Building a Circular Supply Chain
The Ellen MacArthur Foundation, in collaboration with the Circular Supply Chain Network, recently published a white paper entitled Building a Circular Supply Chain. This publication addresses the transition from traditional, linear supply chains to circular ones, emphasizing the increased resilience they offer. Circular supply chains, characterized by distributed networks, multidirectional flows, and maximization of product and material use, provide a solution to the vulnerabilities of linear models. These supply chains not only help reduce greenhouse gas emissions and costs, but also minimize dependence on natural resource extraction. The white paper also highlights the key role of supply chain professionals in this transformation. They are responsible for managing the vast quantities of materials in the global economy and can influence the wider adoption of circular economy principles. The paper and an accompanying fact sheet highlight nine focus areas for supply chain leaders to facilitate this crucial transition, providing a comprehensive guide to redefining supply chains in today’s economic landscape.
Circular Supply Chain Transformation
We have just released a new report, entitled Circular Supply Chain Transformation: Challenges, Opportunities, and Trade-Offs for Circular Smartphones and Computers. It highlights the importance, opportunities, and potential trade-offs associated with circular supply chains for electronic devices in a way that makes it easier for decision makers to understand and navigate the circular transformation. Importantly, the report emphasizes that everyone – from manufacturers and purchasers to distributors, recyclers, and policy makers – has a role to play in the transformation toward circular devices, and that it is possible to implement many of these circular initiatives in a way that reduces the environmental, social, and economic costs of electronic devices. By providing concrete examples and societal reflections, the report serves as a foundation and guide for decision-makers who want to reduce the negative impact of their electronic devices. The report is a result of the Reimagining Supply Chains Initiative – a collaborative research effort between Copenhagen Business School, Nordakademie, and Nordakademie Foundation.
Accelerating the Path to Net-Zero Supply Chains
The “No-Excuse” Framework to Accelerate the Path to Net-Zero Manufacturing and Value Chains is a new white paper that aims to provide businesses with the information they need to operationalize their commitments to reducing carbon emissions and addressing the climate crisis. The framework is intended to be a central tool for the World Economic Forum Industry Net Zero Accelerator initiative, which is designed to bring together leaders across industry sectors, academia, government, and civil society to jointly shed light on global insights and best practices for reducing emissions. The framework is divided into four stages: (1) build the foundations, (2) change the game internally, (3) drive systemic collaboration, and (4) make it simple, inclusive and exciting. Each stage of the framework consists of a combination of research-based insights, well-established action areas, and emerging themes. The goal of the framework is to be applicable across key industries and geographies. This white paper is the first output of the Industry Net Zero Accelerator initiative and further resources are available for chief executive officers at the Alliance of CEO Climate Leaders.
The Threat to Supply Chains from Rising Gas Prices
Due to the Russian invasion of Ukraine, the European Union is currently experiencing a massive increase in gas prices. This threatens the resilience of many supply chains. An analysis by the Halle Institute for Economic Research (IWH) now shows that a small group of just 300 products causes a large part of almost 90% of the gas consumption of German industry during their manufacture. The five products with the highest gas consumption per euro of sales belong to the basic chemical industry. The analysis also shows that rising gas prices mainly lead to production cutbacks in gas-intensive products that can easily be replaced by imports. Therefore, despite domestic production outages, no significant disruptions to the supply chains are to be expected. “German industry can save a lot of gas with a small drop in sales if gas-intensive products are no longer manufactured in-house but imported,” says Steffen Müller, one of the authors of the analysis.
Supply Chain Resilience 2022
This year Raconteur has once again put together a very readable report entitled Supply Chain Resilience 2022. The authors ask, “As disruption continues to plague international supply chains, what can organisations do to build resilience and ensure efficiency?” And they provide answers: “From reducing waste and cutting costs to onshoring and upgrading systems, our Supply Chain Resilience report explores the strategies making the difference”. The report contains short articles on very interesting topics including Brexit, predictive analytics, striking staff, supply chain tech investments, just-in-time vs. just-in-case, chip crisis, robotics, food waste, air cargo, and sustainable commerce. I particularly enjoyed an article that shows how global supply chains have been rocked by climate change, geopolitical instability and more, and that provides examples of different industries adapting to these challenges. It is not the first time that I am writing about Raconteur’s reports here. I am always amazed at the high quality of their work.
