Bringing the Circular Economy to Reality | Hosted by Lucy Ashton & Carol Mitchell-Lin

Hello, hello, and welcome to Industry 4.0 Club. I want to wish everyone a good local time. And before we start, just want to let you know a little bit about us and today's interesting conversation. Main purpose of Industry 4.0 Club is really to accelerate the evolution of Industry 4.0 by having engaging conversations or discussions like today's among innovators and leaders and manufacturing professionals. This is Women in Manufacturing, our Tuesday conversation, and it focuses on tech and manufacturing. In this space, we touch on perspectives of women in the industry and definitely want to welcome you to this ongoing series on sustainability where we introduce you to women with unique perspectives on sustainability in manufacturing and Industry 4.0. And today's conversation is going to be bringing the circular economy to reality. My name is Karen Rivera, and I'm one of the founders and co-hosts of Industry 4.0 Club. And a little bit about me is I'm a tech translator. I'm passionate about bringing business and technology, bringing it together and ensuring that there's seamless communication amongst diverse teams. I'm a seasoned Salesforce and marketing account engagement strategist, and I just enjoy unlocking the platform's potential aligning the requisites with the proficiencies for an industrial boiler manufacturer called Cleaver-Brooks. And when I'm not exploring all of these endless possibilities and tinkering with technology, I help support, promote, and inspire women in manufacturing as the state chair for the Texas chapter. My partner in crime today is— and co-host is Lucy Ashton. So I'm going to let her introduce herself.

Thanks, Karen. It's great to join you and Deborah today. My name's Lucy Ashton, so I'm part of the club. I'm also the director of MX.O Media, and we bring regional manufacturing events to the Southeast and the Midwest where manufacturers meet to learn from other manufacturers how to advance digital transformation. So I like finding case studies, finding new speakers, and speaking with people in the industry, and look forward to this session today.

Fantastic. Welcome, Lucy. Today I'm excited because we get to introduce Deborah Dahl. She's our special guest today, and she's Vice President of Global Supply Chain Sustainability at Genpact and founder of the Circular Supply Chain Network, which I'm going to ask plenty of questions on that. Hi, Deborah. Thanks so much for taking time out of your busy schedule to be with us today.

Thank you so much for having me. I'm looking forward to it. It's great. It's great to meet you.

So thanks for joining us today. It would be great if you can start by telling us a little bit about yourself, how you came to be where you are in your career, and just introduce yourself a bit more.

Absolutely. I found supply chain at university, actually, which I have— I assume I'm among the first to have found this path. I started out as a marketing major, actually, but as I took my required operations management class, I really fell in love with the whole concept of resource constraints and exploiting a system and figuring out how to solve difficult problems. And I thought, gosh, if this is a career, it sounds like this might be a good path for me. I've had the chance to explore many different industries through supply chain, so I've been at Microsoft, General Electric, the Bill and Melinda Gates Foundation, most recently at a chief supply chain officer community out of London called Zero 100. And now I'm at Genpact, which is about a 120,000-person consulting organization who helps organizations make sense of the digital world. And I also, as you mentioned, am the founder of a nonprofit called the Circular Supply Chain Network, which really came together early, early in COVID during one of those times when everybody kind of asks you the same question multiple times in a really condensed period of, hey, you should start something for the supply chain world to come together to talk about the impacts and opportunities of the circular economy. And I said no several times. And it was my friend Sneha who finally pushed me into it in the end. She said, we have to start something. And I said, I really gosh, who's even going to show up to these conversations? And she said, even if it's just you and me, it'll be worth it. And so that's what got me to get this organization started to begin with. And I know we'll unpack that a little bit, but I started supply chain really truly my undergrad. I earned a master's in this. We talked a little bit before the show from the University of Liverpool. I went online, but still went to walk at graduation in person and studied the digital supply chain to try to figure out is moving bits and bytes, like when you get a Netflix movie or Kindle book. Does that count as a supply chain or not? Which was a lot of fun. And I'm still pursuing an academic career, albeit very, very slowly. I'm working slowly towards my DBA right now from Heriot-Watt University, uh, to explore the relationship between the economy and supply chain. There's a lot of research that says, gosh, here's the way that the economy really messes with our supply chains. But I actually think that there's a relationship the other way around, that there's regional capabilities that we have in supply chain that end up unlocking consumer spending and enabling economic growth, particularly interested in resource-constrained environments. So it's going to be a couple years till that research is done, but I'm hoping that that will show us something interesting. So I really love supply chain. I've had the chance, like I said, to explore lots of different industries, and I'm just delighted as I learn more about how complex and how far-reaching our field is and have a chance to speak with supply chain professionals all over the world.

