Reviewing 2019’s trends: Clarity on circularity

Date : 09 January 2020

This is the fourth and final blog in a series in which we look at how the supply chain trends we identified for 2019 have panned out. In this instance, I’ll be taking a look at Clarity on circularity.

Across the last few years, we’ve witnessed a significant surge in interest with regards to circular economies. Being sustainable is no longer a PR exercise, but an essential step that brings direct and indirect benefits to businesses. But first, we need to define what a circular economy means.

According to the Ellen MacArthur Foundation, a circular economy is “a framework for an economy that is restorative and regenerative by design. It entails gradually decoupling economic activity from the consumption of finite resources, and designing waste out of the system.”

The idea of circularity has been around for a while, albeit without the same level of scrutiny, focus and commitment seen today from the many parties involved.

Moving away from the linear model

A large number of retailers are currently shifting their supply chains from a linear model to a circular one. This shift is embodied by a set of initiatives that strive to use resources for the longest time possible, and reuse, repair or recycle any kind of waste.

That said, each organisation will endeavour to explore its own distinct approach to achieving a circular model. Recently, the Co-op has committed to ensuring the entirety of its own-brand packaging is recyclable by this summer, bringing forward the original deadline by three years.  Meanwhile, in Sweden, Coca-Cola is due to use PET bottles made exclusively from recycled plastic, in a bid to expand its use of recycled plastic in Western Europe.

Back to the UK, Tesco has stepped up its packaging reduction strategy last summer by launching the second phase of its Remove, Reduce, Re-use and Recycle plan, which guides the process of packaging design across all its product portfolio.

Mitigating food waste has been, equally, one of the top priorities for grocers last year. In the US, Kroger, the largest grocer in the country, has introduced new initiatives in its ‘Zero Hunger, Zero Waste’ plan by ramping up its food donations and teaming up with different NGO’s to advocate for public policy solutions, which will help it achieve its ambition of eliminating food waste across its supply chain by 2025.

Meanwhile, technology is increasingly being used to reduce food waste. In the UK, Morrisons has become the first grocer to use the ‘Too Good To Go’ app, which connects businesses with surplus food to the general public, and allows it to purchase a “magic box” containing food that would otherwise be wasted. The partnership between Morrisons and ‘Too Good To Go’ is aimed at helping the retailer achieve its pledge to halve food waste by 2030.

Circularity under IGD’s radar

In our review of the concept of waste management, we produced a report that dwells on how to best manage and prevent waste. Essentially, the report highlights the types of waste, the industry standards and best practices, and suggests ways to develop a relevant waste management strategy.

Similarly, Money for nothing? Waste valorisation in the grocery supply chain looked into the concept of waste valorisation, which is described as the re-processing of waste or discarded materials to create something new that has a market value. The blog puts the spotlight on a range of approaches to waste valorisation and some of the possible challenges that could hinder the valorisation process.

We’ve also captured a couple of innovations that focus on reducing food waste. Metro, one of Germany’s largest supermarket chains, has started the trial of an app called ‘FreshIndex’, which dynamically calculates the best-before date of temperature-monitored products. Not too far off, Albert Heijn has been testing dynamic pricing on chicken and fish products to help reduce food waste. The concept is simple: the price of fresh products is automatically reduced based on the remaining shelf-life, which means the shorter the shelf-life, the bigger the discount.

Lastly, we had the founder of TerraCycle – Tom Szaky – attend the IGD Supply Chain Summit. He delivered a compelling presentation on the Loop platform and how it’s working with major players to develop reusable packaging in several categories from detergent to ice cream. We spoke with Tom to understand the platform better prior to the event.

Conclusions

The circular model presents several opportunities for businesses.  It has the potential to save organisations money, help attract and retain new customers in addition to strengthening the sustainability credentials of the brand.

In 2019, the grocery industry recognised that circularity will characterise supply chains of the future. While some of the initiatives currently lack sufficient scale to make a substantial impact, we are in a period of exploration and intensity will increase as consumers demand more from the businesses they engage with.

Becoming ‘circular’ cannot be driven solely by the commercials. To succeed, it must be combined with a genuine desire to preserve the environment, which can only be achieved through strategic partnerships that make progress towards this challenging endeavour easier.

Wassim El Attar

Supply Chain Analyst

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