The generative economy is all about the circular economy
According to Ellen MacArthur Foundation, the three principles of a circular economy are the following:
- Eliminate waste and pollution
- Circulate products and materials (at their highest value)
- Regenerate nature
More and more companies pretend to support a circular economy by only focusing on the first and second principle. At Dassault Systèmes, we believe the third principle cannot be left out. In order to emphasize this principle on top of the other two principles of the circular economy, Dassault Systèmes uses the term “(re)generative economy” as part of its mission. We believe that this will be a solution to (over)consumption.
The importance of a circular economy
In our current system, we take materials from the Earth, make products from them, use these products for a while, and throw them away as waste. A take-make-use-waste model focused on consumption is not sustainable because it takes much more from the planet and society than it gives back: it leaves a negative eco-bill. As we continue like this, supplies of materials are running low, waste mountains are growing bigger and bigger, and nature suffers. All of this will affect humanity. Therefore, we have to transform from a linear system to a system that continuously reuses materials: a circular economy.
The main idea of a circular economy is reducing the consumption of natural resources, avoiding materials that become waste and therefore keep products and materials in circulation. It is the successor to the famous “3R waste hierarchy” that everyone knows: reduce, reuse, recycle. In the meantime, this list has evolved into many more Rs. In general, the main goal of the circular economy (and the R-strategies) is to retain the value of materials and products as much as possible.
Here’s a great example of how a Dassault Systèmes customer put these principles into practice already: an automotive customer made better use of scrapyard materials. They changed their internal processes to use a product for its original purpose. Instead of recycling bumpers from the scrapyard into other, lower-quality plastic parts, the bumpers are now reused. This avoids the energy required to separate, wash, shred, melt and remold plastics for recycling. In addition, there is no longer a need to buy new bumpers made from virgin materials. Furthermore, the value of the bumper material remains much higher than that of the original scrap.
Key opportunities in the circular economy transition
Ellen MacArthur Foundation highlighted a couple of key opportunities in the transition to the circular economy:
- Improving the design of products and their corresponding production processes, so that products last longer. Elements are easily repaired and reused by designing products and their manufacturing lines for product disassembly,
2. Ensuring the reverse network is in place, including logistic flows of reverse products, to save products from landfills and return them to the manufacturer after use.
3. Creating new value chains and optimizing material flows, so that we maximize the usage of materials by keeping them in the loop.
DELMIA’s virtual twin solutions are key for businesses to imagine, create and deliver circular manufacturing processes. These solutions are able to tackle all of the key opportunities to support a circular economy. The power of combining the virtual twins of the product, manufacturing and supply chain is extremely powerful, but the scope of this blog focuses in on the opportunity with the supply chain, and how the supply chain virtual twin can enable the creation of new value chains, and the optimization of material flows.
Optimizing material flows within supply chains
Using DELMIA Quintiq and the 3DEXPERIENCE® platform, customers have been optimizing material flows within supply chains since 1997. DELMIA helps optimize (financial) costs, material use, mileage, energy consumption, scrap usage, CO2 emissions, and much more, while matching (customer) demand and available supply. Our DELMIA Quintiq solution helps businesses to balance potentially conflicting goals (such as margin and carbon emissions). Through scenario comparison, a trade-off can be made to determine the best supply chain plan. Let me illustrate this by just giving an example of one of DELMIA’s supply chain optimization solutions.
| An example: sustainable sourcing optimization DELMIA Quintiq Optimized Planning enables companies to set up a virtual twin of their supply chain. A concrete example is the optimization of a sourcing plan. It helps users answer the question: “how much of which product to buy from which supplier in which week?” while taking into account constraints, costs, carbon emissions and supplier ratings. Supplier ratings are non-quantifiable factors, for example supplier compliance with standards and certifications. The choice of KPIs, including circularity metrics, and how much weight these are given, depend on the settings and can be different for each company or situation. It allows a manufacturer to make trade-offs between multiple different scenarios, such as: 1. Cost vs. Sustainability with a focus on Cost: This plan minimizes costs, but sources materials from suppliers that are geographically located far from manufacturing locations, which introduces longer distribution routes. 2. Cost vs. Sustainability with a focus on Sustainability: This plan sources material from local suppliers, close to manufacturing, who offer recycled materials, have sustainable business practices and use EV or rail networks for distribution. The plan involves higher costs and a lower margin than the first scenario, but generates much less indirect scope 3 emissions and ensures a more responsible value chain. 3. Balanced: This plan optimizes against both costs and carbon emissions. It results in a balanced supply plan that involves a higher margin than the second scenario, but generates much less indirect scope 3 emissions than the first scenario. Consequently, by rapidly and precisely evaluating potential scenarios in the virtual world, the supply plan design is ready to be applied in the real world and lays a foundation for the overall value chain. |
Creating new value chains within and between companies
In a circular economy, waste is the new raw material. Instead of being discarded, the output of one process step becomes the input of another. Therefore, to keep products and materials circulating, circular processes have to be set up.
