A circular solution

Michael Power is the editor of PurchasingB2B magazine.

From the August 2017 print edition
At a recent supply chain conference, a speaker showed the audience a picture of a European yogurt factory taken some 30 years ago. The facility had a relatively simple layout, with little visible machinery. He then showed a picture of that factory now. The space had become more complex, with far more conveyors, tanks and machinery than the previous, older picture—a reflection of increased demand and production complexity.
In part, I saw that clutter as a reflection of the complexity of today’s supply chain. There are far more players on the field than ever before, and organizations can deal with far more suppliers. Those suppliers are geographically dispersed, and global sourcing is common. Similar to the yogurt factory, those supply chains are becoming more of a network than a chain, with many interconnected parts.
And while this (relatively) new interconnectedness can offer rewards, there are also challenges. The risks to today’s supply chains include economic, social and environmental perils that must be navigated.
Fortunately, the potential solutions provide a holistic approach. The circular economy views the supply chain as an ecosystem in which waste and pollution are minimal or non-existent and the materials involved in the production process can be deconstructed after they can no longer be used, with components and parts going back into new production.
In a circular economy, materials like packaging can be reused multiple times without being broken down into component parts, as is the case with recycling (see page 29).
The circular economy has the potential to make procurement more sustainable, an idea that some jurisdictions are adopting. Denmark, for example, has seen its regions, municipalities, and the Ministry of Environment and Food collaborate on green procurement through something called the Partnership for Green Public Procurement (GPP). Among other objectives, the partnership aims to transition to a circular economy through non-toxic chemicals, extended product lifespan and cycling of biological and technical materials.
As well, companies like Phillips see procurement as an enabler of circular economy principles. In 2014, it joined Dutch GreenDeal Circular Procurement, which works to accelerate the transition towards a circular economy by implementing circular procurement within purchasing processes, policies and strategy. Many other companies and organizations are also catching on to the circular economy’s benefits.
Procurement can be a major player in advancing this shift. Procurement organizations can enable economic growth while simultaneously driving social and environmental sustainability.
As well, it’s often procurement that collaborates with suppliers. It’s procurement that can ask them to innovate to drive sustainability and a circular approach. It’s also procurement that can ask up front for innovative ideas when speaking with those suppliers.
All of this is not only good for sustainability, but helps to create value for organizations, suppliers and consumers in the face of the modern supply chain’s complexity.