A circular economy needs robust infrastructure to manage the backwards flow of materials, and logistics companies are perfectly placed to manage this.
Since the industrial age, economies around the world have relied on a ‘take, make, waste’ model of consumption. Resources and materials are used to create a product, and at the end of its life – or when it’s no longer needed – the product and its valuable inherent resources are simply thrown away. This is not a sustainable way of doing things and one that couldn’t be further from our own ethos here at Cawleys.
As a leading-edge waste management and resource efficiency business, we passionately believe that the solution is a transition towards a circular economy, where resources are used and reused for as long as possible to keep them in the cycle of consumption. This is not only beneficial to the environment – which no longer has to provide increasingly scarce resources to create products, nor bear the brunt of their disposal through landfill or incineration – but it makes good business sense, too. Companies adopting circular economy principles benefit from resilient value chains and significant cost savings. In Europe alone, these savings are estimated at €600bn with a further €1.8 trillion in economic benefits.
But there are challenges involved in this. Managing a circular economy can be complex – there are a lot of moving parts, not to mention legislation barriers and, of course, the task of preserving the value of materials throughout the cycle, in order to make it all financially viable in the first place.
This is where reverse logistics come in, presenting a valuable opportunity for logistics companies and warehousing operations to play a critical role in the circular economy transition. Where ‘forward logistics’ is concerned with assembling materials for manufacturing, then delivering the end product to consumers via retail or business networks, reverse logistics focuses on the process of returning goods from the consumer to the point of origin for replacement, refurbishment, recycling, redistribution or clean disposal.
It is a key step in capturing the value of end-of-life goods and enabling the reuse and recycle pillars of the circular model, and since logistics companies already operate with the minimisation of resources in mind, their aims are squarely aligned with the main principles of circularity.
For companies that make and sell products, and which are perhaps new to the concept of circularity, reverse logistics can be seen as an unnecessary expense, generally because the costs involved are not as clearly visible as those involved in traditional forward logistics. While reusing and recycling materials can bring significant cost savings to a company, they can be harder to quantify. Again, this is where logistics companies can offer a valuable service, since they already operate with the technology and management processes needed to record and plan the flow of materials, which can give a better picture of the overall costs and savings involved.
And the opportunities for logistics companies to move into this space are definitely there. Big name brands such as L’Óreal, Unilever, The Coca-Cola Company, Levi Strauss and Intel are already pursuing circular economies backed by reverse logistics, many developing partnerships with logistics operators that help incentivise the process with customers though pre-paid shipping labels, smart packaging and convenient take-back schemes.
Don’t forget, people are becoming increasingly receptive to recycling and sustainability initiatives, so moving into this space can bring important reputational benefits for both the logistics company and their clients.
DHL, one of the most established logistics companies in the world, has explored the opportunities of a circular economy and reverse logistics in depth, publishing a comprehensive paper on its assessment of the Reverse Logistics Maturity Model. You can read the company’s findings at www.dpdhl.com/content/dam/dpdhl/en/media-center/media-relations/documents/2018/circular-economy-reverse-logistics-maturity-model-042016.pdf
As mentioned, there are a lot of moving parts involved in the transition to a circular economy, and reverse logistics is just one of them. Fully breaking away from the ingrained take, make, waste model requires input and innovation from everyone: manufacturers, product designers, brands, retailers, waste management and more. Logistics companies are no exception, and those that are ready to pursue their role in this shift will certainly find a world of opportunities available to them.
Contact 0845 260 2000 or visit cawleys.co.uk for more information.