticipates climate change to completely rethinking material consumption in the construction industry. And the list goes on and on and on.

New supply chains

Back in August, I wrote a blog about how many supply chains are moving from just efficiency to embracing resilience. This means creating supply chains that are not only lean and fast-moving, but also agile, flexible, collaborative, network-focused and, most importantly, predictive in their ability to foresee disruptions and prescribe action.

These trends are definitely still valid, but there is a piece of the puzzle missing, and that piece is sustainability – and circularity in particular.

There are at least seven ways in which companies are right now transforming supply chains to accommodate a greater level of circularity and responsible consumption:

  1. Cradle to cradle supply chain: When a company designs waste free products that can be integrated in fully recyclable loops or biodegradable processes.
  2. Take-back management, including reverse supply chain. When a company takes back the product using reverse logistics and supply streams.
  3. Deposit systems: When companies take back their own products (or a common product) and refunds the customer.
  4. Repair: When companies offer to repair their own products.
  5. Refurbishment, including resale: When a manufacturer or retailer offers to refurbish (clean and put in working condition) their own products.
  6. Remanufacturing: When companies remanufacture their own product and provide a guarantee for functionality and/or performance.
  7. Rematerialisation, including recycling and cascading use: When companies transform or recycle a product into a new material or product.

What’s so mind-blowing about this is that not that many years ago people were sitting with arms crossed when talking about sustainability. Today, companies are looking into innovative materials, 3D print, circular business models, use of local suppliers and other measures to reduce the environmental footprint. And what’s more: the industry is buzzing with initiative. Everyone seems to be getting ready to join.

From our friends at Deloitte Acacia I am happy to pass on six pieces of advice for companies that want to work with sustainable transformation and circularity in their supply chains:

  1. The aspiration should be ambitious: Ambitious solutions can be hard to get going, but they also hold the potential to capture people’s imagination and drive engagement. Think about what your company’s biggest opportunity to create a more sustainable world is; it will almost always lie close to the heart of the business.
  2. There needs to be a commercial potential: The solution must have a commercial potential to ensure commitment from senior management, also in case the company sees a downturn.
  3. Senior management must be committed: Senior management must be committed throughout the process and should delegate the day-to-day work and ensure adequate dedicated resources.
  4. Keep it simple: It is much easier to explain a simple, coherent solution to potential clients than a wide-ranging, fluffy one. Companies need to work on their value propositions and business models and refine them into easily communicable solutions.
  5. Ensure a dedicated project team and project management: A dedicated project team must be established with a project lead/manager, who is not the CEO.
  6. Communication is always part of it: Clear ideas on value propositions, the stakeholder landscape and the key messages increase the chances of success for any sustainable business.

Although we are still in the middle of this global pandemic, and although it will probably be a while before it really loosens its grip, there is no doubt that there is still so much innovation power in Danish and Nordic companies, and so many ideas waiting to be brought to life.

As sustainable innovation moves to the forefront of the agenda, what we see is frontrunners embracing sustainable transformation in their supply chains. This involves changing not only a part of the chain, but rather changing the system of product and service usage in order to simultaneously maximise profitability while addressing the root cause of problems. Add to this the huge leaps in visibility, transparency, flexibility and robustness of supply chain processes that are now possible due to new technology, and I would say you are well on your way to changing the world.

More about the author

Tore Christian Jensen

Tore Christian Jensen

Partner

As a part of the Strategy & Operations practice Tore has worked with analysis, development and implementation of operational strategies. Tore has deep experience with aligning business models to changing market demands through optimisation of business processes and aligning systems, organisation and governance accordingly. He has industry experience from manufacturing, transportation, consumer products and energy. His main focus is on on the operational core processes but he also covers administrative support processes. As a program manager Tore has been leading transformation projects for international clients heading multiple parallel projects and reporting directly to executive committee members. His responsibilities cover everything from initiating assessments, identifying opportunities for improvement to building business cases and following up by designing solutions and driving teams through implementation.