That—

wow.

First, thank you, Sneha, for encouraging you to start that nonprofit. I got to send her a personal thank you for that. Quick— I quickly digress. What was that feeling like when you realized that supply chain was When you were doing your studies?

You know, it's interesting. It was the very first day of class, and usually, you know, they give you your syllabus and you kind of leave. And instead, he like left the stack of syllabus— syllabi at the front of the room and picked up a whiteboard marker, and he said, okay, we're planning Thanksgiving dinner. What do you want to have? And we all listed everything we could possibly think of, including like cakes and lobsters and whatever. And so we had all these different things we wanted to make. And then he said, cool, you've got one burner and you've got one oven. Let's plan how we make this meal. And it was a brilliant way to explain to us how to do demand planning, supply planning, resource constraints, project management, a workback schedule, resource allocation. all within like a 25-minute exercise. And after class, I went up and said, is this actually a career? And he said, it sure is. And that, that hooked me. I mean, I already make spreadsheets to plan Thanksgiving dinner, and I delight in that. And so the idea that you could actually get paid to do something you do naturally is really wonderful. And I find people are either supply chain people or you're not a supply chain person.

Love it, love it. Wow. Next question for you, and, um, and I have to apologize because when I first started delving into circular economy and more sustainability, the re's would make my eyes roll back in my head because they were just said so many times. It's like, here we go again. But the more that I spoke to more people on the sustainability And if the other re's, it's like the interest sparked back up, like, oh wow, I want to learn more. So in your research that we discovered, there's more re's in the world besides reuse, recycle, and reduce. Those are the ones that it's like, oh, here we go. Um, there's also repair, rental, recovery, regenerate. In your experience, which one of those means the most to you and why?

That's a really good question. One day I'd love to write a book called Welcome to the Re-Universe, where we delve into all of this. And one of the challenges that we have in this space, of course, is that we're asking supply chains to do everything they're doing now, but do it differently. So we could really apply this to the entire spectrum of the SCORE functions. So we source and resource, we plan and we replan, we move and we remove, we make and we remake. So everything that we do, we're going to do again and again. And allow these items to remain in our value chains forever. So it's tough to choose just one. So I'm going to bend the question and give an honorary call out to 3. One, the most important truly is for us to repair. If we imagine a supply chain that sources a finished good instead of a raw material from the planet, we can actually go faster. and be cheaper, in theory, than if we start from the planet every single time. So what I mean by that is, in today's land, when we make a product, of course, we start from a mine or an oil field, forest, and then that goes through many, many, many different factories. 5 or 6 if you're a t-shirt, 20 if you're a car. So many, many, many different areas, factories, and then that becomes an item. A circular ecosystem says, look, source the item that you actually want to end up with, do as little to it as you can, get somebody else to pay you for it, and that's the economic part of circular economics. And supply chains need to be in charge of that. So if we can source more finished goods, finished components, and then repair that and do that in the smartest way that we can, our margins get better, our lead times get better, we are more resilient because we can do that closer to point of use, so we're moving around less often, So repair really is the future, I think. And we've been doing this in industry for a long time, and we're starting to see right-to-repair laws come into the consumer world where I really think consumers want the chance to repair their items. And we've all had a favorite pair of jeans that we've really perfectly gotten broken in, and then the zipper breaks and it becomes really expensive somehow to fix it. I also, though, want to give 2 callouts. One, To this idea of recovery or harvesting or mining out of areas that isn't the planet. So we might have bought laundry detergent and the front of the bottle says bottle made from ocean plastics, or you have leggings or something from ocean plastics. That's one type of recovery. We're recovering value that some people would call trash or pollution, but it's value if we put back into our value chains. And I think we'll be recovering value from our cities and from other dense areas in the future instead of from the planet. One, because we're just running out of what's inside the planet, but two, because we have just so much material to work with to be able to bring into our value chains. And the other one is regenerate. This one is a really tough one for some people to get their heads around, but essentially what this says is, look, it's almost, it's kind of too late to be sustainable, Sustain is like, let's continue the path that we are on today. How do we continue doing what we're doing today into the future? But we have pushed the planet beyond where we can do that. We already need more than one planet's worth of material every year. And so if we continue that, we're actually just kind of adding to the problem. So regeneration means how do we restore ecosystems? How do we leave our, the area around our operations better than how we found it? And in some cases, that might look like cleaning water before we return it to the watershed. It might look like investing in the communities where we operate. So it can look like a number of different items, but it's a tougher one to wrap our heads around to say, can we in supply chain truly leave this area better? And we certainly can. And there's examples of this from different supply chains.

