We hosted an engaging fireside chat for you, featuring Elmer Rietveld, a renowned senior researcher at TNO in The Netherlands. His expertise covers critical raw materials, circular economy, and supply chain management spanning various fields.
Your host Noah Schaul, Global Director of Corporate Training at Inchainge, takes you along on a crucial conversation.
Don’t worry if you missed the fireside chat. You can still get access to watch back the livestream video.
In this Q&A blog, we will dive into many of the questions that went unanswered due to lack of time.
As an active and well-informed viewer, you play a significant role in the success of our events. Your curiosity and insightful questions brought the conversation to life. So, we decided to address all the unanswered questions that emerged.
Stay tuned as we delve into these queries, ensuring that your voice is heard and your interests are explored further in the world of sustainable supply chain management.
At TNO, our research primarily focuses on servitization. While remanufacturing and recycling are certainly present, servitization is the most important model of circular strategy.
Servitization is the shift from selling products to providing the services and solutions that the products deliver. Our goal is to make manufacturers aware of the opportunities to offer their products as a service rather than just selling them outright.
For example, instead of selling a snow-clearing machine, the manufacturer could lease it to the authorities that need to clear roads during winter.
This is just one of many examples of servitization. It’s where TNO’s projects concentrate, as it presents the biggest business opportunities.
It’s clear that bio-based materials will become more prominent and more widely used, particularly in combination with synthetic materials.
The intermediate step is the interaction of bio-based and synthetic materials instead of just relying on synthetic ones.
Local supply chains for bio-based materials make more sense when dealing with crops, agriculture, and wood, as they can help close the loops in these areas.
I see a particularly significant role for emerging economies in this context. Whether it’s protein for agriculture, energy-related bio-based materials, or clothing, garments, and textiles, there’s an opportunity to adopt new materials and deploy them in emerging economies where transport costs may be higher.
In Latin America, for example, there are some promising cases to be made. Lyocell textiles, which are sustainable and eco-friendly, are a good example. Another example is turning food waste into protein for consumption.
Although not bio-based, simple types of metals like ST37-2, a low-carbon steel, can be mixed with bio-based materials in local supply chains. As long as these materials are utilized, the supply chain can be kept local.
It’s hard to be detailed about it. In general, you have the factors of production, which are: energy materials, capital stock, buildings, vehicles, knowledge, and money. Those are like your inputs.
You always have to think about them, and they are therefore the most important ones. You cannot really leave one out. If you have everything except knowledge. If you have everything except energy. Well, you have nothing.
So, just your classical factors of production are still important to try to answer this question.
For readers who are not familiar with the topic, understanding these fundamental aspects of production is important because they provide a foundation for examining how companies can make their production processes more efficient, environmentally friendly, and circular.
By knowing the essential inputs and their significance in the production process, businesses can identify opportunities for improvements, reduce waste, and better align with sustainable practices.
There’s always a risk of businesses, policymakers, and political leaders being conservative. The acceleration towards novel methods comes from obvious examples like the coronavirus pandemic and the Ukraine crisis.
People start seeing or experiencing first-hand situations where we cannot continue with the old procedures or business cases, and adopting circular strategies might actually help.
However, we should be clear-eyed about this and keep in mind that it’s very easy to put sustainability on a lower priority level. There’s always a risk of reverting back to the old ways, and unfortunately, that is inevitable in some cases.
Facilitating methods like Appreciative Asset-based Inquiry could indeed be interesting. Although I’m not entirely familiar with it, I understand it as a branch of asset management.
Existing concepts in asset management, bookkeeping, and even scrap rates need to be updated to focus on appreciative value rather than just depreciation.
The question is whether an asset still retains its value and remains useful at the desired level, instead of being automatically depreciated just because it’s one year older. So, the short answer is yes, Appreciative Asset Management is important.
Another perspective: It’s interesting that residual value is based on yearly depreciation, which heavily depends on maintenance assessments and specific circumstances.
This approach doesn’t take into account the true value of an asset, leading to potential underestimation of worth.
It’s essential to consider real-world experiences and research when assessing an asset’s value, rather than solely relying on depreciation models.
