The zero waste supply chain

Plastic soup was never on the menu

Global supply chains as we know them now are pipelines full of waste, right from the source up until the trash can in millions of households. It’s everyone’s concern, but no one’s responsibility. Supermarkets sell everything in plastic foils, because consumers (seem to) want it, telling their suppliers to pack them in evey smaller packages. So why did plastic soup ever end up on our plates? With our ongoing concerns, will it ever be possible to design a zero waste supply chain?

Why all this waste?

Today’s production system is built on 19th century infrastructure, fuelled by coal, oil and gas. What we didn’t know back then iswhat we know now: the damage this system causes to our planet and to people. Often people pay tribute to the past Industrial Revolutions as being the source for prosperity. Indeed, if it wasn’t for energy that provides electricity to households, we would still be doing our own dishes, wash our shorts by hand and sit around the table in candlelight. What the happy few of the 19th century – who were starting to travel by train, car, steam ship and later by airplane – didn’t realise was that the simultaneous inventions in medicine and agriculture would result in a demographic surge that was unprecedented in human history. It took two, almost three world wars, until mankind saw the necessity to spread wealth over the planet with the United Nations organisation as the podium for debate, conflict and small successes.

If we look back on the great inventions of the 19th century: electricity, steam and combustion engine were not invented for mass production, let alone mass consumption: choked cities, wasted landscapes and beaches, polluted water and air, dead oceans full of nutritients but without oxygen. The great inventions made transport of people and goods much easier, made companies flourish and spread over the world during the first wave of globalisation. In the smallest corners of the world, multinationals with global brands give consumers all they want. What we got in return in this century is a wasted planet.

What’s all this waste?

Waste is everywhere. The poorest people in the world waste their lives in the deep of the earth to excavate raw materials, piles of raw materials waste landscapes during dust storms, spoiling crops. Crops perish because of poor cooling during transport. Transport load units run half empty back because of the trade imbalance. Ports build ever bigger and deeper access channels because shipping companies strive for economies of scale, while small African ports actually don’t need bigger but more frequent ship calls. Governments spoil tax money to give multinationals tax holidays in return of their investments in shopping malls or factories. On forward in the chain, trucking companies run their diesel engine trucks to cool their loads while queuing up in traffic jams. Freight forwarders are called upon to book airfreight capacity for fashion cloths to meet the Christmas season. Retailers give discounts to prevent their stocks from going obsolete. People throw away their wrappings and let apples and oranges perish in fruit bowls. This is the world we have created over the years.

The end game of the ‘waste supply chain’

The question is how we can get rid of these waste-supply chains? Truth is, we have the odds against us. Only 7.5% of our global energy production is generated by renewable energy [1]. Because the infrastructure has been ‘perfected’ over two centuries, societies have become dependent on it, multinationals cannot afford a complete makeover, because also organisation structures, production systems, even accounting systems are all tuned to consume resources and let them go wasted after their ‘economic’ lifecycle. Indeed economic life cycle. This means the last phase of a product’s life cycle is not even considered. In the go-to-waste phase waste in all its forms is ‘externalised’. If it wasn’t for the externalities, many ‘business cases’ would not turn out to be ‘positive’. Positive in the sense of maintaining the status-quo.

The next painful truth is that we have arrived at the ‘end game’ of our fossil and carbon based civilisation. A reset is needed to prevent things from going worse: the zero waste society. Our global supply chains are built upon the wrong energy source. While searching for the great inventions, we took the energy from the wrong source, not from the sky but from the earth. Space on earth is scarce, fresh air comes up for free, the ocean cleanses everything. Or so it seemed. And so our capitalist system values fixed assets over variable assets, material over immaterial goods. Our accounting principles turned depreciation of these assets at the core to assess economic life cycle of products, resulting in ‘business-case’ thinking, break-even analysis and net present value calculations. Flipping our thoughts would make more sense: net future value. Our present value should lie in how we sustain our planet for the future.