Fantastic.

That's—

I've taken some notes because that's a really, really clear way of describing a lot of terms that you hear all the time. But yeah, thank you. So I've got a small question coming up now. How do we turn the big sustainability goals into action? And is there consensus around those goals? And does that even matter?

Yeah, it's a really good question and certainly on the minds of the sustainability community now. I'm happy to say that the conversation has dramatically shifted in the last year, 18 months to how do we be compliant with disclosures or reporting to now saying, well, we really need to get on with it and take action. I spend a lot of my day job time sitting together with customers and really investigating their processes to say, look, if this is a big sustainability goal that you have, maybe to reduce carbon emissions, or to source more responsibly, what exactly are you asking people to change? In what exact process? In which exact decision needs to be made differently to have a different outcome? So we get down into the details to say, who should be making this decision at which cadence? And sometimes it's like a monthly S&OP type of a discussion. Sometimes it's longer term, a 2 or 3-year relationship we might make with a new supplier ecosystem. or a power purchase agreement that some supply chains are doing to avail renewable energy rates up their supply chain. Sometimes it's small decisions that say you have a couple of routing options. And it's interesting, there's research out of MIT that says the shortest path isn't always the most sustainable from a logistics perspective, depending on what's inside the truck. And so it might make more sense to drive a little bit further, but to drop off the heaviest load first. Relaxing delivery windows actually makes a big difference in the amount of emissions that we need— we put out in the world. So there's all these different decisions that we make, which, to our credit in the supply chain land, we really don't know. We've not really been engaged in this discussion. And so often we don't really know that we are making an impact out in the world. So there's that bridge to cross as well. But sometimes it comes down to new data. That needs to become available for us. And sometimes it comes down to teaching a machine a new set of decision rules, business rules to make, to use to make decisions. And sometimes it's much larger, more strategic decisions to make. But really, it comes down to like any other goal. If we were to say, we need to service this new market, which we've never been into before, or we need to be able to react to changes demand 5 times faster. Supply chain, go fix it. We've done big, bold challenges before. I think what's different here is very few supply chains are phrasing these challenges in a clear way. So I think we should be asking our supply chains, imagine that you can no longer source raw materials, you can only start from a finished good. Go, just figure out if that's possible to do. And we can solve for anything. So I think it's possible. Or imagine a supply chain that is actually zero emissions. Go design it, then come back and say how prohibitively expensive it is. But it's possible to do. I'm just not sure we've ever been given the right set of constraints to solve for this type of a problem.

Fascinating. And I like how you use the examples from everything from big picture to everyday decisions. That everyone, whether you're in the supply chain or not, what actions can be taken to take one step closer to that sustainability. So I love that part. Another question for you, going back to the supply chain network. Can you give us a rundown of what the mandate is? And here's your shot to plug any of the upcoming events that you have coming.

Fantastic. How can people get involved? Yeah, so look, our homepage is circularsupplychain.network, and I encourage you to check it out. It's just, it's better on a desktop, frankly, but it does work mobile-wise, and it's a scrolling experience to take you through what is the circular economy, why does supply chain matter, how is a circular supply chain different from a linear one. So very quickly you can scroll through that. and kind of glean the main points. On that site also, we'll take you to what we call the Members Circle. And that has more resources, recordings from past events, and indications of upcoming events. We are a few years old now, about 4-ish years old. And we've tried on lots of different ways of engaging the community. We are free to join. We always will be. The mandate is really to create a space for we call ourselves circular supply chain nerds, to come together. So if you're curious, if you have ideas, if you have controversial ideas, if you have questions, if you want to engage others like you, we're your people. We have reignited a monthly discussion group. So it's the last Thursday of every month at 10 AM Eastern. We're just getting our next event launched. That should be up online tomorrow. So we pick a different topic every time we come together for an hour. These are real discussion groups. So we have about 8 minutes that we do as one group, and then we go into reasonably sized breakout groups. And we're getting some really positive feedback from folks who just don't have another free forum to find each other. So we're— Really individuals for individual supply chain professionals. Association for Supply Chain Management is also very interested in the circular economy. So as we get both these organizations interested in essentially circular supply chains, we may not need to exist forever. So we'll see how this space progresses, but we're having a great time with each other for now.

