NEW RESEARCH | Researcher’s advice to boost the circular economy

More and more companies want to focus on resource reduction, reuse and recycling. But it’s not an easy transition. KTH researchers now outline the measures needed for a stronger circular economy.

Electrified trucks, coffee makers, clothes and signs. These are examples of products included in Daniel Berlin’s doctoral thesis on supply networks in a circular economy.

– In a business-to-business context, relationships with other actors in networks are central to business model innovation. It is from networks that you get skills that are lacking in your own company and in networks that there is an opportunity to test circular solutions and take part in the expected transition. Companies also share risk and can join forces to attract public funding, he says.

Great uncertainty

In circular supply networks, all parties cooperate with each other, including competitors. This is because everyone needs to understand how products are used and be able to determine how return flows can be managed.

– For example, the end consumer can also be a supplier to the producer when the product is to be reused or recycled. But there is a lot of uncertainty when it comes to getting the products back. It is very difficult to know what condition the product will be in when it is returned.

In his research, Daniel Berlin has identified a number of uncertainties for producers in supply networks, using Apple’s Iphones as an example.

– If Apple wants to get Iphones back for reuse and recycling, four uncertainties arise. iPhone users use their phones for different lengths of time (timing), wear out their phones in different ways (quality), return in different numbers at different times (quantity), and behave differently when it’s time to get rid of the phone. Some put it in a drawer, while others go to an Apple Store or send it to a mobile collection company (availability), explains Daniel Berlin.

More control with servitization

This means that once the product has left the company, there is little control over it. An increasingly common way of dealing with uncertainty is to stop selling the product and instead rent it out.

– Such a development has taken place in the automotive sector, where leasing has become a big thing through both company vehicles and private leasing.

Design for recycling

One of the companies studied by Daniel Berlin makes clothes without the elastic clothing fiber elastane because it cannot be recycled when mixed with other materials. So to get stretch in their clothes, they design them with different cuts and durable materials.

– They would have preferred to use elastane, but as recyclability is a must in circular design, this is not possible. Companies must be prepared to sacrifice materials if they want to be part of a circular economy.

When designing a circular product, the entire supply network needs to be involved and activities coordinated across the network.

– For example, they are interested in what it takes for the supplier’s supplier to use recycled raw material and what happens to the material at the recycler. This means investing in long-term partners and deeper relationships in the network, says Daniel Berlin.

Three tips for small businesses to get started with a circular business

– Disassemble your product to learn how it is used and how the components behave after use. Only when you understand this can you make it more resource efficient and reusable and recyclable in a practical way.

– Create dialog and build relationships with recyclers. It is important to understand where and how your own product is recycled by actors further down the supply network.

– Carry out a life cycle assessment to understand the environmental impact of your product throughout its life cycle and where you can take effective action.

Four tips for policymakers to boost the circular economy

– Create incentives for innovation by encouraging new stakeholder constellations with a diversity of actors.

– Promoting systems thinking and optimizing material flows to benefit the whole supply network, not just the individual company.

– Use instruments to ensure that whoever puts a product on the market is responsible for its end-of-life management. Alternatively, a third party can take over producer responsibility.

– Make it favorable for companies to use secondary (reused and recycled) resources instead of primary (virgin) resources. This includes not burdening secondary resources with high costs and recognizing the risks of being circular. Businesses need to be rewarded for this risk-taking.

Contact daniel.berlin@naturvardsverket.se

More about the thesis
Daniel Berlin will defend his thesis Industrial Networks: Purposes and Configurations in the Circular Economy at KTH on September 7. To the thesis.