The term “circular economy” appeared as an opposite to a linear “take, make, dispose” economic model. Nowadays, the product life cycle becomes shorter and shorter due to the development of technologies and faster distribution cycles.
If you take fast fashion or electronics as an example, you will see how we as customers, are encouraged to consume more, since our purchased products quickly become obsolete. All that makes us face an important environmental problem of product waste.
What is the main principle of a circular economy? The European Commission defines it as following: “Waste and resource use are minimised, and when a product reaches the end of its life, it is used again to create further value”.
Let us take an example of your mobile phone. How long have you owned it for? Maybe after 1 or 2 years of use, you want to get a new model. The phone that is of no use for you any more, may be of interest to someone else. So it will be refurbished and resold; and once it doesn’t function any more, its components will be reused for manufacturing.
As you can see from the figure 1, product life cycle represents a circle of “Make-use-return” for technical materials and “Make-consume-enrich”. (source: Ellen MacArthur Foundation).
Thus, the circular economy helps to keep products in circulation for as long as possible and then to recover their parts and materials at the end of product life.
Nowadays, more and more companies are adapting the circular economy approach, first of all because of a growing number of environmental challenges (waste problem, pollution, shortage of resources) and regulatory constraints. For example, in many countries manufacturers of electronic products are obliged to take care of them at the end of life. In Europe it is regulated by the Waste Electrical and Electronic Equipment (WEEE) directive (2012/19/EU), which obliges manufacturers to collect, recycle, and recover all types of electrical goods.
So organizing the reverse logistics of their goods has become an obligation for consumer electronics manufacturers, which at the same time enables them to generate extra revenue and create a positive brand image in terms of CSR.
Thus, a switch towards circular economy creates new business opportunities for reverse logistics companies. Let us have a look at the example of GEODIS: how it has implemented an asset recovery center in Germany that gives a second life for high tech equipment.
Case study: GEODIS Asset Recovery Centre in Nieder-Olm, Germany
GEODIS, one of the leading logistics providers in Europe, has numerous reverse logistics centers all over the world, including a key site in Nieder-Olm, Germany. In a facility of more than 23 000 sq m (2017 figures) electronic devices are being reworked to give them a new life.
GEODIS fulfill all kinds of activities to prepare unwanted, damaged or end-of-lease goods to be used again, getting the maximum value of them and their components.
Mid-life products sometimes just need to be inspected, cleaned and refurbished; and they are ready to be sold again.
While treating IT equipment, asset verification testing is done by means of special software on operability and configuration. The wipe-out of a previous user’s personal data is guaranteed.
Repair operations are also fulfilled, avoiding products with minor problems to go through recycling/disposal stage and thus extending product life.
Once the item is recovered, repaired and the software installed, remarketing activities are done: an appropriate price is defined for the product, based on data analysis and it is put on sale on the channel of greatest value whether it is e-commerce, broker sales or other channels.
We may not realize the value hidden in the consumer electronics waste. Even if the item is non-repairable, it can contain considerable value in its spare parts and materials.
In GEODIS reverse logistics centres, end-of-life products are dismantled to pieces, so that their spare parts can be reused in manufacturing process or in repair services; and some materials (gold, aluminum, copper etc.) can be sold to specialized markets. In this case we talk about urban mining, the
process of getting elements from waste, used products and buildings. Did you know, for example, that there is enough gold in 40,000 iPads to regenerate 1kg of gold. Apple is selling 50M iPads every year, the equivalent of 1 ton of gold.
The recycling operations and proper disposal are fulfilled in accordance with The Waste Electrical and Electronic Equipment Directive, with a special focus on safety while treating dangerous goods.
Hence, GEODIS plays a real environmental role, as products are recycled through appropriate channels and landfill waste is kept to minimum (less than 1%).
On the example of electronic devices, we saw how the circular economy principles could be implemented in logistics.
Reverse activities are already quite developed for high tech and automotive items, but they can also be applied to other types of products, for instance fast-moving consumer goods (clothes, food, beverages etc.).
Collection, processing mid-life and end-of-life products all require specialized expertise and entrusting these operations to a 3PL provider can be a solution providing both environmental and financial benefits.
For further information, visit GEODIS website: https://www.geodis.com/
Read more on the circular economy: https://www.ellenmacarthurfoundation.org/circular-economy/overview/concept
 Internal GEODIS presentation, Damien DEROUENE, Global Senior Director, Reverse Logistics, GEODIS, Supply Chain Optimization, USA
Special thanks to Cécile BRAY, Senior Expert, Climate and Carbon Accounting, GEODIS, for information provided and for her advice