Sustainability and the concept of the circular supply chain are becoming increasingly important issues for supply chain leaders, but making products that can truly be reused or recycled can be challenging.
Tuesday's keynote speaker at the Council of Supply Chain Management Professionals (CSCMP) EDGE Conference, Tom Szaky proposed several new ways for attendees to think about issues around reuse and recycling. Szaky is the founder and CEO of TerraCycle, a company focused on collecting and repurposing complex waste streams.
According to Szaky, what makes something actually recyclable has nothing to do with whether or not you can physically recycle it. Instead the main piece of the equation is whether the garbage company can make money out of recycling it.
"It's clear that the issue is not can it be done but who is going to pay for it," Szaky said.
The starting point then in turning "linear systems,"—where a product goes to the landfill at the end of its life—into more "bent" or circular systems—where the product get recycled or reused—is to start with the economics of what makes some products recyclable and others not. The trick then is to make sure that the value you can get out the recycled product is more than the cost to collect and process it.
Creating that value can sometimes require some creativity and may not be tied directly a profit and loss statement. Szaky gave the example of a dirty diaper recycling program that TerraCycle has created for Pampers in Japan, Paris, and the Netherlands. TerraCycle has created a box that consumers can access using their phones and then drop off used diapers that will be cleaned and processed and recycled into other diapers. In return, Pampers get the consumers' information and can push coupons and promotions to them. Suddenly the equation of cost to the company versus the value of what they are getting back has shifted.
Another key point that Szaky made is that you have to make recycling or returning reusable packaging as easy for the consumer as possible. One of the reasons why we currently have a worldwide waste problem is that rise in disposable packaging that occurred starting the in 1950s, according to Szaky.
"Disposability brought with it unparalleled affordability and convenience," said Szaky.
Instead of trying to push back on human behavior and change people's relationship to convenience, recycling and reuse efforts need to work with it, he said.
"You need to make reuse feel like disposability as much as humanly possible," he said.
In these efforts, the retailer becomes key, according to Szaky. Szaky believes reusable containers for consumer goods works when there are multiple locations where consumers can return reusable containers. For example in the United Kingdom, McDonald's is piloting a program where coffee is sold in reusable cups that can be returned not only at a McDonald's but also at Tesco locations.
"This is the everything in shifting ourselves to a more sustainable ecosystem," said Szaky. "It's really putting convenience on a pedestal and honoring that instead of trying to get people to somehow not care about convenience."
Gartner, Inc.
