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How circular economy principles can drive out new value

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From the Soil Association certification to the Fairtrade trademark and the Roundtable on Sustainable Palm Oil certification, there are many standards businesses can benchmark themselves against as a means of ensuring they meet various ethical, social or environmental credentials.

 

Now, for the first time, a standard for the ‘circular economy’ has been launched. Business standards company BSI has established the British Standard (BS) 8001:2017, which provides a new framework for organisations looking to implement circular economy principles into their processes.

 

So what is the circular economy?

 

The concept involves keeping resources in use as long as possible, finding additional value in them, and reusing materials far beyond the manufacturing process and into the after-sales market, as well as the end of product life cycle.

 

There are six principles to the circular economy standard: innovation; stewardship; collaboration; value optimisation; transparency; and systems thinking, that is understanding how organisations, decisions and activities interact within the systems of which they are part.

 

While the standard is not certifiable or prescriptive, provides guidance to organisations looking to adopt a more circular approach to their operations, issues that may hamper this progression, logistical concerns and different circular economy operations such as remanufacturing methods, the sharing economy, or closed-loop recycling operations.

 

As such, the initiative has been welcomed by waste management and sustainability groups.

 

It should also be welcomed by procurement. After all, the circular economy most definitely falls within the function’s remit.

 

Natural resources are wasted at every stage of the supply chain. For instance, consultant and author Catherine Weetman told attendees at the World Procurement Congress 2017 that just 14% of plastic packaging is collected for recycling, and most of this is downcycled.

 

Committing to the circular economy can bring a number of benefits to both the function and its supply chain.

 

For one, reusing resources beyond their typical lifespans and reducing waste will enhance an organisation’s corporate social responsibility standing, which can improve the company’s standing among consumers, and enchance the function’s reputation in the eyes of internal stakeholders.

 

Procurement can also benefit from a cost perspective. Recycling waste into useful resources eliminates the need to source newly made goods. Engine manufacturer Cummins, for example, sells ReCon engines that are entirely remanufactured from the company’s old engines and parts. As well as reducing waste in the after-sales supply chain, upcycling materials also provides an additional revenue stream, while procurement executives can purchase remanufactured products for less than the as-new market rate.

 

To get the most out of the circular economy, procurement executives should also turn to their supply base and encourage them to diversify by creating and offering by-products from their main goods and services.

 

As consumption continues to increase among ever-growing populations, businesses are responsible for the creation of a growing volume of waste. Procurement needs to act fast to reduce this waste and bring materials and goods back into the supply chain.

 

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

Rachel Sharp
Posted by Rachel Sharp