The role of Digital Ecosystems in Circular Supply Chain.
This is the fourth installment of the QAD DynaSys blog series focusing on circular supply chains.
If you are interested in that subject, don’t miss: Chapter 1: What is Circular Supply Chain? – Chapter 2: Circular Supply Chains: The Impact and Chapter 3: Circular Supply Chain: the Politics of Pollution.
Industrial Symbiosis is a phrase not often used, if ever, in supply chain circles. However, in the future, it may become more prevalent. So what is Industrial Symbiosis?
Linear supply chains, by definition, have points of material consumption and points of wastage. After all, it is linear and there must be an entry point and an exit. Conversely, circular supply chains, by design, have waste designed out by adopting a product design, material sourcing, and production processes which, by design, do not generate waste. But how realistic is this in practice? When an individual supply chain is managed in isolation, the opportunities to minimize waste by improved product design and material sourcing are very limited. When the scope of the supply chain design is increased to include products from multiple supply chains, the possibilities to source process inputs from the re-use and rework of other process outputs is increased.
Any individual participant in the ecosystem may generate waste, but the system as a whole is designed with the zero waste parameter. Production output that would have previously been unwanted and referred to as waste in a linear model is now considered an asset and labeled a by-product or co-product in a circular model. There is a coupling of the unwanted production output of one process to the desired input of another production process. The production processes may transcend industries. This type of supply chain design is called industrial symbiosis.
Feasibility of Industrial Symbiosis
The Kalundborg project is a commercial example of using industrial symbiosis to create a zero-waste manufacturing ecosystem. This project uses digital technology to connect and optimize operations across manufacturers from different industries to minimize net waste across all ten companies. This case demonstrates the role of the government to take a leadership role in circular supply chains proactively. Nine of the ten companies in the connected supply chain are state-owned. The typical flows between the participants in the ecosystem are illustrated below.
Is Industrial Symbiosis Commercially Feasible
Industrial symbiosis generally requires a central actor such as the government, industry body, or a third-party to manage the design and the evolution of the ecosystem as well as to coordinate operational activity. The majority of current implementations of industrial symbiosis are sponsored by governments. This should be expected given the commitment and collaboration required by the disparate parties to adopt a relatively immature operating model. There are many challenges to adopting such a model. There are material sourcing and rework costs that need to be distributed amongst the participants. There are intermediate product quality, storage, and service-level constraints. The strength of the ecosystem relies on the strength of its worst-performing participant.
Supply Chain Technology
Such models require a mature technology platform. Supply Chain technology is required to optimize the flow of materials between participants of diverse industries, preventing leakage of resource value outside the ecosystem whilst balancing the requirements of individual participants. The required technology must be highly responsive and collaborative with a broad level of connectivity to many supporting systems.
The Future of Industrial Symbiosis.
There is a lot of progress to make from both an engineering and political perspective before such ecosystems will become more than a pilot or proof of concept. This is a need for a stronger legal framework to support private companies to engage in such ecosystems. This is already recognized by some jurisdictions such as the European Union. In 2019 the EU commission published a paper that highlighted the need for the Commission will clarify rules on by-products and on end-of-waste status to specifically help support the development of industrial symbiosis.
So if you didn’t know what Industrial Symbiosis was and the role in sustainable supply chains, now you know.