Challenges in resource recovery value chains Akkerman.pdfResource Recovery from Sanitation for Food...

February 20, 2020

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Challenges in resource recovery value chains

Renzo Akkerman

Operations Research and Logistics group, Wageningen University ([email protected])

Resource Recovery from Sanitation for Food Security and Soil Health, E-Conference, February 19-21, 2020, Day 2: Setting up a Value Chain

Operations Research and Logistics group

Academic discipline focused on data science / advanced analytical approaches to help make better decisions

Logistics: the processes involved in matching supply and demand of products and services

Logistics is all about making sure we have the right products and services at the right place, in at the right time, in the right quantity, and at the right quality

Challenges in resource recovery value chains

My perspective

February 20, 2020

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Resource recovery value chains – Background

From a linear economy... ...to a circular economy:

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THE VALUE HILL IN A LINEAR ECONOMY

From a business perspective the circular economy makes sense: reuse of mate-rials can save costs and service models can deliver new business propositions and revenues. Circular businesses allow products to stay at their highest level of value for as along as possible (Ellen MacArthur Foundation, 2015; Bocken et al., 2016; Kraaijenhagen et al., 2016).

All over the world we have developed sophisticated ways to design, produce, distribute and sell goods. By extracting UHVRXUFHV�IURP�WKH�HDUWK��UHȴQLQJ�WKHP�for manufacturing, assembling them into products and distributing them to consumers, value is added at every step. After the consumer uses the prod-uct however, its value goes downhill.

Business models are generally sales oriented and therefore revenues come mainly from selling as many products as possible. This creates an incentive for producers to design products that have a relatively short lifespan in order to continuously sell new products. The old SURGXFWV�HQG�XS�LQ�ODQGȴOOV�RU�DUH�LQFLQ-erated, quickly destroying the value that was created in the manufacturing pro-cess. This complete lifecycle is illustrated below in the Value Hill. Value is added as the product is developed (the left-side uphill slope) and once the product reaches the top of the hill, the product’s value is at its maximum and after a rela-tively short lifecycle the product’s value is destroyed quickly and value rapidly goes downhill.

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THE VALUE HILL IN A CIRCULAR ECONOMY

The idea of a circular economy is inspired by eco-systems in which the waste of one system is food for another (Ellen MacArthur Foundation, 2013). Circular businesses aim to retain a product’s added value for as long as possible, if not forever. In the context of the Value Hill, value is added while the product moves “uphill” and circular strategies keep the product at its highest value (top of the hill) for as long as possible. Products are designed to be long lasting and are suit-able for maintenance and repair, thus slowing resource loops (Bocken et al., 2016) and prolonging the use phase of the product. When a product is ready to start it’s downhill journey, it is done as slowly as possible so that its useful resources can still be of service to other

Keep products for as long as possible at their highest value on the Value Hill

systems as illustrated in the Value Hill below. In summary, the path that prod-ucts take while travelling up and down the Value Hill is divided in three phases. The pre-use phase (mining, production, distribution) is displayed on the left as value is added in every step and the product moves uphill. The second phase is the in-use phase and is depicted at the top of the hill. Here the value of a product is at its highest. And the third phase is the post-use phase, where the product loses value as it moves downhill. However, by feeding the complete product or its com-ponents back into a previous phase (e.g. by providing second hand products they ȵRZ� GLUHFWO\� EDFN� LQWR� WKH� XVH� SKDVH��YDOXH� LV� UHWDLQHG�� ΖQ� HYHU\�SKDVH�GLHU-ent business activities take place.

5THE VALUE HILL: A CIRCULAR BUSINESS STRATEGY TOOL

(Achterberg et al., 2016)

Resource recovery value chains – Experiences

Main project goal:Accelerate the transition to a circular economy by leveraging knowledge on logistics and CE in collaboration between science, industry, and (local) government

Funded by:

February 20, 2020

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LOCATIEANALYSE VERGISTINGSFABRIEK

CentraaL deCentraaL


produCt serviCe

pre-use post-useuse

organisation

Meerlanden1. The level of centralization


Case: Organic waste in urban environments

Collection of biomass from households and companies to make biogas, heat, CO2, and water in the Metropolitan Region of Amsterdam

Challenge: Where to locate the biogas installation?

Approach: Two-stage multi-objective GIS-based optimization model for identification and selection of location.

