Alis Sindbjerg Hemmingsen on Procurement’s Role in the Circular Economy

If we ran a tender evaluation type process on the autumn solution provider conferences, there is no doubt that the Trade Extensions event scored highly in terms of what we might define as the “interesting speakers who had nothing to do with the software product” criterion!

We reported on the Medicin Sans Frontieres session here, on Sigi Osagie’s inspiring presentation here, and on “responsible procurement” expert Alis Sindberg Hemmingsen here. But we said then that we’d come back to the second part of her session, when she talked about the Circular Economy, so that’s what we are doing today.

The Circular Economy is a concept that we suspect many procurement professionals will need to get to grips with in coming years. It means re-using materials of all types so that “waste” is eliminated and everything can be re-used. It goes beyond re-cycling which is energy intensive and often downgrades the materials; instead, the circular economy looks to design out waste in the first place. Here is a rather good graphic from the Ellen Macarthur foundation that illustrates the idea.

Hemmingsen called it a “industrial system that is restorative or regenerative by design”. It replaces the “end of life” concept with restoration, and shifts business towards the use of renewable energy, eliminates use of toxic chemicals, and “aims for the elimination of waste through intelligent design of materials, products, technologies and business models”.

Some of the ideas she discussed included the concept that “every product is a service waiting to happen”. So she now works for Velux, who produce blinds and windows. The firm will take back your widows when you don’t want or need them anymore. So rather than selling you a one-off product, they are almost providing “windows as a service” as you might say – it is more like a rental service.

The sharing economy is another development that plays into this idea; ten households might share one screwdriver (you don’t need it very often) which would save nine screwdrivers’ worth of materials and manufacturing energy.

What might this mean for procurement people? (We won’t get into the wider economic effects of a collapse of the screwdriver manufacturing industry today!) Hemmingsen said you must “know your flows and your products” in some detail in order to understand the issues and opportunities. Then, it is “collaborate, collaborate, collaborate” - moving from supplier partnerships with a cost orientation to a focus on joint collaboration and innovation. Procurement can lead that to drive “circular thinking” through the supply chain in an effective way. And, as she also said, “if we don’t do it, who else will”?

So that is just an outline really of this new thinking, and it looks like a topic we will return to in coming months and years. As landfill sites fill up, natural resources get depleted, and oceans are poisoned with plastic waste and chemicals, the idea of making the most of the resources we have will surely resonate more with citizens and governments. You would hope so anyway. This may well be another area where procurement can play a leading role in something that will become strategically more important to our organisations in coming years.

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