Global Earth overshoot day was on July 28th, 2022. Every year, this date moves earlier by a few days. Earth overshoot day means we use more resources than Earth’s biosphere can produce in a year. The use of Earth’s resources at a rate faster than they can be regenerated leads to severe effects on people, the planet, and industry for current and future generations, such as increasing competition over a fixed resource base, rising prices of resources, and decrease in the quality of life. To counterbalance these effects, it is necessary to move away from the linear economy which is defined as the ‘take, make and waste’ approach and turn to the concept of “Circular Economy”. The basic idea of this model is to ‘close the loop’: not use virgin raw materials but use waste instead or, if not possible, extend the life-cycle of a product. Logistics has a crucial role to play in this.
While designing products with repairability, reuse, and recyclability in mind should be considered early in the supply chain, logistics service providers can strategically leverage the supply chain network to support product life-cycle extension and recycling through reverse logistics. This means not only collecting and transporting materials, but also including value-added activities such as repair, refurbishment, recycling and redistribution. In addition, logistics providers can become enablers for return and reverse logistics by increasing transparency, simplifying and consolidating returns, and pre-sorting secondary raw materials.
Circular economy transforms logistics
In the white paper, Arvato customers were asked to provide their view on the role logistics service providers play in the circular economy. The result revealed that, companies must collaborate with their customers and suppliers both up and down the value chain. Moreover, the circular economy requires long-term cooperation, and logistics providers must be consultants and facilitators along the way. In addition, logistics providers must invest in technologies like on-demand packaging that can help prevent or cut down on waste. In this context, all materials used must be recyclable and reusable. In the medium term, logistics providers are expected to support their customers in remanufacturing and reusing, since they already have the necessary networks to return and ship products. In the long term, they should also be able to repair and refurbish products. However, because this is not yet common practice, logistics providers still need to build the necessary expertise and fundamentally rethink how the value chains are organized and pro-actively engage suppliers and customers in this conversation.
This assessment was also confirmed by industry leaders and experts at the Arvato Supply Chain Masterclass event in early October, where the topic of circular supply chains was discussed at length. "The circular supply chain is the future," emphasized Andreas Barth, President Tech Vertical at Arvato Supply Chain Solutions. "It converts waste into opportunities as requirements for recycling and proper disposal of manufacturing byproducts become more stringent. If companies want to remain profitable in the upcoming decades, they need to recognize the importance of the circular supply chain model and start implementing the necessary steps." Specific advice for starting the journey toward circularity was pointed out by Robert O'Mahony, Head of Sustainability, Global Operations at Logitech: "First, start with the data. Second, get motivated and get your entire company motivated around that data to understand how much of a difference you can make as an individual. Third, think beyond carbon. Think beyond the climate. We can't have a healthy economy unless we have a healthy society and a healthy planet."
Specific solutions are also outlined in the white paper. For example, Arvato provides several of its customers from the high-tech industry with circular services such as testing, reconditioning and dismantling old and defective equipment. In the process, recovered components are returned to the value chain either as B-goods or as spare parts or raw materials for new devices. "We prefer to drive change rather than follow it," explains Paul Brolly, Vice President Global Business Development & Solution Design, Arvato Supply Chain Solutions. In addition, Arvato is already using innovative packaging machines in the warehouses. These machines reduce the amount of cardboard used and empty space, resulting in lower CO2 emissions. The company also offers circular solutions in fashion logistics, where returned items are cleaned, inspected, minimally repaired and returned to the warehouse or donated, leading to greater sustainability. After all, second-hand and vintage stores are popular with Generation Z consumers.
To find out what other opportunities lie ahead for logistics service providers on the path from linear to circular logistics and what they need to do to tap into this potential, read the whitepaper "Circular Economy in Logistics". It is available for free download here: arva.to/circular-economy-in-logistics
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