Logistics in the Circular Economy: matching supply and demand for waste and byproducts

Basically, we are often addressing the issue from three perspectives: pre-use, use, and post-use. These are all very important to help us reach the ultimate goal behind a circular economy: reduced overall resource consumption. ‘But what is often missing, is an integral perspective, which connects these three perspectives.’ says Renzo Akkerman, researcher in the Operations Research and Logistics (ORL) group. This is where logistics and supply chain management play an important role. Many companies starting a transition to a more circular business also experience this: ‘It is one thing to have a technology to transform a waste stream into a useful product, but another thing to design and operate the supply chain required to create a feasible business out of that.’

The ORL-group has been actively working on this topic. Their supply chain perspective on circular economy involves not only the strategic design of supply chains with emphasis on location decisions and the scale of networks, but also the overall matching of supply and demand within these networks, and the detailed planning and control of product flows in these networks.

Orange peels

A key initiative in the ORL-group is their leading role in the LogiCE project, a project funded by the Dutch science foundation and focused on building a community around the role of logistics and supply chain management in the transition to a circular economy. During the course of the project, this community grew to more than 20 contributing organizations, the majority of which were companies that were in one way or another involved in increasing the circularity in their business.

Akkerman: ‘Partners included Het Groene Brein, The Amsterdam University of Applied Sciences and the Port of Amsterdam, as well as a large number of start-ups, including a company that focuses on local composting solutions for horticultural waste streams and a company that converts orange peels from hotels and restaurants into ingredients for cosmetics and food products, as well as animal feed. With these companies, case studies and pilots were performed, with a focus on the quantitative modelling and economic and environmental assessment of new circular supply chains.’

Complex puzzle

Designing an efficient circular value chain is a complex puzzle, in which a series of factors must be taken into account, says Renzo Akkerman. One of the recurring themes is the design of logistics networks to collect waste streams and byproducts for valorization of these materials. The collection of the waste streams, often small quantities in many different places, must be done in a way that is efficient and affordable. Unless you can turn it into an expensive or high-end product, it will simply be way too expensive otherwise. And this becomes even more challenging with perishable residual flows.

Akkerman: ‘Take the initiative to collect waste in Amsterdam with the help of autonomous boats that collect the organic waste that people have brought to collection points along the canals. How many of those stations do you need? How far are people willing to walk with their waste? How often do the boats have to sail past the stations? What is the optimal route? Based on quantitative modelling of the supply chains, the ORL group contributes to the optimal design and operation of these circular business models.’

Finding the right balance

Many new initiatives in the circular economy start on a small-scale local level, and supply chain modelling is then essential in assessing feasibility of different network organizations. But there are also larger-scale projects. For instance, ORL’s quantitative models combined geographic information systems and network optimization models to help identify the best locations for large-scale biogas production based on organic waste collected in the Amsterdam metropolitan region. A similar study was performed for the case of waste collection and processing in the state of Maharashtra in India.

Renzo Akkerman: ‘In all these projects, finding the right balance between different cost factors and the many other considerations and objectives that come up is a challenging task in which our group’s modelling effort provides much needed support for companies and other stakeholders.’