Emily Newton
When implemented thoughtfully, closed-loop programs — where products and materials are reused, recycled, or remanufactured throughout their lifecycle — make businesses more competitive by positioning them as sustainability pioneers. Additionally, these initiatives benefit specialty companies that manage their supply chain operations. Closed-loop efforts keep more resources in company supply chains or extend the time customers can use their products.
Digital supply chains can increase success in sourcing recycled materials while data management programs track sustainability progress.
Examining the Shift to the Closed-Loop Model
Not long ago, business leaders tackling product waste dealt with it by recycling, disposing or reusing materials. These combined strategies comprise open-loop systems, which have notable downsides.
For example, recycled materials are often lower-grade or less pure than the originals. Additionally, since reuse opportunities remain limited, many people view them as merely prolonging the route to disposal.
In contrast, closed-loop systems prolong a product’s useful life. That may mean making it easy to repair or using durable materials. Companies also design items to facilitate reprocessing or launch return programs. Once items can no longer be used, businesses can do more to utilize their raw materials by circulating them through their supply chains.
Most corporate entities have not yet implemented complete closed-loop recycling programs. However, many have made gradual progress, helping them lead their peers.
Making Material-Sourcing Efforts More Sustainable
Anyone shopping for furniture in IKEA notices wood in many products. The material can last longer than alternatives, but procurement specialists must also know its source. The Swedish brand needs more than 10.5 million cubic meters of pine every year. It has tackled some environmental challenges with recycling and strategic sourcing.
For example, the company recycles approximately 17% of its wood. It also gets the material from plantations certified as sustainable operators. Together, the recycling and sourcing efforts account for 97.8% of that component in IKEA’s products.
Besides pursuing similar options, people should investigate how technologies could move them closer to their goals. Digital supply chains could increase success in sourcing recycled materials while data management programs track sustainability progress. The latter option is relevant since IKEA executives committed to eliminating forest degradation and deforestation by the end of 2025 in all its supply chains at risk of those outcomes.
Executives are increasingly aware of the challenges of operating in a world with finite resources when consumption is central to their business models. Fortunately, closed-loop systems make supply chains more efficient and resilient, enhancing resource management.
They also encourage innovation through unconventional efforts. For example, the United States has more than 100,000 abandoned mineral-mining sites. Scientists are applying commercially ready technologies to those locations to recover more than 50 in-demand resources. People assume they must source these critical products from far-flung places, including some with questionable human rights practices. However, getting them from forgotten-about domestic locations could become a sustainable alternative.
Cutting Emissions and Waste
Those investigating closed-loop improvements must also find creative recycling opportunities. Digital platforms can help, such as when people use ecommerce tools to connect to recycling markets and sell or purchase materials.
Reducing the company’s environmental footprint through recycling may also require smarter purchasing decisions. Is it time to get a new coffee machine for the employee lounge? Numerous companies sell coffee pods, but Nespresso offers several convenient recycling options. People can mail back their used pods, drop them at dedicated points or bring them to stores.
Prioritizing recycling and curbing underutilization also have abundant profitability potential. Estimates suggest the clothing industry could generate $500 billion more through these activities.
Executives must scrutinize their supply chains to find previously unrecognized recycling options. In one case, Jaguar Land Rover partnered with an industrial specialist to achieve the first closed-loop recycling of seat foam for the automotive industry.
This collaboration relied on advanced recycling methods and sourced polyurethane foam from end-of-life vehicles, using it in the seats of new automobiles. This material is durable but difficult to recycle conventionally, so it often ends up in landfills. This problem-solving effort shows how teamwork can overcome obstacles and lead to meaningful outcomes. Taking materials from used vehicles rather than purchasing them new should also strengthen the automaker’s supply chain.
Company representatives believe this change will cut emissions by 50% and prevent 44 grams of CO2-equivalent emissions. It could also offer financial incentives, such as reduced waste disposal and lower raw material costs.
Executives can explore other sustainable methods to reinforce their commitments by using digital merchandising and marketing programs, especially when promoting eco-friendly product decisions. Such measures became more popular at the height of the COVID-19 pandemic because people could not visit car dealerships. However, they remain relevant, mainly because marketing teams can use digital assets for longer and distribute them without physical resources such as paper and ink.
Making Thoughtful Choices
B2B executives, supply chain professionals, and other concerned parties have various compelling reasons for prioritizing the development of closed-loop systems. They will get the best results by thoroughly evaluating all the options to find the most effective possibilities, seeking stakeholder feedback and tracking metrics through the process.
Finding appropriate digital technologies to complement their goals will also streamline workflows, monitor progress and identify gaps.
About the author:
Emily Newton reports on how technology disrupts industrial sectors. She’s also the editor-in-chief of Revolutionized, covering innovations in industry, construction, and more.
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