Solar PV Global Supply Chains
The International Energy Agency has just released a new special report entitled Solar PV Global Supply Chains. It examines solar PV (= photovoltaic) supply chains “from raw materials all the way to the finished product, spanning the five main segments of the manufacturing process: polysilicon, ingots, wafers, cells and modules”. The authors argue that “[p]utting the world on a path to reaching net zero emissions requires solar PV to expand globally on an even greater scale, raising concerns about security of manufacturing supply for achieving such rapid growth rates – but also offering new opportunities for diversification”. It becomes clear from the report that China currently dominates such supply chains and that diversification can reduce supply chain vulnerabilities and offer economic and environmental opportunities. According to the authors, policy makers need to aim for (1) diversifying manufacturing and raw material supplies, (2) de-risking investment, (3) ensuring environmental and social sustainability, (4) continuing to foster innovation, and (5) developing and strengthening recycling capabilities.
Personal Predictions for Supply Chain Management in 2022
The year 2022 has been going on for quite a while. I see the following topics at the top of the agenda in both academia and business: First, the last few months have been characterized by a large number of supply chain hiccups. Missing chips in the automotive industry have become a symbol of this development. Therefore, supply chain resilience is more important than ever. Second, a lot is currently happening in the European Union in terms of supply chain laws. Stricter rules on supply chain liability are expected shortly, and several EU countries have recently pushed their legislation forward. Third, many companies are transforming their linear into circular supply chains, see the new DHL report entitled Delivering on Circularity. Finally, many companies are also concerned with net-zero goals – and more importantly with action plans for these goals. Many of these plans explicitly involve the supply chain. Although I am a bit late, I wish you a good supply chain year 2022.
Supply Chain Resilience 2021
In association with The Times, Raconteur has recently published a very insightful report, entitled Supply Chain Resilience 2021. It covers many interesting stories. For example, the report urges us to rethink just-in-time ordering, because “the global semiconductor shortage has highlighted the pitfalls of procuring parts right at the moment they’re needed”. Another interesting article in the report asks what the supply chain industry can learn from the Greensill Capital collapse: “Greensill Capital, the ill-fated provider of supply chain finance, claimed to be offering vital support for hard-pressed small firms, but is SCF all that good for SMEs?” A third article I would like to highlight is about net-zero logistics: “The decarbonisation of supply chains is as critical to [a country’s] net-zero ambitions as it is difficult to achieve, but innovations are emerging to address the problem areas of air freight, shipping and road haulage.” Much of the report is in line with my own view of resilience.
Why Is the SCM Discipline So Silent About the Climate Crisis?
The Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) was released today. Bringing together the latest advances in climate science, it addresses the most updated physical understanding of the climate system. Even without this new IPCC report, it should be clear that our planet is in an existential crisis: The scale and intensity of the recent floods in Germany have broken all records and the ongoing fires in Greece have reached biblical proportions; Greek Prime Minister Kyriakos Mitsotakis said these fires showed “the reality of climate change”. Devastating fires are also raging in Russia, Italy, Turkey, and various other places. Attribution studies show that the recent record-breaking heatwaves in Siberia and Western North America would have been impossible without man-made climate effects (Ciavarella et al., 2020; Philip et al., 2021). Much of the greenhouse gas emissions are generated in global supply chains. Possible solutions to the climate crisis, thus, include new supply chain structures, processes, and business models. Yet, despite the existential threat to our species from this crisis, our discipline has so far been strangely silent. Therefore, I hope that as many SCM scholars as possible will now read the 42-page Summary for Policymakers of the new IPCC report from cover to cover. Our discipline simply cannot continue to ignore the elephant in the room.
Intergovernmental Panel on Climate Change (2021): Summary for Policymakers. In: Climate Change 2021: the Physical Science Basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Geneva, Switzerland. https://www.ipcc.ch/report/ar6/wg1/#SPM
Net-Zero Challenge: The Supply Chain Opportunity
A new World Economic Forum report, entitled Net-Zero Challenge: The Supply Chain Opportunity and co-authored with Boston Consulting Group, showcases “the opportunity that all companies have for huge climate impact through action to decarbonize global supply chains”. This report argues that addressing supply-chain emissions enables many companies to impact “a volume of emissions several times higher than they could if they were to focus on decarbonizing their own direct operations and power consumption alone”. Among the major findings of the report: (1) Many companies can multiply their climate impact by decarbonizing supply chains; (2) Eight supply chains account for more than 50% of global emissions; (3) Net-zero supply chains would hardly increase end-consumer costs; (4) But: decarbonizing supply chains is hard. The report contains a step-by-step guide, which shows nine major initiatives every company can undertake. These initiatives were identified through interviews with a large number of global companies that, according to the authors, lead the way in reducing supply-chain emissions.
