Blog september 2019 – Lean & Circularity

Like in many other European countries, the temperature record in the Netherlands was broken this summer. In the city Gilze and Rijen it became 40,7 °C. Even more remarkable: this is two degrees above the old record, 38,6 °C measured on 23 august 1944.

Across the world, the weather becomes increasingly weirder and above all, warmer. To stop this climate change, a world-wide transition to a so-called circular economy is needed. However, a definition to measure the ‘circularity’ of products and services is missing. An increasing number of companies say they are on a mission to become 100 % circular. Unfortunately, what they mean is unclear!

Sceptics of global warming pointed to the amazingly cold -30 °C measured at the end of January in Chicago. However, this was a local effect. It was caused by a weakening of the low-pressure area - the polar swirl - in the troposphere above the north pole. This resulted in a so-called polar vortex split, which means that the polar swirl splits off in separate cells.

Normally the vortex holds the bubble of cold air underneath it in place, now at some places this no longer was the case. So, very cold periods remain possible, be it that the temperature in Chicago had already risen to +10°C a few days later.

There are indications that the polar vortex weakens more often, due to the decreasing amount of ice and snow at the North Pole. This makes the atmosphere on the northern hemisphere more viscous, resulting in prolonged periods of the same weather. The extreme dry summer in Europe in 2018 is an example.

Grosso modo the weather becomes increasingly weirder and warmer.

Sunrise on February 25th 2019 in a nature reserve in the north of the Netherlands. Temperature would rise to a record-high 17°C that day.

Regeneration
What is needed to turn the tide? A lot. Higher bills for energy and fuels, predominantly mean higher taxes for the citizens. They will not immediately buy electric cars, or heat pumps to warm their homes.

What really would help: transform the world economy to circular. Compare it with the polar vortex, which keeps the cold air in place. A circular economy retains all materials. It strives for regeneration, instead of products that age rapidly and have to be replaced frequently.

This also means that we no longer add any gas to the atmosphere. No CO2, but also no other harmful gases that we might overlook (think of the CFC’s, of which we discovered the harmful effect on the ozone layer just in time).

I am aware that I implicitly use a very strict definition of circular here. Namely a complete closure of the cycle of materials and energy. Is that possible? I will come back to this later.

Lego
In "De Ingenieur", a journal for engineers in the Netherlands, I read an interesting article in February: "building without waste". This is possible if we built houses, offices and viaducts with a kind of Lego blocks. Those building blocks can then be reused again and again. A database keeps track where which "Lego stones" are located.

It seems that this concept is much wider applicable than in construction. It can be broadened to "value creation without waste" or perhaps even better: "fulfilment of needs without waste". Owning something is not always necessary to meet a need.

There is more good news. The prices of sustainable energy continue to fall. This makes win-win solutions possible. In addition less waste, think of the reduction of the seven non-value-added activities in the context of Lean, often means lower costs.

As a result, sustainability can go hand in hand with economic growth and it can provide extra employment.

Together with DSM-Niaga, Auping developed a "circular mattress" in which you can see the "Lego concept" in effect.

Viable
Of course it is impossible to transform a company into circular in one go. However, it is possible to take major steps in that direction, while remaining a viable company.

What also adds weight is the image of brands. Lean aims to increase value creation in the eyes of the consumer. More and more people consider environment-friendly produced things to be extra valuable.

Circular economy
I promised to return to the definition of a circular economy. To get right to the point: there is no generally accepted definition of it, let alone that circularity is measurable!

In my opinion it is important that we agree on a definition soon. Otherwise chances are that circularity will soon go out of fashion. Just like cradle-to-cradle did, and recycling. In my eyes, recycling originally meant the same as circular. However, today it is dismissed as down-cycling, with examples like plastics ending up in mile markers.

Never change anything
The term "circular economy" refers to circular processes in natural ecosystems. I found hundreds of definitions of it on the internet. However not the simple, be it impossible one, that I made up myself: "never permanently change anything on our planet".

I added permanently, to make biodegradable materials fall within the definition. Other examples of temporarily changes are companies that use each other's materials or - after a considerable time - return materials to each other.

Nature nearly meets my strict definition of circular. Everything is reused endlessly, and the energy to keep this going is supplied by renewable energy, coming from the sun.

However, if we ourselves do everything we can, then still we do not get beyond a situation for which the polar vortex is a beautiful metaphor. The polar vortex only roughly holds the cold, outbreaks are possible. Likewise, from a circular economy, materials will always leak to the environment.

You can therefore aim to become "100% circular", but you will not achieve this. Is that bad? No, because you can take big steps. But, as I have already mentioned, it is a problem that there is not a broadly supported and measurable definition of circularity yet

Describe
The current definitions of "circular" are much more elaborate and much vaguer than mine. They mainly describe what you can do to move in the direction of a circular economy. The Ellen MacArthur Foundation, for example, talks about "an industrial system that is self-healing and regenerative in purpose and design."

A research group at the university of Utrecht in the Netherlands, led by professor Marko Hekkert, searched for the common denominator in the definitions of circularity. The result was published in their article: Conceptualizing the circular economy: an analysis of 114 definitions.

The research group came to the following description of a circular economy (shortened freely by me): "An economy based on business models that replace the existing and linear end-of-life approach, by concepts based on reduction, reuse, recycling and recovery of materials. This with regard to production, distribution and consumption, and throughout the system from end-to-end. The goal is a better environment, more prosperity and more social equality for current and future generations."

Direction
This might be vague, but has the advantage over my straightforward definition, that it gives direction. It does so by making it clear what you might do to achieve more circularity, and how (think off those business models). It also prevents people to drop out quickly. So, a descriptive definition shows that a circular economy is a viable option.

There is, however, a downside: companies and governments can make the definition their own, and twist it to their needs. More and more often you see in a mission that an organization wishes to procure "100% circular", or even wishes to operate “100% circular in the year 20xx".

What do you mean?
In my opinion, the first question then should be: what do you mean? After all, "100% circular" is not feasible. In addition, circularity might include anything ranging from the use of recycled materials, to ensuring that depreciated materials are used by others, but possibly only in low-value products. It can also be that products have a modular design, which makes reuse possible (but this does not say that this really happens).

There are companies that have come far in the direction of a closed loop. I mean: taking everything back and reusing it. There are also promising Lego-like products on the market. In addition to the circular mattress I already mentioned, there exists for example a modular cell phone, there is renewable carpet, and there is even a demountable viaduct.

The ease with which circularity can be achieved depends on the type of industry and on the position in the supply chain. Suppliers of parts, for example, have to take into account the wishes of their customers. And for complex products, that contain many components and materials, circularity can only succeed if there is a matching ecosystem of companies. And, as I said before, a 100% closed system is impossible!

In nature, sustainability is achieved by way of an ecosystem

Talking
What is needed is a performance indicator, to make it possible to objectively compare the circularity of products. That would make it possible for companies to distinguish themselves, and buyers and consumers can then consciously choose more sustainable products, if they wish. Until we have a performance indicator of circularity, there will be a major confusion of speech, and more talking then doing, I think.

Interestingly, the aforementioned article by Hekkert et al. states that the definitions they found often include recycling, but less frequent encompass the reduction of material consumption. That is remarkable. In my opinion, reduction of waste is the first step, because materials you do not use, do not have to be recycled.