Your Circular Transformation requires Paradox Thinking

rp_circular_procurementHow can paradox thinking help you transform your company into a more circular one? What does it take from me as a business professional? 

Why circular?
Why do we need the Circular Economy? Isn’t it just another way of saying that we should re-cycle? As Andre Gide has said: “Everything that needs to be said has already been said. But since no one was listening everything must be said again”. We have to find a practical way to solve the world’s emerging resource crunch. Reserves of key resources such as rare earth metals and minerals are diminishing, while exploration and material extraction costs are rising. The current ‘take-make-dispose’ linear economy approach results in massive waste.

It has been stated that 90% of the raw materials used in manufacturing become waste before the product leaves the factory while 80% of products made get thrown away within the first six months of their life. This, coupled with growing tensions around geopolitics and supply risk, are contributing to volatile commodity prices. A circular economy could help stabilize some of these issues by decoupling economic growth from resource consumption.

Leadership is key
Ground-level innovation in this field is being driven by large corporations who are piloting business models based on leasing, product performance, remanufacture, and extended lifecycle thinking. These companies have the power to effect change quickest, given their geographical reach through global supply chains, and their efforts are likely to accelerate with the emergence of a business-led platform for collaboration. While the circular economy also relies on the involvement of SMEs, take-up in this sector remains limited. A recent survey of nearly 300 small businesses across England, France and Belgium found almost 50% had not heard of the concept. Whereever you are in terms of companysize – it is important to have the right mindset. Developing a circular business model is not a matter of choosing between one approach or the other. It is simply a matter of working with the paradoxes.

Paradox thinking
A paradox is a contradictory statement contrary to common beliefs. While a dilemma is a challenging choice between two alternatives. True leadership crushes paradoxes by challenging the general outlook and thereby change the way we think. A leader which manages paradox thinking uses logic, personal knowledge and recognizes creative patterns. Hence people who have the ability to master paradox thinking has a much higher value for the company. In the fast changing business environment of 2016 it is no longer enough just to put your focus on a well run optimized machine. You will need to find solutions to the paradoxes surrounding you. The resource paradox is one of the many paradoxes that needs to be solved. In relation to the circular economy make sure you develop paradoxes and not dilemmas.

 

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

 

The Circular Economy – An Innovation Opportunity

RP_building_strategic_approachIf you ask the new generation what they think about the Circular Economy they will most probably tell you, that it is cool and it is disruptive. Why? Put in short it offers those who are spirited to take flight with new enterprise, and those who are disillusioned a chance to re-engage with their future. (Check out Maxine Perella’s study here)

Circularity starts to mainstream – so what can you, as a company, do to tap into the creativity of the new generations? The answer is simple: start embracing open source – because the young people are already there. They are ready to go for disruptive innovation.

DISRUPTIVE?
The theory of disruptive innovation was invented by Clayton Christensen, of Harvard Business School, in his book “The Innovator’s Dilemma”. Mr Christensen used the term to describe innovations that create new markets by discovering new categories of customers. They do this partly by harnessing new technologies but also by developing new business models and exploiting old technologies in new ways.

He contrasted disruptive innovation with sustaining innovation, which simply improves existing products. Personal computers, for example, were disruptive innovations because they created a new mass market for computers; previously, expensive mainframe computers had been sold only to big companies and research universities.

While sustainable innovation is more disruptive, it is also considered to have a stronger case for change than other forms of innovation.

DRIVERS FOR CHANGE
The drivers for change include:

  • Changing consumer aspirations and behaviours, such as Millennials not wishing to own vehicles and instead focussing on how to optimally get from A to B.
  • Customers and consumers expecting companies to look after the environment and community – with some consumers preferring products with provenance“Sustainable innovation has a good bottom line benefit”
  • Increasing staff expectations of their employers (and managers) to share their personal values, ethics and purpose
  • Environmental and social externalities being included into business cases
  • Cleaner technologies (such as renewable energy)
  • Shareholders equating good sustainability performance with good management
  • Communities increasingly challenging companies’ licence to operate (and licence to grow)

COLLABORATION IS KEY
More disruptive business models unlocking different types of value require greater collaboration to succeed. This can include collaboration between and among individuals, divisions, and organizations. In some instances one company alone cannot succeed and must work with its peers because the challenges are bigger than any single participant’s resources. In other cases, uncertainty about the future is causing companies to spread their innovation investment across a broader portfolio of initiatives, so co-funding is needed.

