CIOs and the circular economy: ‘Ultimately, businesses will need to go this way’

How technology and digital chiefs can help build a supply chain without waste

In 10 years, the circular economy will be the only economy, replacing wasteful linear economies, predicts Gartner.

According to Gartner, circular economic business models encourage continuous reuse of materials to minimise waste and the demand for additional natural resource consumption.

“The circular economy creates an ecosystem of materials,” notes Sarah Watt, senior director analyst at Gartner. “What was previously viewed as waste now has value. However those ecosystems are complex, and include many interdependencies and feedback loops.”

sarah watt gartner Sarah Watt

Watt says the latest Gartner Future of Supply Chain Survey shows that 35 per cent of companies believe digital technology will be a key enabler for circular economy strategies. Only 12 per cent of organisations, however, have linked their circular economy and digital technology strategies.

“This data tells us that supply chain leaders see the potential in linking their digital and circular economy strategies, but only a few have acted,” she says.

Gartner research finds organisations are looking at four technologies to enable circular economy activities: advanced analytics, 3D printing, internet of things (IoT), and machine learning.

Watt cites the case of Hewlett Packard Enterprise (HPE), which started moving towards the circular economy in the 1980s with its Design for Environment Programme. The latter focused on recyclability and efficiency, including giving customers options to repair, upgrade or refurbish HPE products.

For instance HPE provides money back to customers when assets are upcycled. She says advanced analytics allows HPE to decide on a product’s fate, refurbishment or recycling. Technology renewal centres take back equipment from any manufacturer, including desktops, printers, laptops and servers. 

gartner on circular economy Gartner

She notes that HPE continues to look to develop technologies that will enable supply chain circular economy strategies. These include edge computing, AI, machine learning and IoT. The first three will enable faster processing, decision-making and automation. IoT is being tapped for product design, predictive maintenance, refurbishment and decision-making.

The circular economy involves entire ecosystems

Andrew Goodin, head of New Zealand Growth at Fresh Supply Co believes discussions on the circular economy will grow as organisations tackle COVID-19 challenges.

“Certainly, the biggest focus will be on provenance, sustainability. Can I trust my food sources? Are they being managed in an appropriate way?”

andrew goodin of fresh supply Andrew Goodin

He says CIOs can play important roles in circular economy initiatives.

“CIOs are in a unique position of having a view across the value chain and can provide lots of insights with the executive team on circular economy initiatives,” he states. “They see what is happening and they can scan the environment and bring the information and share them with their colleagues in supply chain, marketing, sales, and innovation.”

He notes how research by Euromonitor finds one million plastic bottles are sold every minute and the number of bottles sold yearly will increase to 583.3 billion in 2021.

The same research points out less than half of all plastic bottles were collected for recycling in 2016, and only 7 per cent of these were recycled into PET bottles. The majority went to landfills or dumped into the environment.

“We have got to do something about that. Ultimately, businesses will need to go this way,” states Goodin. “Sustainability is not just the environment. It is getting into that circular economy, and it involves entire ecosystems.”

“Having a business that can care for people and provide for families and support the people, who depend on it by reusing and regenerating elements, is pretty important. It is a whole life scenario.”

“The challenge for business is finding balance between supporting circular economy ideals and how they will change existing businesses to do the right things versus the cost of change.”

Goodin also points out that the key for organisations is to start piloting circular economy projects and see which works. “You then create or adapt a model that works for your business.”

Inside a circular economy ‘proof of concept project’

He says lessons learned from the pilots they have conducted is that people think sustainability concepts, or doing good for the planet, are important.

He cites a pilot he was involved in last year, where Fresh Supply worked with three other organisations to test the concept of encouraging consumers in Singapore to reduce, reuse, and recycle coffee cups.

The group, which includes Coffee Break, Dai Nippon Printing (DNP), and VeChain, created a circular economy “proof of concept” project using blockchain technology.

The project “rewards” consumers for recycling single use coffee cups. Their recycling history and user activity is tracked on a VeChain public blockchain. Consumers earned a ‘social good point’ each time they recycled serialised coffee cups in a specified location (‘a smart bin). Points can be then redeemed for a reward, a bamboo coffee cup. The project also tested if, how and when consumers will use mobile technology with a serialised asset.

Consumers logged onto Google or Facebook and were given information to the closest recycling location. They earn a ‘social good point’ by taking a selfie in front of the recycling bin and sharing the photo on social media.

“What the trial showed us is you can create an opportunity for people to do good through recycling, through reuse, and they will do it,” he says.

“You can create a ‘what is in it for me’ through the point system, through gamification,” he explains. “It does not have to be hugely expensive to do that through using QR codes. It creates opportunities to do the right thing for the planet. We believe this is a platform that could be leveraged in New Zealand.”

Goodin notes that the pilot provided a concept that can be scaled and used across several platforms. Moreover, the pilot creates a new opportunity for Fresh Supply. He says previously, their focus was on traceability, consumer engagement, and supporting customers to digitise their processes. This allows them to support social good projects utilising leading technologies.

He shares that Fresh Supply is a founding member of the APAC Provenance Council. This is a new alliance of commercial and industry leaders, who want to help exporters digitally enable and scientifically prove the integrity of their products.The members include providers in packaging, printing, IoT, distributed ledger technology, trade finance, marketing, technology, and consulting services.

“We want to support people in the circular economy, and as Gartner research has pointed out, you cannot do this type of sustainability and circular economy work by yourself. It needs a consortium partnership,” says Goodin.

pieter bakker of frucor suntory Pieter Bakker

Pieter Bakker, business technology director at beverage company Frucor Suntory, also sees CIOs being a lot more involved in circular economy initiatives.

“Sustainability is a strong pillar in our overarching business strategy,” he states.

Frucor Suntory chief technical officer Vincent Meron has said the company will “increase efforts to deal with packaging from start to the end of life to create a circular economy...Increasing our use of recycled plastic and finding inshore solutions to our waste issue is a major part of this.”

Frucor Suntory has committed to using 100 per cent reusable, recyclable, or compostable packaging by 2025. Bakker says the business technology division at Frucor Suntory is working with all parts of the business involved in these initiatives, such as the research and development and sustainability teams.

Circular economy and lessons from Apollo 11

Gartner analyst Sarah Watt says there are three main barriers to the circular economy: creating a business case, ability to scale projects, and skills to enable the organisation to move toward a circular economy.

“Supply chain leaders need to help senior leaders see beyond the current state to an alternative future,” she points out in a recent report on employing digital technology to enable a circular economy. “They also need to address concerns, which may include cannibalisation of existing market share by releasing refurbished products or the complexity of reverse logistics.”

“Our linear use of finite stocks of resources will no longer be viable,” she states. “The circular economy promises a new system approach to resource management by separating primary resource consumption from economic growth.”

Nvidia moon landing 50th rtx 2 Nvidia

According to Watt, challenges organisations face as they build circular economy models are not dissimilar to efforts to launch Apollo 11.

“Moving from today’s economic model to a circular approach will require the same levels of ingenuity and problem solving that put man into space,” she states. “NASA put a man on the moon by drawing on people and technology and proactively challenging assumptions about the way things had always been done. The same enablers are needed to create a circular economy.”


Copyright © 2020 IDG Communications, Inc.

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