Bending the Flow: How to Make the Transition from Linear to Circular Operations

Today’s Supply Chains are Linear ?

Our supply chains are designed and optimized to flow one way: towards the consumer. We take materials from the planet, we process it and make items, and we consume them. It flows in a line. ? ?

Tomorrow’s Supply Chains are Circular?

What would happen if, instead of a line, materials moved in circles? After it’s used by one supply chain, it’s used by another? Materials offer more value than what we’re using today. In a circular supply chain, every operation becomes a source of raw materials for another operation. Every material has value.??

This Transition Model offers a Bridge from Linear to Circular?

How in the world can we change the entire global economy from linear to circular? By changing the operations. Supply chains around the world can shift their operations from linear to circular with the transition model we’ve developed as a community.?

Phase 1: Identify

The first phase in transitioning from linear supply chains to circular supply chains is to identify the materials and resources that move through our processes. This involves finding and defining the purpose of each material or resource.

The way to measure this phase in:out ratio of a given process, for example to weigh everything that goes in and out of each process. Look for the gaps. This helps us understand how much of what goes in and comes out of each process. The target is to achieve a 100% ratio, or complete visibility into how materials and resources flow in and out of different processes.

To connect this step to today’s practices, think about value stream mapping as it can be used to show what flows in and what flows out of each process. In the future, these value stream maps will begin to track “waste” streams as a different type of value stream. The use of Industry 4.0 technologies will allow near-real-time vision for better material tracking.

Phase 2: Intensify

The second phase in transitioning from linear supply chains to circular supply chains is to intensify the utilization of materials so they add the highest value possible.

This involves measuring the utilization of a given item and targeting a 100% utilization rate. While today's supply chains often focus on inventory turns, tomorrow's supply chains will focus on utilization.

To connect this step to today's practices, consider outsourced services such as Flexe allow multiple organizations to share warehouse space and lease flexible pallet locations so each pallet location is used as often as possible. In the future, outsourced services like Flexe will continue to expand to ensure the highest utilization of supply chain assets, including in-market operations to shorten supply chains.

Phase 3: Narrow

The third phase is to narrow the amount of material and resources needed such as water, heat, gas, materials, consumables, etc. This might be through lean or quality programs that allow us to create the same output with fewer inputs.

This involves eliminating waste and often referred to as "zero waste." The target is to achieve a 100% waste elimination rate. If lean is about finding and eliminating waste, circular operations extends this idea into finding, eliminating, then monetizing "waste." And if there's a customer for it, is it truly even "waste" anymore?

To connect this step to today's practices, consider the work your team has likely already done around Lean Management and Kaizen principles. In the future, the "three Mus" of Kaizen might expand to include a new type of waste: capturing the wasted materials known as "fugitive value."

Phase 4: Predict

The fourth phase is to predict when, where, how, and what resources are ready for others across the supply chain network to use.

This involves measuring "forecast accuracy" or the ability to predict availability of materials and resources with a target of 100%. This is not the same as today's forecasting, however. This starts to imagine today's "waste" streams as valuable inputs for a new type of customer, which means we need to put out a type of "supply signal" into the marketplace.

To connect this step to today's practices, we can start from the base of how we understand forecasting and forecast accuracy. In the future, forecasting waste/"secondary value streams" in addition to primary value streams will be necessary in order to serve new types of customers that will emerge to buy our "waste."

Phase 5: Slow

The fifth phase is to elongate the life of products so they can be used at their highest value for as long as possible.

This involves measuring version improvement or how long an item lasts compared to its previous version with a target of 100% longer.

To connect this step to today's practices, MRO (maintenance, repair and operations) including the spare parts industry is an example. In the future, there will be a broader use of Industry 4.0 technologies for prescriptive maintenance to get even more life from supply chain assets. In the future, we predict that supply chains will repair more than we build new.

Phase 6: Close

The sixth phase is to "close" material use by sourcing only secondary or renewable materials/resources for all processes in the supply chain.

This involves measuring secondary sourced or the amount of an operation's inputs that come from a secondary source with a target of 100%.

To connect this step to today's practices, consider the idea of renewable energy, refurbished spare parts, re-used items, renewable materials or even recycling (although it is the "circle of last resort" - brush up on the basics here). In the future, we will use even more technology to match potential uses of material "to introduce new types of materials substitutions that were not previously identified - expanding the market and new possibilities.

Phase 7: Capture

The seventh and final phase, before starting the process again, is to locate and transform secondary materials that can become available and affordable for supply chains to use.

This involves measuring capacity or the secondary materials market captures only what is needed by demand with a target of 100%. We won't process more than the market actually needs.

To connect this phase to today's practices, consider "fugitive" plastics taken from the environment by companies like the Plastic Bank or Green Mining. They are creating the start of a secondary materials market by capturing "fugitive value." In the future, urban mining or mining landfill previously covered up in search of materials to circulate will become more common. Consider this as the future of mining: no longer from the planet, but from what's already been used and discarded. In this way, we can clean up the earth!

You Can Go Circular

In conclusion, transitioning from linear to circular supply chains is a way to reduce waste and increase sustainability by reusing materials and resources.

By changing operations, supply chains around the world can shift towards circularity with the transition model developed by the community.

In a circular supply chain, every operation becomes a source of raw materials for another operation, and every material has value. This transition model offers a bridge from linear to circular supply chains.

Looking for how to engage your operations in this discussion? Check out our article Who's Leading the Way?