Well, that's the main thing. Well, not the main thing, but it's an important thing. And you collaborated with the Ellen MacArthur Foundation on a white paper, Building a Circular Supply Chain. So what did you— what were the main learnings from putting that paper together and how was it received? What lessons were taken away?

Yeah, really, really interesting. And again, I've really got to take my hat off to the Foundation for taking interest in supply chain. For those of us, I think, in supply chain, when we wrap our head around what a circular economy means, you've got to have supply chain and operations as a critical component to transitioning to circular ecosystems. So very, very happy that they are investing in this space. As we pulled these concepts, working between our 2 organizations together, we talked to lots of different supply chain professionals who are in various stages of their journey. We discovered, unsurprisingly, there's not really one accepted definition of a circular supply chain. Most of the time out in the wild, you see the word circular supply chain used to mean a recycling loop. So we'll say, oh, it's a circular supply chain because they're reusing lithium in batteries for EVs, which is a component of this, but we tend to have lower margins when we recycle rather than reuse. So it's really the goal to reuse first, do as little as you can to a product and get it back into a value chain, back to a user as quickly as we can. We also tend to overlook this, localized, regionalized, distributed part of operations, that it's always better to put our operations closer to the point of use. And you hear always better. Better for what, of course, is the question. And we think about resilience and we think about being able to keep items in use. Then we don't want repair facilities to be very far away from the user because the goal really is to get an item back into use as quickly as possible. We also learned that there's lots of challenges to doing this. Of course, some of those challenges the supply chain owns, and some of those challenges we need to work across the enterprise. Those are outlined. There are 9 of them outlined in the paper as well. If you just Google— it's on our website, but you could just Google building a circular supply chain from the Ellen MacArthur Foundation— you should be taken to a landing page. They made a beautiful, just few-minute video that you can look at as a crash course. And then there's a fact sheet, and that's a 3-page overview if you just want to glean the high level. They've made some really nice graphics to explain how a circular supply chain is different than a linear one. And then there is also a white paper that you can flip through and read. There's case studies, there's context around megatrends, and like I mentioned, there's a deeper dive into those 9 different challenges to expect. So as a supply chain leader, as you go into these conversations, that you can go in kind of looking around corners and expect some of the challenges that you'll likely get from your colleagues.

Fascinating. That is a geek-out moment if I ever heard one. Now, you mentioned something which is a part, a big part of sustainability is every supply chain becomes a source of raw materials for another supply chain. And one of the first words that came into my mind was resiliency. How important is this to manage those ebbs and flows between major disruptions? Because I can imagine only several years back that apple cart was highly upset.

