Change is coming.
We are moving from a linear economy, based on the principles of the ‘take-make-waste approach, to a circular economy based on the values of eliminating waste and pollution, re-circulating products and materials ( at their highest value), and regenerating nature.
The transition to a circular economy is being driven by global missions such as mitigating climate change and protecting the earth’s finite resources and biodiversity.
The transition is also underpinned by emerging national and international policies and regulations such as the EU Circular Economy Action Plan, as well as the global rollout of policies such as the Extended Producer Responsibility.
In addition, initiatives by the private sector are also gaining momentum with the recent US Plastic Pact signed by nearly 100 multinational companies to make plastic packaging either recyclable, reusable, or compostable.
The direction of travel has been set but the duration of the transition and final destination still has to be worked out.
Like all change, the Circular Economy will be similarly disruptive to the current business models of waste and recycling companies whilst also providing new opportunities for sustainable growth.
It is time now for waste and recycling companies to scan the horizon and plan how to best position themselves to exploit these emerging opportunities.
Change is opportunity
What is clear about the circular economy is that there will be less waste in the future and the focus will be on keeping resources in circulation and at their highest value.
The future is therefore about understanding, tracking, and assigning resources at their highest value to where supply chains need them.
The circular economy is based on a strong integration of the value/supply chains as resource composition, quality, and predictability gain in importance.
This means fundamental changes to the traditional business models of waste management companies.
Whilst there may be a view that recycling can be viewed as a lesser option against approaches such as repair, re-manufacture, re-use, sharing, etc, there will undoubtedly be a role for advanced recycling for many resource types.
But it also means those companies that respond rapidly to the new requirements of customers, will be those that will have the opportunity to achieve the most success.
Prospects from the circular economy for Waste and Recycling companies include:
- Reducing waste
- Increasing resource productivity
- Helping secure increasingly scarce resources e.g., precious metals
- Reducing the environmental impact of production and consumption
- Advanced recycling whereby more value of the underlying resource is captured and preserved
- Delivering a more competitive and optimized economy.
- Innovation – new business models e.g., repair, re-use, re-manufacture, sharing, etc.
How can your recycling business be part of the circular economy?
An integrated supply chain will be a key feature of the Circular Economy.
A linear economy was a model where the material was extracted, made into a product that was sold, consumed, and then thrown away. This was our past but is unlikely to be our future.
In a circular economy, existing products are used as the building blocks for manufacturers. This can be through recycling cardboard boxes, plastic bottles, and metal cans, but also reusing packaging, electrical items, and other goods where possible. It also means designing products that can be easily recycled rather than disposed of.
Waste and Recycling companies already play a pivotal role in recycling in the linear economy acting as an important intermediary between waste producers and those companies looking to source quality secondary raw material to replace virgin materials.
Recycling (particularly advanced recycling that preserves the highest value of the materials) will remain a key part of the circular economy.
We expect that this role will evolve beyond recycling as Waste & Recycling companies become more integrated into the supply chain of the original producer of the material (not just the waste producer) as well as a range of potential users of the transformed material.
Most likely your business traditionally moved waste, but it is time to reposition yourself as a circular logistics/agile logistics company that is integrated within circular supply chains.
- Collecting material for quality to ensure it can be turned into new, high-value products – is likely to result in higher prices achieved for your business
- Integrating with your customers so they know when you will collect or supply their material
- Reducing your environmental impact through optimized collections and investment in technology
- Increasing focus on understanding the quality and composition of the resources that you collect and accept into your facility
- Better understanding your inventory so you can forecast when the material will arrive and leave your facilities and ensure it is there when you need it
- Driving efficiencies in your business, which also has the benefit of reducing your costs
- Marketing yourself as forward-thinking in the context of the circular economy, helping you to gain brand loyalty and improving brand recognition.
- Exploring new business models and services built around repair, re-use, remanufacturing, sharing, reverse logistics, etc.
- Partner with manufacturers of goods on pilot schemes around EPR, take-back, re-use, remanufactured, etc.
Circular economy checklist
What do you need to consider when changing your business from a linear waste company to a circular logistics provider?
1. Understanding emerging circular policy developments and assessing their likely impact on your collection logistics
Extended producer responsibility (EPR) will mean those that create waste need to pay for its collection, sorting, and processing giving them an incentive to design and manufacture products that are easy to reuse or recycle. Where can you co-operate with producers that are subject to EPR legislation?
