Circular Logistics: Why We Need to Break Free from Linear Thinking

 

Everywhere I look, I’m reminded of how much linear thinking is baked into our logistics, our supply chain, and even our business software. 

We assume the flow of a particular material or product can be treated as a closed system. Outputs, in a linear system, are just “waste.”

We talk about going forwards or backwards in the supply chain. 

And we think of the “consumer” as the end of the line, because they “consume” the product. Yet the products don't magically disappear at this point. 

If we’re ever going to transition to a circular model, we need to start breaking free from this language and this kind of thinking.

 

Reverse Logistics

“Reverse logistics” is a prime example of this. 

The concept and emerging work in this area are incredibly exciting. It represents a desire on the part of businesses to take responsibility for their products after the so-called “consumer” has finished using the product.

I’ve spoken to innovators like Paul McSweeney from ZeroNet who are providing solutions to optimise household recovery of products and materials.  

But the term “reverse logistics” exposes our linear thinking.

In one commonly cited definition by The Balance Small Business, "Reverse logistics is the process of moving products backward through the supply chain. In other words, reverse logistics involves taking products back from customers and reworking those products (or parts of them) to create a new product that can be sold."

Do you see how the assumption of a linear supply chain is baked into our definition? Why are we are moving “backward” through the supply chain?

ZeroNet have begun using the term “intelligent collection” instead of only talking about reverse logistics, which is an excellent example of being more intentional about our language.

 

Circular Supply Chain: a Disruptive Example

One example of how thinking, language, business model, and software are interconnected is the Servitisation model. In this model, customers pay for a service rather than buying the equipment themselves.

For instance, Kaer, the innovators offering air conditioning as a service, provide the equipment and infrastructure for air conditioning and hire it out to businesses. 

The real potential in Servitisation is aligning incentives. Instead of incentivising themselves to manufacture and sell more big machines, Kaer are incentivised to keep machines running as efficiently as possible, for as long as possible.

Their software helps with that. As we discussed in our podcast interview, Kaer are able to minimise energy usage by monitoring and adjusting to the ideal room temperature for the office.

This is just one example of how we can shift our mindset and rethink our business model — and indeed the language we use to talk about what we’re trying to achieve.

 

Software to Support Circular Logistics

Our linear thinking is often reflected in the software systems we use.

Inventory management, stock control, fulfillment, delivery, procurement, and ordering systems almost all work on this assumption of a one-way flow.

The business software we use reflects the needs of the business — but the opposite is also true. 

Forward-thinking software opens business opportunities. What if the software sector really started to think in terms of "Circular Logistics"?  What opportunities could we create for ourselves, our businesses and our clients? And what if we began thinking and speaking in a more circular language?

I don’t have all the answers, but it’s something we’re constantly exploring on the HappyPorch Radio podcast. 

I invite you to listen to our latest season, where we speak with circular economy consultants leading the way in building a circular economy for all.