Yes. So the interesting thing, if we imagine circular flows, is that your customer becomes your supplier and your supplier can become your customer. And if you look sideways, so there's upstream and downstream, and I think we have more side streams in the future than we do today. So your competitors might actually become sources of material for you as well. So if we think about this idea of exchanging material among our operations, materials or components or even finished goods, then instead of from the planet, right? So the idea is how do we make better use of all this material that we already have in our economies, then we need to shift the way that we communicate about what's in our supply chains. This is really sensitive, of course, because we don't really want to share what's in our supply chains because that's sort of our IP. So this becomes a tough one to do. But if we can find clever ways to put out what I call a supply signal out into the world to say, this is what I have up for grabs, And then to have a way for other supply chain to say, look, I would actually love that. It flips it on its head a little bit instead of saying, here's what I need. Can somebody come and tell me if they can fulfill that? And we're seeing this across different circular material marketplaces. In that space, I predict will grow pretty considerably, especially when we start thinking about some of the movement from the EU, particularly one directive they have in place called CBAM, which is the Carbon Border Adjustment Mechanism, which basically says for high-carbon materials coming into the EU, eventually there will be a tax or a tariff or a levy on those materials. And I predict they'll be quite hefty in order to change behavior, and the behavior could go one of two ways. I think one could be companies working with their suppliers to have that steel, for example, created in a way that's lower emissions and greener. Or it says, look, don't cross a border, keep your materials within the EU, circulate it within the EU, and then you don't ever have to pay that. And so that should inspire a material— a circular materials marketplace inside the European Union. And I imagine regionally that that can happen around the world so that our materials travel less far, thus creating less disruptions for our supply chains. And in theory, more material security because we have lots of different options for how we can get those materials. And again, in theory, we'll have a better idea of where those materials have been because we'll have shortened our supply chain instead of going from the planet through 10 or 15 tiers. Now we repair it and there's fewer tiers, so we can actually have better eyes on all of the activities that's happening in our supply chains. And I keep saying in theory here because I'm well aware that there's lots of market failures that's preventing these circular operations from happening like they might be able to do. And that's because we're swimming upstream against 100 years of linear economy development, and our operations forefathers did their darndest to make unbreakable processes in the lands before us. And so now we're trying to break these processes that were carefully put in place. But we're in a different world now. You know, we— the linear economy, I think, has served us actually very well. We have healthier economies and healthier populations around the world. We've got better middle classes than we've ever had. People are living longer than they ever have. It's actually a good news story. If the news is bumming you out, I recommend picking up a book called Factfulness, which will help you feel I hope a little bit better about the high-level state of the world.

I would definitely check that out. Sounds like a good read at the moment. So we've talked about sustainability, obviously, and this is actually the last episode in a 3-month series. And touching on what you've just said, that we've talked a lot about theory, or you've talked a lot about it, and that we're in a good place, we're in a different world. So the last big question is, what do we do now? How do we turn conversation into action?

Absolutely. Look, part of this is to get curious. So assuming everybody watching is in the supply chain, I think it's important for us all to recognize that we have an impact in the world. You know, we get a lot of messaging to us as consumers. It's important for us to be responsible, and that's true. Keep recycling and reusing and saying no to plastic and try being vegan once a week and all that kind of stuff. But you as a supply chain professional, you have a massive impact out in the world, far greater impact than you do as a consumer. The decisions that you make throughout the day impact many, many other nodes throughout the supply chain, the network that you are a part of. But we on the whole have not been engaged in this conversation. And the example that I give at the beginning of a Carbon Flows keynote that I give right now is I walk up with a bottle of alcohol, breaking lots of conference rules, I'm sure. It's usually a bottle of wine. And I offer it to whoever can tell me the CO2 equivalent impact of creating that bottle of wine. And it's unbelievable how wrong we all are about the impact of that bottle of wine to the tune of 100 or 1,000 times wrong. 1.5 kilos, by the way. But if I ask us to do that for COGS or to imagine a lead time, we can do it. We have an intuition around what we imagine for COGS or imagine a supply chain to look like physically, but we've never been given the chance to develop this intuition around carbon. or other types of impacts that we have in the world. So part of this is to get a little bit curious. It will be more difficult than you might imagine that it should be to go out and learn about this simply because we just haven't been very engaged. But there are lots and lots and lots of us, and this topic has become very popular among the supply chain community. So there should be others like you out there to go and get curious around all of these topics together with, if that's proper grammar in any way.

Interesting, especially because I am not in the supply chain world at all. But if I had to pick one area in manufacturing that it's like a moth to a flame, it's supply chain. And I remember a social media post of like, what's your favorite, you know, podcast or blog? And I said, ironically enough, it's Supply Chain Brain. I listen to it and it's like, so that's how that works. Get up. Really? And I'm just hooked on an area that I have zero interaction with. So when you're saying be curious, sounds like, yep, that's me.

That's me.

So we're approaching the end, but I wanted— before we close, I definitely want to get your final thoughts and takeaways about the conversation. And actually, Lucy kind of stole the question I had in my head is like, what do we do now? How do we turn this into action? But last thoughts.