The distributed supply chain

The major obstacle of today’s supply chains is the tendency to have central control. The strongest player in the chain often has the best information available and therefore the strongest power to determine which nodes, modes and players are used in the supply chain. This makes supply chains less adaptable to sudden changes, and more vulnerable for fixed mindsets. Central control also necessitates other players in the chain to search for marginal profit if there is any at all. Lack of trust is the result and eventually leads to suboptimal processes and waste as explained in the above introduction. The power will be in the hands of the platform, but it still requires people and people’s decisions to bring trust to these platforms. Peer-to-peer services are slowly but gradually building momentum. Crowdsourcing are popular among research driven companies, which shows the potential of decentralised knowledge rather than build upon the same pools of experts who often build their technologies upon the same principles. New business models provide mobility services, whether you’d like to move by taxi (e.g. Über), car (e.g. blablacar) or bicycle (e.g. obike) or do business with freight forwarders (e.g. flexport), truckers (e.g. ezyhaul) or search for on-demand warehousing space (flexe, stockspots).

Distributed supply chains are based on the concept that control is transferred away from a central authority. They are not just decentralised, they are distributed. In a distributed network there is no central command and each node is connected to various other nodes [2]. Shipments and data ‘hop’ through the network allowing for the shortest route for any shipment at any given point in time against any given customer requirement. The customer experience determines which node will take part in the distributed network. Supply chains of the future will be similarly configured, consisting of multiple platforms which act as exchange routes for goods, financial transactions and most of all customer experiences. When the customer experience is not there, consumers abort and move on to the next platform, as can be seen by social networks such as Facebook and Twitter, who have to work much harder to keep the conversation going nowadays.

Blockchain / DLT is a revolutionary new way to make transactions transparent yet sharing digital tags that travel along with the goods in its journey from raw materials to finished product, without having to open up accounting systems. Because of the trust and transparency proposition, blockchain / DLT is perceived as the new holy grail among supply chain professionals. But making supply chains transparent does not make them more sustainable by default, let alone will they become zero waste supply chains. For chains to become circular, blockchain may need to evolve move beyond: attach value to the source code, just like in software development. In many supply chains, such as in perishable goods like citrus, fish, meat or poultry, there is an intrinsic motivation to capture the product’s condition at the source and keep track of these goods while travelling through the chain until the final consumption. Data such as controlled temperatures, status updates and change of transport modes are essential to assess whether conditions have been kept up to standard and promises are met. Blockchain has the potential to provide an efficient and unchangeable digital book of records in a chronological order [3]. In the event of a malfunction, individuals and organizations who are involved in the chain can take immediate and effective measures without having to depend on the hampering information provision of others.

If plastic soup is not on the menu, what is?

Consumers in western societies want to take control back in their own hands. They will not wait before large retailers turn to locally produced vegetables, but will grow them in local communities. Consumers will not wait for electricity companies to sell off their coal heated power plants, but unite and build solar farms. They may not even want to wait for national banks to regain trust in their financial institutions, but start exchanging bitcoins among themselves. This all means that the way people perceive wealth as much more than financial wealth, it is well-being. What is a good business case does not make a good business.

The paradox of the zero waste supply chain is that they will have to leverage on the industry platforms of the past: the electricity revolution provided us with an energy grid, transport revolution provided a dense global network of transport arteries, the production revolution evolved into revolutionary robotics technology, taking over heavy duty work from man. Telecommunications had its breakthrough with the internet, initially a global network of computers, now an internet of things. Accounting systems gave businesses a global financial system, whose need for calculation power led to the invention of the computer. Basically all these networks are driven by multinationals who have grown larger than many countries in their own right. What this means for multinationals and their global supply chains full of waste is that they too can sustain value to society if they are able to change over to zero waste supply chains. By configuring blockchains, they not only provide opportunities for higher efficiencies, but also create a footprint of value for consumers all the way back to the origin. Because it makes waste so visible, it gives an incentive to avoid it Authorities also have a role to play: a tax system based on pollution rather than on labour. Both will give rewards to those who make an effort for the good and contribute most to minimize waste. Let Hemingway’s sense making be an encouragement towards zero waste supply chains:

‘No subject is terrible if the story is true, the prose is clean and honest, and if it affirms courage and grace under pressure’.

Not an easy task, but with distributed effort, courage and grace it is not impossible.

Sources used:

[1] BP Statistical Review 2017. In Europe, 11.8% is generated by renewable energy, which is mainly wind and solar energy, but does not include hydropower.

[2] Beyond distributed and decentralized: what is a federated network?, Network cultures, website:

[3] Blockchain. the best way to decentralize supply chains, Harry Goodnight (Sept 6, 2017)

[4] Provenance