Appreciative Inquiry (AI) is a strengths-based, collaborative approach to organizational change and development. It focuses on leveraging an organization’s assets and strengths, rather than identifying problems and weaknesses.
The approach involves engaging stakeholders in conversations about the best aspects of their organization, envisioning an ideal future state, and working collaboratively to implement changes that will move the organization closer to that vision.
In the context of asset-based inquiry, the focus is on identifying and building upon the assets, resources, and strengths within a community or organization, rather than concentrating on its deficiencies.
This approach encourages positive thinking and fosters a sense of empowerment, as individuals and groups work together to create change based on their strengths and resources.
Combining the principles of Appreciative Inquiry with asset-based inquiry results in an approach that emphasizes both the positive aspects of an organization and the assets available to create meaningful change.
This question addresses the difficulties supply chains face when managing risks, such as unexpected events or low probability, high-impact situations that can have significant consequences on global sourcing and production.
The most challenging component of supply chain pricing is dealing with unexpected risks and externalities, especially those with high impact and low probability.
Examples include the COVID-19 pandemic, geopolitical tensions like the situation in Ukraine, or disruptions such as the Suez Canal blockage.
Being reliant on a country that might become unacceptable to source from in the near future is another clear example.
These factors make pricing in the supply chain particularly difficult.
Absolutely, considering transparency as an intrinsic value makes sense. When you can show that your records are transparent, with data integrity and no tampering, it holds value in itself, regardless of the contents of those records.
This can serve as a metric or guideline for procurement and policymakers. Trust, as a result of transparency, creates value within supply chain management.
We can think of a product’s life before it’s used as part of the value chain. To me, that’s all about design, which takes into account the use and after-use phases since they’re closely related.
If a design doesn’t address a product’s entire lifecycle, it may look good or have a competitive edge, but it’s not fully addressing sustainability.
When we really think about design decisions, we inevitably discuss material choices and how they impact a product’s strategy during and after its use. These two aspects are just two sides of the same coin.
For sustainable design, it’s essential to consider material choices and their impact on the product’s life cycle, including its use and end-of-life management.
Assessing the environmental impacts of materials and production processes is crucial.
It’s important to look at the whole picture, considering not only the materials used but also the potential harm to the environment, society, and human well-being.
We can’t exclude the production phase from the use and after-use phases. In fact, considering these impacts is well embedded in sustainable design methods.
These assessments should be integrated into the design process as a precondition for creating sustainable value.
The short answer is; the current framework of lifecycle assessment, which takes care of sustainability issues throughout the entire product life. This includes production, use, and after-use phases. It looks at environmental factors as well as potential social impacts, so the scope is quite comprehensive.
The current framework of lifecycle assessment (LCA) is a systematic process that evaluates the environmental impacts of a product or service throughout its entire life cycle, from raw material extraction to production, use, and disposal or recycling.
LCA aims to provide a comprehensive understanding of the environmental consequences associated with a product or service and help identify areas for improvement.
The LCA process generally follows these four steps:
LCA has been standardized through the International Organization for Standardization (ISO) under ISO 14040 and ISO 14044 series, which provide guidelines for conducting and reporting LCAs.
The framework can also be extended to consider social and economic aspects, referred to as social LCA and life cycle costing, respectively, to provide a more comprehensive sustainability assessment.
There’s really one way to go, and it is to internalize these known external effects to raw material use. These are the costs that are detrimental to humans and nature but aren’t paid for.
They’re just left as they are, and after five, ten, or even twenty years, companies can move on, leaving these unpaid bills behind. In many cases, this is the current practice. So, how can we change it?
It’s a panacea – a global, generic solution – and it might sound a bit boring, but it’s inevitable.
This is how you deal with those incentives that aren’t in the price. If they’re not in the price, they’re hard to take into account, and that’s just how it is.
This last question is really important, but it’s hard to know where to start because there are many possible starting points.
How to change a company’s way of thinking is a difficult question, but an important one.
It usually starts with particular individuals who believe that certain practices should be changed and that the current way of doing things is not sustainable. That’s a general answer and only scratches the surface.
Since we really ran out of time, this question is one that we will use as inspiration for future fireside chats.