Check out this blogpost: The 5 pitfalls of sustainable supplier collaboration.

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

Resources are Limited

Climate change

Climate change, global poverty and income inequality cannot be left to governments or NGOs to solve. It’s about time to act if you want to rise to the top as a company. Because talent want’s to be part of the solution not the problem. Procurement plays a key role when it comes to creating solutions. They keyword is sustainability and there are plenty of solutions already created. Check out this blogpost to learn more.

ACT AND RISE
Some of the biggest and most influential companies around the world have already embraced the rhetoric of sustainability and made more-or-less serious commitments to drive change. Consumers are beginning to align their purchases with their values. NGOs collaborate with big companies when their interests coincide. Perhaps most importantly, more and more workers, especially young people, demand meaning as well as money from their jobs; they want to work for companies that are part of the solution, not part of the problem. Those companies that attract and engage them will rise to the top.

THE WHY
Sustainability is important because all the choices we pursue and all the actions that we make today will affect everything in the future. We need to make sound decisions at present in order to avoid limiting the choices of generations to come.

For example, if you continue wasting water and polluting the dwindling supply of freshwater that we have today, we leave future generations with no other choice than to desalinate saltwater or treat contaminated water for their consumption and daily use. We can also be assured that, if that happens, all life that depends on clean freshwater will become extinct.

The same goes with the supply of soil that we currently have. Without proper care, our soils can easily lose quality enough that they will no longer be able to encourage growth and sustain life. If that happens, future civilizations will be void of crop and other natural sources of food. They will then have no other choice but to create man-made sources for nourishment and sustenance.

The two examples described above may seem terrible but, in fact, those are not the worst circumstances we can leave the future of mankind with. If clean water and good soil become scarce enough, all life on Earth can become extinct. Keep in mind that this does not just apply to soil and water but all elements of nature that are crucial to sustaining the Earth’s equilibrium.

In the past, the entire human population was small and civilizations had very few needs. At that time, natural resources seemed infinite because the capacity of nature to regenerate was much higher than the rate at which human beings used up resources.

RESOURCES ARE LIMITED
Today, we are painfully beginning to learn that environmental resources are limited and are quite sensitive to everything that we do. We are starting to experience the effects of the actions of generations that came before us. To make sure that future generations will not experience worse, we need to be aware of the ideals and requirements of sustainability.

As we become aware, we need to put what we learn into action as that is the only way we can allow nature to catch up with the rate at which our requirements grow. This does not mean having to stifle human development. On the contrary, it means sustaining the supply of resources so that we can, in turn, sustain human development.

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

 

The Circular influence on procurement

RP_Product_Lifecycle_EfficiencyThe circular economy will have a huge influence on procurement in the years to come. How can you approach it and what is it all about?

I have piled up the blogposts I have done in the past on that topic. Hoping to inspire you!

Why Circular Procurement is also Responsible Procurement
Valuable materials are leaking from our economies. In a world where demand and competition for finite and sometimes scarce resources will continue to increase, and pressure on resources is causing greater environmental degradation and fragility, we can benefit economically and environmentally from making better use of those resources. That is why Circular Procurement is also Responsible Procurement.

Read the blogpost right here.

Why is Circular Procurement a good idea?
No business can escape the fact, that the global economic conditions, the status and future availability of affordable resources, energy supplies and a growing global population, are creating an ever more complex business environment. The limitations and growing problems of the linear economic model, that has served us well for many decades, demands that business “as usual” is unlikely to be a winning strategy in the future. The winning strategy lies within the circular economy. Learn more about why Circular Procurement is a good idea.