Sure. Look, sometimes sustainability or this idea of the circular economy can be somehow polarizing for teams that I'm not entirely sure what happened between sending kids home with plants at Arbor Day to now being upset about the environment. I'm not entirely sure how that worked out. However, if we say, look, sustainability, circularity, these ways of looking at the world, imagine them as an innovation tool. as a lens through which to see your supply chain processes. I find we're— I wouldn't say running out, but we've been through a lot of our tools to try to make our supply chains more resilient, have better margins, be faster, quicker, more agile, more resilient, more responsible, perfect in every way. And at some point, there's fatigue on how can we possibly improve our supply chains We can do huge transformations. Many of those struggle without proper change management and huge cultural transformations as well. So those are big, long-term work, or you've got to do something dramatic like outsource a big portion of your supply chain, which we do, and it works out. But then for kind of the every person, functional leaders, or those working in a supply chain who don't get to inspire a huge transformation. How do we sit down with our processes? We can diligently do process mapping and figure out kind of our, our today state, which is often very, very difficult to do. And then how do we look at that in a different way? And I think if we imagine some of these scenarios almost like a whack-a-doodle scenario, you know, like the ones I mentioned earlier, what if we truly only could source finished goods? Or we have to source from existing supply chains. We can source nothing from the planet anymore. What would that do to our supply chain? Or imagine we really truly couldn't emit a single little carbon emission out of anywhere along our supply chain. What would that mean for us? How might that shift our networks? And even if you do that as a one-day thought experiment, offsite team building, and you come away with one new idea that could help your supply chain work on your existing KPI targets, then everybody is smarter coming out of it. You've learned something brand new coming out of it. You came up with one really good idea, and you had a Team Banya experience over a new way to do problem solving. So even if it feels like a huge mountain to climb, try imagining these as innovation tool sets in order to see your supply chain processes in a brand new way. And then go and call your sustainability team. They're probably really small. They've probably been looking for you. The problem with supply chain is it's so big. So for all the folks I've talked to in sustainability, they just don't know who to call in the supply chain because there's just so many options. So go give them a call. I'm sure they're going to be happy to hear from you and they're going to have lots of questions for you.

And I like the example that you used of taking a scenario We'll say to the extreme, you can emit not one more emission. So if you can come up with one idea that can address that, that's an extreme scenario, then the other challenges that you face become that much easier because you've already handled the hard one.

Absolutely.

That would cause momentum. It's like, oh, we got that one, then we could definitely tackle this. It's one.

Totally. Or go and ask yourself, how sustainable can we afford to be? Go find shifts that you can make that actually don't cost you more money. The leaders in this space, albeit, you know, the actual leaders, they've had some time to refine their processes. They tell me that sustainability initiatives don't always cost more. 2/3 of the time, they actually are margin neutral or margin positive. So it doesn't have to cost more to do the right thing. We just need to understand the tools that we have and to go and find those opportunities.

Excellent point. Ms. Lucy, any closing thoughts or takeaways?

I've written down a lot.

Thank you. That was such—

like Marion said, for someone who I didn't know much about supply chain or sustainability, and you just described all the terms in, they, you know, very clearly. It was great. Um, I, I mean, I was just really impressed by everything that you said, and I will definitely be reading the back from this book. Um, I'll also be recommending some of these questions and thoughts, um, at our conferences. So thank you very much.

Thank you so much for having me. Really appreciate it.

Thank you. No, I'm so glad. I know that we only have a limited amount of time, and I was actually messaging someone. It's a bit of a shame because I want to continue the conversation, but I know I can't. Just a lot of— you gave a lot of food for thought. And kind of like Lucy, for people who are not in the supply chain world, it was kind of like you brought it down from the rafters that an everyday person's like, oh, okay, so that's how that works. Okay, this is how that impacts Instead of it just being this big idea that you can't really wrap your head around it. So I definitely thank you for that. I want to thank you for joining the Industry 4.0 Club on this topic. We just appreciate everything that you bring to the table, all the knowledge, all of the experience, all the examples, especially for, for a geek like myself. I guess past Past guests have noticed that if you can count my teeth, I'm in full-on geek mode. Thank you. Thank you for everyone joining us today. And again, if you like conversations like this and you like updates and notifications, don't forget to follow us on LinkedIn. We have an awesome newsletter called Shaping the Future. It's a Substack newsletter. You can subscribe to it on our website, industry. 4oclub.com and go to the newsletter in the navigation bar. Wish you all a fantastic rest of the day and an awesome week and a sustainable future.

Thanks, Karen.

Thanks, Deborah.