Case: Orange peels

Collection of orange peels from hotels, cafes, and restaurants in urban environments. Biorefining of these orange peels to produce a mix of products (for cosmetics to food and feed)

Challenge: How to efficiently organize a collection network?

Approach: Scenario analysis w/ several transport methods, collection systems, and collection frequencies.


2. The level of collaboration


fromexten

dingfirm

activitiesinto

theen

tireprodu

ctlife

cyclean

dcon

sideringthe

reallocationof

firmactivities

toextern

alpartn

ers.Figu

re1illu

stratesthismodel.

Onthehorizon

talaxis,

wedistin

guish

between

three

stagesof

valuecrea-

tionthat

offervariou

soption

sto

capture

value.

Productioninvolves

thetradition

alvalu

ecreation

activitiesof

aman

ufactu

ring

firm:new

product

developmen

t,man

ufactu

ring,an

ddistribu

tion.In

theconsum

ptionstage,valu

e-creatingactivities

inclu

deall

servicesthat

areassociated

with

theprodu

ctan

d/ortheuser.

Even

tu-

ally,circulation

involves

allvalu

e-creatingactivities

fromprodu

ctretu

rnsto

the

potential

recoveryof

theprodu

cts’maxim

um

value.

Onthevertical

axis,wedistin

guish

between

three

typesof

collaborations

that

canbe

used

toreallocate

activitiesto

external

partners

inincreasin

glyopen

FIGURE1.

TheIntegrated

Framew

ork:Open

BusinessModels

inExtended

ProductLifeCycles

Maker Econom

y

Openness of Business Models

Forward-value chain

Closed-loop value chain

Circular Economy

PlatformsAlliancesFirms

Towards the …

Sharing Economy

FC

gF

Cg s

FC

g sr

Cg

FS C

Cg s

FS C

Cg s

FS C

r

F

S CC

g

F

Cg s

S C

F

Cg s

S C

r

Production*C

irculationC

onsumption

Transaction-orientedm

anufacturer Servitizing m

anufacturer Rebound m

anufacturer

Co-creating m

anufacturer C

o-creating service provider Recycling alliance

Maker-platform

operator Sharing-platform

operator C

irculation-platform operator

Integratio

n alo

ng th

e Pro

du

ct Life-C

ycle

12

3

4 78

9

56

Notes:*Production

coversallactivities

ofaconventionalforw

ardvalue

chain,includingproduct/

servicedevelopm

ent,manufacturing,and

distribution.Indication

ofStakeholders:F:focalfirm;C

:consumers;S:suppliers,contributors.

Output:g:goods,s:value-add

services,r:re-acquiredproducts.

Activities:Firmscan

integrateadditionalactivities

downthe

closed-loopvalue

chain(g,s,r).

Solidlinesindicate

thecore

businessactivityofa

cell/businessmodel,dashed

linesindicatepotential

activitiesofothercells/business

modelsthatcan

beintegrated.

Open

BusinessModels

andClosed-Loop

ValueChains

CALIFO

RNIA

MANAGEM

ENTREVIEW

VOL.58,N

O.3

SPRING

2016CMR.BERKELEY.ED

U91

Case: Organic waste in rural areas

VICOE (vital circular organic economy) focuses on organic waste streams in a municipality with many horticultural companies. Different uses possible (e.g. vermicomposting) after collecting the waste streams

Challenge: Some degree of centralization and collaboration required among growers to achieve feasible processing options

Approach: Technology assessment, logistics scenario analysis

February 20, 2020

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§ Achterberg, E., Hinfelaar, J., Bocken, N. (2016), Master circular business with the value hill, Circle Economy & Sustainable Finance Lab

§ Akkerman, R., Beames, A., Faber, C., Heideveld, A., van der Have, C., Dijkstra, A. (2019). Logistiek in een Circulaire Economie [Logistics in a Circular Economy]. Research Report (in Dutch). Het GroeneBrein.

§ Beames, A., Claassen, F., Akkerman, R. (2020), Logistics in the circular economy: Challenges and opportunities. In: Strategic and Managerial Decision Making for Sustainable Management of Industrial Networks (Series: Greening of Industry Network Studies), Springer, to be published.

References & Acknowledgements

Funded by:

Acknowledgements

References

Challenges in resource recovery value chains Akkerman.pdfResource Recovery from Sanitation for Food...

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