For example, a Dassault Systèmes customer in the aluminum industry increased the use of scrap aluminum and reduced the use of virgin materials, by changing their internal processes. The quality of the aluminum product depends on its ingredients; the quality of the scrap. Therefore, now the scrap is first carefully sorted into low/high quality “scrap buckets”. The next step is the planning of the aluminum batches, which is very complex because hundreds of properties have to be taken into account (such as quality or strength). Thanks to DELMIA Quintiq, optimal batches are composed with the available supply of scrap material, while respecting their customer’s requirements and delivery dates.
The example above illustrates an improvement of process innovation within the organization. However, circular processes go beyond a single company: complete new circular value chains should be built between different companies. Companies have an unique opportunity to join a large network of different companies in order to keep products and materials in the loop. We see initiatives already emerging within sectors where raw materials are becoming scarce, such as steel and aluminum. Key stakeholders, from metal producers to waste management companies, are exploring how materials can be kept in the cycle for longer.
The road to circular metals
At DELMIA, we are involved in these circular metals conversations because we play a key role in modeling and simulating new value chains, and optimizing the corresponding material flows. And there are more circular opportunities with our virtual twin technology. The road to circular metals might look like this:
1. Factories of the future. Individual facilities in a network are being modernized with DELMIA solutions for operational optimization and execution. DELMIA’s supply chain optimization solutions can also enable the simulation and design of the future value chain (see the example of sustainable sourcing optimization mentioned above).
2. Close the loop. The individual DELMIA solutions are integrated to reach end-to-end supply chain optimization: an optimized circular value chain. Post-consumer scrap serves as input for metal producers. Material flows are being optimized on a much larger scale.
3. Collaborative value network. The facilities in the network intensify their collaboration in real-time by leveraging the 3DEXPERIENCE® platform. One single source of truth, full visibility of the value chain and data driven decision-making, for example, enable stakeholders to minimize unexpected peaks in demand and thereby reduce safety stocks (leaving less unused, scarce material in the loop).
4. Combining Virtual Twins of Product, Manufacturing and Supply Chain. The value network goes beyond circular manufacturing and circular supply chains: circular product development is tested and validated across the network, via the virtual product innovation solutions of Dassault Systèmes on the 3DEXPERIENCE® platform.
5. Product as a service. By offering metals as a service, facilities maintain control over material flows. Full digital traceability of the product throughout its lifecycle is enabled by DELMIA solutions. The 3DEXPERIENCE® platform takes on the role of an orchestrator, properly balancing the interests of each facility in the value network.
Ready to collaborate?
We have supported many individual companies in their supply chain sustainability initiatives. Now it is time to take the next step in sustainable innovation by enabling organizations to connect and collaborate in holistic value networks. This not only enables companies to keep materials in the loop, but also optimizes the material flows on a much larger scale. Collaboration is key in the generative economy, and what better platform than the 3DEXPERIENCE platform to facilitate this?
Discover these resources to learn more:
- Web page: DELMIA’s supply chain optimization solutions
- 16-minute podcast: Sourcing optimization at The Kraft Heinz Company
- 2-minute video: Sourcing optimization in CPG with DELMIA Quintiq
- 1-hour webinar: How virtual twins accelerate sustainable operations and circular ambitions
- Web page: Circularity in Action: Circular Supply Chains – Reshape the Enterprise’s Value Network
Carlijn Goedhart earned her MSc degree in Operations Management and Logistics (healthcare track) from Eindhoven University of Technology. Supply chains and zero-waste principles are her biggest passions, which she prefers to apply in a social responsible context. Since 2021 she is Sustainability Lead for the DELMIA brand at Dassault Systèmes, responsible for defining the DELMIA sustainability mission in order to enrich the DELMIA solution portfolio that enables customers in the transition to become more sustainable.