During a consortium meeting of the Circular Foam research project, there was a vigorous debate about digitalization in the circular supply chain. Participants view digitalization as a critical factor for success (alongside other crucial aspects such as regulation and technology). But what exactly does digitalization mean for circularity?
There are barriers to digitalization for large-scale, high-quality reuse of materials:
- Insufficient information is available about existing materials, products, constructions, and processing techniques. This leads to uncertainty about whether recycling can deliver sufficient quality. Consequently, the risks for structural reuse compared to new materials are too high.
- It is challenging to align the supply and demand of available materials in terms of timing, location, and quality between different parties in the chain.
- Insufficient alignment between supply and demand results in volatile prices and a lack of market transparency. High-quality reuse of materials requires stable prices for those materials.
Materials Passport
A material passport gives the material an identity. This reduces risks and serves as a foundation for high-quality reuse. It is a set of data necessary for a circular economy. Data can be extracted from different systems and exchanged between systems. It includes information about the applied materials, elements, (sub)objects, such as the type of material, quality, quantities, financial value, assembly methods, ownership, and object location. Ultimately, this dataset can consist of different data points, which may also vary over time.
One of the product flows in the Circular Foam project is refrigerators. Manufacturer Electrolux provides each fridge with a unique QR code for collection and further processing.
Supply and Demand
There are still no real solutions for ‘reverse sales and operations planning’ to align future supply and demand of available materials regarding timing, location, and quality, especially not for transparent pricing—insufficient alignment between supply and demand results in volatile prices and market non-transparency. High-quality reuse of materials requires stable prices and delivery reliability.
Digital platforms can facilitate this by offering an environment where providers and buyers of secondary materials can connect, and transactions can occur. Additionally, digital technology lowers transaction costs between parties and enables connections between parties that would not have otherwise met due to geographical or organizational barriers. AI and ML may offer potential solutions. Exciting developments are taking place in battery recycling (pricing of ‘black mass’) and integrating construction waste into BIM planning.
Data and management
Losing control over circular resources is detrimental, especially in a circular economy where supply chains must be closed sustainably (and affordably). So, who takes control: the user of the circular materials or the collector?
For a circular economy, massive waste flows must go to major recycling processors for the highest possible and most efficient reprocessing. These processors must, of course, be accessible by water or rail. Trucks offer much greater flexibility than a boat or train that departs once a week, but alternative modes of transportation must now be chosen due to sustainability efforts. Waste companies need robust ‘reverse sales and operations’ planning to transport waste by rail or water.
In the future, will the users of the circular materials or disposers be collectors’ clients? Users (producers) are increasingly interested in a predictable stream of circular resources at the right time, in the right quality, and at low costs. This could potentially reverse the chain, as indicated in an AutoRecycling Nederland (ARN) report, which suggests that it will lead to different roles within the chain.
Digitalization is the key to managing circular flows. A materials passport is merely the first step.
Walther Ploos van Amstel