Deposit return schemes are already popular in some countries but are being enacted in others as a way of ensuring as much material is captured as possible. Drinks bottles and containers are typically collected this way, as it often gives a purer and better-quality product that is easy to recycle.
Single stream collections are commonplace in many European countries, while others such as the UK, China, and Thailand are introducing them to create better quality secondary material for recycling with fewer impurities. It also means that high-quality recyclate is more likely to be accepted for import by countries that are part of a global circular economy.
Organic waste collections are becoming the norm in some countries as there is a growing recognition of the circular value of organic waste which can be transformed into soil nutrients ( re-generation of nature is circular economy value ) and renewable energy.
We believe that these policy developments along with the rapid adoption of exponential technologies require recycling companies to review their collection strategies and supporting technologies as logistics becomes increasingly data-driven.
We expect the following trends:
- An increasing number of single-stream collections necessitating either multi-compartment collection vehicles and/or more collections
- Increasing focus on measuring the quality and composition of these resources
- Adoption of reverse logistics models where recycling companies will work with other logistics partners to co-operate
- Accelerated de-carbonization of the collection with a move to electric vehicles and gas-powered vehicles
Are you up-to-speed with legislative change and can your company present itself as a specialist in these areas? Should you consider how these developments will mean changes in vehicles and technology to collect materials in single streams for use by manufacturers? Are you familiar with the latest advances in data-driven logistics particularly as to how it relates to transport optimization?
2. Invest in Digital Technology
As part of the circular economy, you will need the latest digital technology to integrate within the circular supply chains.
Keeping a record of your trades and contracts in Excel will no longer be enough. You’ll need to know to understand resource inventory in detail, its quality, composition, costs, and valuation. You will need to forecast volumes of material coming in and how you will service customers that work on just-in-time raw material manufacturing schedules.
Digital technology will help you track each part of this for you, with sophisticated tools providing reporting and analysis when you need it, but also automating processes to save resources.
Digital technologies will be a key enabler for the circular economy given the centrality of data and analytics to provide the data and information for circular business models and the demands on an integrated supply chain.
AMCS believes that Waste & Recycling companies need to embrace new digital technologies that allow them to participate and collaborate across the value chain.
We have identified the following four key areas which we view as key technology enablers for the circular economy:
- Data Infrastructure & Analytics- an integrated supply chain to support a circular economy will be built upon data and analytics to track all resource movements and transformations and to share this information among all the supply chain partners.
- Optimization – a new generation of intelligent optimization tools designed to help decarbonize logistics by reducing mileage and emissions while leveraging exponential technologies to deliver new levels of agility in terms of service. We anticipate the application of AI and other digital solutions in forecasting, planning, operations, and reviews across all resource management processes.
- MRF 4.0 – a new concept of a data-driven, advanced recycling facility where all the processes and workflows are connected and data-driven. There will be real-time visibility on inventory management, quality, valuations, and any adjustments. There will be a strong focus on the quality of input and output material which will be reviewed by AI and Machine Learning tools which can review images of resources at scale to determine resource composition and quality. All the key MRF functions such as logistics, operational, financial, sales, demand planning, etc. will be integrated and aligned to provide complete visibility and control. All relevant data can be shared across the supply chain with partners.
- E-Commerce Platforms/Digital Engagement – these are platforms and portals that will connect the various actors (producers, users, consumers, W&R companies, logistics companies, etc.) in the value supply chain to allow them to share, collaborate, and trade. For example, these platforms could consist of digital material trading platforms to match sellers and buyers. These platforms could allow waste and recycling companies to collaborate with each other or third-party logistics companies on reverse logistics opportunities to reduce carbon emissions.
The circular economy is not entirely new, for example, metal has never been regarded as waste but instead as a circular resource since 300 BC. There is much to be learned from the approach of such early adopters of circular recycling that are in areas such as fiber, organic waste, metals, and plastics.
These are companies that are deeply integrated into the supply chain of steel mills, smelters, paper mills, natural fertilizing companies and they have always tightly managed resource quality to produce a product to a demanding end specification.
The circular economy is driving our strategy at AMCS, ensuring we provide our customers with the tools and expertise they can rely on as we move towards a new future with both the opportunities and complexities that this entails.
One thing that is certain is that the circular economy will be digital and AMCS plans to be a key partner and enabler for our customers on this transition journey.
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