Reverse logistics is one of the most important enablers in the transition to a circular economy so I noted with interest that logistics giant DHL is now actively exploring new ways it can capitialise on this.
Deutsche Post DHL has become the latest member to sign up to the Circular Economy 100 as the Ellen MacArthur Foundation nears its target membership for the business platform. With its global network reach, DHL is undoubtedly sensing an opportunity here to develop new models that can push forward more circular flows of goods and materials.
The question is, will such an influential delivery firm look to potentially disrupt into other markets? Increasing demand for remanufacture could necessitate a need for volume-based takeback, whereby the focus is on preserving value of component parts. Courier companies have a real advantage here as retaining product quality (during transit) is a key performance indicator for them.
So, could we start seeing traditional logistics firms compete with waste companies for materials? Global supply chains have always been a circular bottleneck in terms of material leakage out of the system, but DHL’s international network grids could offer a strategic advantage here. It has the ability to backhaul from consumer to remanufacturer, even if the two geographically are poles apart.
The waste industry tends to operate on far smaller networks, mostly on a regional or local basis. However, there are some touchpoints where it could feasibly enter into supply for remanufacture – such as in the field of ICT equipment and bulkier items.
It also has end-of-life materials collection and consolidation down to a fine art. But it would need to push the quality agenda to dizzy heights in order to offer the level of value retention that a remanufacturing supply cycle demands.
Remanufacturing and traditional waste handling are like chalk and cheese. The first seeks to add immediate value to material inputs, the latter tends to strip out this value by downcycling them. Waste firms could seek to vertically integrate, however, and start becoming suppliers as well as reprocessors. Signs of enterprise are emerging on that front.
Reverse logistics I feel has the potential to glue the circular economy together. Working out how to build smarter models for takeback and supply will take time, but I see a real opportunity here for DHL. It has the ‘just in time’ strategies that can make it competitive.
Perhaps the route ahead is a gelling of expertise from different industries – might we soon see the first circular collaboration between a delivery firm and waste-to-resource provider?