Tuesday, February 26, 2013
Companies Are Starting to Circle Up
This week’s McKinsey Quarterly article, Manufacturing Resource Productivity, brought up the idea of supply circles and how resources and materials can be “looped back into the production process” after they have been used and have fulfilled their product life cycle. According to McKinsey this would impact areas such as cost savings, reducing waste, and improving efficiency. It would also help to bring about an element of sustainability to materials and how they can be reused within the supply chain process. Currently most companies understand the operations within their walls and work hard to make their internal processes more lean and efficient. However I would assume that many do not fully understand the supply chains of the operations that are occurring outside of their organization. This level of understanding is therefore something that companies should look into if they choose to engage in a supply circle method as opposed to the traditional supply chain. Knowing what other parts of the supply chain are doing and working with these others suppliers, manufacturers, etc could help the entire supply chain to become more sustainable.
When trying to think of an example of a company that was successful in this supply circle method and try to reuse their products I immediately thought of Apple. When a customer recycles an Apple product it is disassembled in Australia with the glass, cables, metals and plastics being separated so they can later be processes, refined and then reused in manufacturing. The metal and glass can be reprocessed while the plastics can be “pelletized into a raw secondary material”. Apple states that they achieve a 90% recovery weight by weight of the original product that is sent to be recycled. In addition, Apple tries to incentive customers to recycle their products through gift cards and discounts. Steps such as these enable their products to be manufactured using reusable products, which consequentially helps them save money, reduce waste, and so on. While this seems like a reasonable, and desirable option for products that customers are no longer using or have upgraded from I cannot think of many other companies who offer similar programs.
Why would companies not take advantage of the opportunity to recycle and bring collect materials if they are able to reuse them? What will it take for more companies to incorporate circular methodologies into their processes, especially as companies go more green?