Read the blogpost right here.

What’s the role of procurement in the circular economy?
There is more to procurement than savings, an expression I am hearing quite often.The world’s leading global companies are looking to the sourcing and procurement function to do a lot more than cut the price of supplies. So what can a procurement professional do different?

Read the blogpost right here.

Circular thinking in Procurement
I believe that Circular thinking in Procurement will be an integral part of any Responsible Procurement approach in the future.
At the same time it will be a great opportunity with high potential for procurement. Why? Procurement has to facilitate that supply partnerships emerge from a pure cost orientation, towards a strong focus on joint collaboration and innovations. Who else?

Read the blogpost right here.

Would you like to learn more about how you can incorporate Circular Procurement into your own organization, please do not hesitate contacting me. 

Please share this blogpost if you like it.

 

Why Circular Procurement is also Responsible Procurement

RP_Treecycle_dot_green

When companies decide to pursue on the “circular path” it will for sure also affect procurement and the way they operate.

Why is Circular Procurement also Responsible Procurement? Continue reading to learn more.

WHY IS THERE A NEED FOR CIRCULAR PROCUREMENT?
Valuable materials are leaking from our economies. In a world where demand and competition for finite and sometimes scarce resources will continue to increase, and pressure on resources is causing greater environmental degradation and fragility, we can benefit economically and environmentally from making better use of those resources.

There is a strong business case for improving resource productivity. It is estimated that resource efficiency improvements all along the value chain could reduce the material input needs by 17-24% by 2030. A better use of resources could represent an overall savings potential of €630 billion per year for the European industry alone.

Since the industrial revolution, waste has constantly grown. This is because our economies have used a “take-make-consume and dispose” pattern of growth – a linear model, which assumes that resources are abundant, available and cheap to dispose of.

CIRCULAR ECONOMY
What we need is a more circular economy.  This means re-using, repairing, refurbishing and recycling existing materials and products. What used to be regarded as ‘waste’ can be turned into a resource. All resources need to be managed more efficiently throughout their life cycle.

Moving to a more circular economic model promises a much brighter future. By helping to decouple economic growth from resource use and it’s impact, it offers the prospect of sustainable growth that will last. It would as well:

  • Allow Europe to rise to the current and future challenges of global pressure on resources and rising insecurity of supply.
  • Boost recycling
  • Create jobs and economic growth
  • Show how new business models, eco design and industrial symbiosis can move towards zero waste
  • It will reduce green house emissions and environmental impacts

Transition to a more circular economy requires changes throughout value chains, from product design to new business and market models, from new ways of turning waste into a resource to new modes of consumer behavior. This implies full systemic change, and innovation not only in technologies, but also in organization, society, finance methods and policies.

CIRCULAR PROCUREMENT IS ALSO RESPONSIBLE PROCUREMENT
Procurement plays a key role in the transition to a more circular economy. They have to be able to challenge their suppliers on the re-design of production processes, products and services.

Products have to be redesigned to be used longer, repaired, upgraded, remanufactured or eventually recycled – instead of being thrown away. Production processes have to be based more on the reusability of products and raw materials, and the restorative capacity of natural resources, while innovative business models can create a new relationship between companies and consumers.

At the end of the day it is about taking a social and environmental responsibility for the wellbeing of our planet. I call it Responsible Procurement.

Please share this blogpost if you like it.

TestResponsible Procurement Excellence has specialized in helping companies around the world develop and integrate an actionable approach to Responsible Procurement. An actionable approach goes beyond compliance, has a positive effect on the reputation, raises efficiency and generates revenue. 

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Why is Circular Procurement a good idea?

RP_Gears_dot_blueWhen companies decide to pursue on the “circular path” it will for sure also affect procurement and the way they operate.

How can you understand what Circular Procurement is all about and why it is a good idea? Continue reading to learn more.


