Rethinking the Global Economy – How Micro Industries will Facilitate the Shift to a Circular Economy

Circular Economy Concept Eu (1)

By Brad Jeavons, speaker the 2019 National Clean Technologies Conference & Exhibition and Principal Consultant of SA Partners

Globalisation over the last 30 years has delivered many great outcomes for our world. It has enabled lesser developed countries such as China, India and many more to prosper economically. Globalisation has also reduced the price we (organisations and end consumers) pay for products. We have prospered economically through the growth in Globalisation but what has been the impact on our planet?

Globalisation has led to longer supply chains which by their nature result in negative impacts on the environment. Additional energy in transportation is consumed, the bulk of which has been powered by fossil fuels. Longer supply chains mean greater inventory holdings are required which results in damages, waste and warehouse infrastructure consuming additional energy. Our planet has suffered through globalisation as developing countries which have been part of the trend and growth work to develop environmental standards and approaches.

The founders of Lean (Womack and Jones) noted this waste in their book “Lean Thinking”. They noted the economic waste involved in globalisation, sending materials all over the world to produce a product. Womack and Jones note that Lean is about removing waste and that transportation delivers no value to the customer and is therefore waste. If we are not careful our move to a circular economy will increase transportation waste through greater reverse logistics caused by the need within a circular economy to return products for maintenance, reuse or recycling to keep them cycling in our economy rather than going to landfill.

Technology changes in recent times are enabling a move to micro industries based in the market they will be consumed. Processing technologies are becoming, smaller, more agile and lower cost. We can reference many successful micro industries from brewing to baking, apparel and many more. Micro Industries located in the market they will serve enable the circular economy and reduce impact on our planet. Transportation is minimised, reverse logistics for maintenance, recycling and reuse are small. Reuse is simplified through the local presence of the industry, providing the ability to redistribute simply or even refill in the case of a packaged product.

The argument against micro industries has traditionally been that they lack economy of scale. Lean thinking rebuked this claim 30 years ago noting that organisations are the most efficient and cost effective when they initially start up, with only a few employees.

Economy of scale brings with it waste and bureaucracy that can well exceed any buying power benefits larger economy of scale operation brings. The key to success is to apply Lean and Green thinking to a journey towards micro industries within a Circular Economy to help our economy and planet into the future.

Brad Jeavons will be discussing this topic further at the National Clean Technologies Conference, 29th – 31st May on the Sunshine Coast QLD.

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