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What opportunities do closed loop and cradle to cradle innovation for supply chain management?

In the Cradle-to-Cradle supply chain, products are designed and manufactured from sustainable, and if possible fully combustible materials which can be returned to the technical and biological hemispheres after the product has reached its end of life.

In short waste = food.

Re-use of materials in manufacturing and supply chain processes is not only good for the environment but also has financial benefits. Therefore it becomes increasingly attractive for companies to establish closed-loop supply chains and to implement sustainable concepts like Cradle-to-Cradle. Additional benefits can be realised if companies move their focus from product into service oriented organisations, to better profit from scale effects. Previously companies have invested primarily in the optimisation of the forward supply chains. Recent concern about the environmental impact of certain manufacturing processes and supply chains and the fast increase in raw material prices has increased the focus for recycling materials. The larger the percentage of recyclable materials, the higher the financial benefits for the company.

Some of the world’s largest multinational businesses have recognised the advantages of 'closing the loop' on their supply chains. From energy and water conservation to product take-back programmes, materials reuse and recycling, we are seeing major food and beverage, consumer products and electronics manufacturers move towards becoming ‘zero-waste‘ and ‘zero emissions’ businesses.

The ultimate goal is 'cradle-to-cradle' product lifecycles in which all materials used to produce, package and distribute products to consumers are recaptured, reused or recycled. This has seen the emergence of 'reverse supply chain management' as a new industry. Aiming to close the loop on the supply chain, these companies offer an integrated one-stop shop for re-manufacturing, as well as reusing and recycling products, their constituent parts and raw materials.

We will witness an evolution in logistics and distribution systems as more sophisticated reverse supply chains emerge, in order for base materials to be sorted and sent to the respective materials processing plants. This would have both environmental and economic implications. A simplistic scenario of a 100% successful product take-back would mean twice the distance travelled, freight cost, CO2 emissions and packaging for every product.

A break through

One company that is trying gain market share through its environmental efforts is Proctor & Gamble. Many of its advertisements now trumpet the fact that they are trying to make products that reduce waste, reduce energy use, and save water. On its website, the company asserts:

“P&G have found that two relatively small groups exist on the ends of a decision-making spectrum. On one end, ‘niche’ consumers are willing to sacrifice performance or value for a more sustainable product. On the other, a small segment is focused on providing ‘basic living’ for their families and do not make purchases based on Sustainability factors. But between these segments lie the vast majority of consumers: the ‘sustainable mainstream.'”

Obviously, the company is targeting the “sustainable mainstream” as it principal source of sales. The company also insists that it uses a “cradle-to-grave” approach for its products. The website states that, in addition to consumer insights, Proctor & Gamble applies “a second key element to making Sustainability decisions: a unique, holistic view of technology. We use life-cycle thinking, a discipline we helped pioneer, to determine a product’s entire environmental footprint, from the procurement of raw materials to the product’s use by consumers and ultimate disposal.” The company has also “joined a growing number of companies to announce Green measurement programs for their suppliers bases with its new Supplier Environmental Sustainability Scorecard.



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