BASICS

No business can escape the fact, that the global economic conditions, the status and future availability of affordable resources, energy supplies and a growing global population, are creating an ever more complex business environment.

The limitations and growing problems of the linear economic model, that has served us well for many decades, demands that business “as usual” is unlikely to be a winning strategy in the future. The winning strategy lies within the circular economy.

CIRCULAR ECONOMY
The Ellen McArthur Foundation defines a circular economy as one, which is defined as an industrial system that is restorative or regenerative by design. It replaces the end of life concept with restoration. It shifts business towards the use of renewable energy, eliminates the use of toxic chemicals, which impair re-use and aims for the elimination of waste through intelligent design of materials, products, systems, technologies and business models. We could call it circular innovation.

COLLABORATION IS KEY
Supply chains are getting more complex every day in terms of the number of involved partners and the quality and degree of interdependency between them. One of the predictions in relation to the integration of circular thinking is, that complexity will increase.

Also we have to remember, that businesses have to operate in a globalized world where the volatility of markets, the speed of technological progress and the pace of change, in the economic and business environments, will continue to rise rapidly. As a result product life cycles are getting shorter and market demands become more and more unpredictable.

Collaboration with all types of partners, and their willingness and ability to share their knowledge, will be crucial and key to a successful development and integration of circular thinking.  

WHY?
The risk to miss an important trend and the threat of being commoditized, has become the substantial risk of every company. This provides a great opportunity for procurement to take on the lead on circular innovation.

Procurement has to facilitate that supply partnerships emerge from a pure cost orientation towards a strong focus on joint collaboration and innovations. Procurement can advance the collaboration with suppliers on circular thinking in an effective way.

They can ensure that the suppliers can support the business in eliminating waste through intelligent design of materials, products, systems, technologies and new business models

Procurement has to start planning:

  • Which pilot projects they will run in order to build competences within circular procurement
  • How they will ensure that suppliers are capable of adopting “circular thinking”, and hence able to support the business
  • How they will build awareness and capabilities with procurement professionals
  • Which tools and processes that need to be in place in order to support the business
  • What the role of procurement will be – within the Circular Economy and also within the organization when it comes to accelerating the move from the linear economy to a circular economy.

Please share this blogpost if you like it.

TestResponsible Procurement Excellence has specialized in helping companies around the world develop and integrate an actionable approach to Responsible Procurement. An actionable approach goes beyond compliance, has a positive effect on the reputation, raises efficiency and generates revenue. 

Stay connected, sign up for the newsletter.

 

What’s the Role of Procurement in the Circular Economy?

RP_Product_Lifecycle_EfficiencyProcurement plays a key role in the transition towards the Circular Economy and must, as part of a Responsible Procurement approach, look at how they can develop Circular Procurement.

One of the key challenges in developing a structured approach to Circular Procurement is: What is the role of procurement? I was inspired by an article from Forbes magazine “The five traits of world class procurement organizations” . Especially because I am seeing some of the same traits could fit very well into the development towards Circular Procurement.

Read my blog post: Circular Thinking in procurement for more knowledge on what circular procurement is all about.

There is more to procurement than savings, an expression I am hearing quite often.The world’s leading global companies are looking to the sourcing and procurement function to do a lot more than cut the price of supplies. So what can a procurement professional do different?

According to the article new benchmarking data from The Hackett Group suggests, that the discipline needs to broaden its role in the organization, well beyond the traditional job of negotiating with suppliers.

“When you limit the value of the procurement organization to spend savings, you put that organization at risk of being unable to increase that value over time,” said Chris Sawchuk, Hackett’s global managing director and Procurement Advisory Practice leader.

These characteristics reaffirm procurements value to the organization:

  • Trusted advisors, especially on supplier knowledge: They could act as trusted advisers to top management. Also in circular procurement there is a need to view it from a strategic point of view and guide management in terms of how to attract innovation, how the market can create the circular value and how new partners and suppliers can be developed to build the circular business case. Procurement can as well provide fresh insights into key supplier data. Companies can draw on the information to create predictive analytics, providing a deeper view of markets.
  • Involving suppliers in the innovation: Suppliers as well as procurement professionals should be involved in “the innovation life cycle,” from initial idea all the way to manufacturing and continuous improvement. Innovation is happening with or without the involvement of procurement. The key question is how procurement can build competences to enable the transition.
  • Procurement can also help manage and alleviate supply-chain risk. In many cases, procurement will have a sharper view of that area than any other part the organization. And companies with a formal risk-management program generate a 25% greater return on investment in procurement, Hackett said.

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

Circular thinking in procurement

Circular EconomyI believe that Circular thinking in Procurement will be an integral part of any Responsible Procurement approach in the future.

At the same time it will be a great opportunity with high potential for procurement.

Why? Procurement has to facilitate that supply partnerships emerge from a pure cost orientation, towards a strong focus on joint collaboration and innovations.

Who else?

NEED FOR BUSINESS “UNUSUAL” 
No business can escape the fact, that the global economic conditions, the status and future availability of affordable resources, energy supplies and a growing global population are creating an ever more complex business environment.

The limitations and growing problems of the linear economic model, that has served us well for many decades, demands that business “as usual” is unlikely to be a winning strategy in the future. The winning strategy lies within the circular economy.

CIRCULAR ECONOMY
The Ellen McArthur Foundation defines a circular economy as one, which is defined as an industrial system that is restorative or regenerative by design. It replaces the end of life concept with restoration. It shifts business towards the use of renewable energy, eliminates the use of toxic chemicals, which impair re-use and aims for the elimination of waste through intelligent design of materials, products, systems, technologies and business models. We could call it circular innovation.

COLLABORATION IS KEY
Supply chains are getting more complex every day in terms of the number of involved partners and the quality and degree of interdependency between them. One of the predictions in relation to the integration of circular thinking is, that complexity will increase.

Also we have to remember, that businesses have to operate in a globalized world where the volatility of markets, the speed of technological progress and the pace of change, in the economic and business environments, will continue to rise rapidly. As a result product life cycles are getting shorter and market demands become more and more unpredictable.

Collaboration with all types of partners, and their willingness and ability to share their knowledge, will be crucial and key to a successful development and integration of circular thinking.  

GREAT OPPORTUNITY WITH HIGH POTENTIAL FOR PROCUREMENT
The risk to miss an important trend and the threat of being commoditized, has become the substantial risk of every company. This provides a great opportunity for procurement to take on the lead on circular innovation. Procurement has to facilitate that supply partnerships emerge from a pure cost orientation towards a strong focus on joint collaboration and innovations.

CHALLENGES
In many companies it is typically a challenge to include suppliers in the front end of the innovation process. Procurement teams are often disconnected from the functions they serve and the markets they engage with. They are not fluent in the nuances of the business and hence lack experience and authority. Also in many companies, procurement are used to “innovation” being an internal capability and are hence not used to working together with external partners on delivering innovation.

THE KEY QUESTIONS
How can procurement advance the collaboration with suppliers on circular thinking in an effective way? How can procurement ensure that the suppliers are willing and able to share their knowledge?

For procurement to be successful in these innovation oriented supply partnerships I believe, that it requires new models for relationship building and collaboration. It also requires procurement to integrate across the whole organization.

There is a great opportunity for Procurement to take on the leading position within the company. Transforming the companies from linear economy to circular economy.

400x400_alis-001Would you like to know more about how you can integrate Circular Thinking in Procurement?

Please do contact me on alis@responsibleprocurement.dk or by phone: +45 5189 4429.

Responsible Procurement Excellence has specialized in helping companies around the world develop and integrate an actionable approach to Responsible Procurement. An actionable approach goes beyond compliance, has a positive effect on the reputation, raises efficiency and generates revenue.

Stay connected, sign up for the newsletter.

Circular Economy