Under the scope of Canada’s G7 Presidency in 2018, and following the group leaders’ summit in Charlevoix earlier this month, Panalpina was invited to participate with a supply chain perspective in the G7 value retention policies workshop on advancing remanufacturing, refurbishment, repair and direct reuse.
The event, which was held at the Panoramic Hall of the Montreal Science Centre on 21-22 June, included a section on reverse logistics.
The objective of the workshop was to explore the necessary conditions for companies to extend product life cycles.
On the opening day, Panalpina’s keynote speaker Dimitri Brink, country head of marketing and sales in Canada, presented on how state-of-the-art technology and global supply chain networks are the key to enabling the transition to circular economies.
The supply chain perspective
Panalpina’s presentation focused on how logistics providers can be key enablers and drivers of the transition to more sustainable circular supply chains in the future.
“Product life cycles are getting shorter and consumers demand that products be delivered faster, but you can’t keep up if you need to manufacture and ship the product from the other side of the world. If you stick to this model with long supply chains you only end up having an unsustainable increase of inventories,” said Brink.
Trillions of dollars of inventory trapped in supply chains and very high rates of scrapping are the hidden cost of today’s take-make-dispose model. And the cost is not just financial, but also environmental.
New industry opportunities
However, things are starting to change. Technology such as 3D printing, for example, makes local production of make-on-demand and personalized products more likely.
From a remanufacturing perspective, it is now becoming easier for people to get access to spare parts and repair products.
“We are seeing a shift from linear manufacturing to distributed manufacturing, and from linear supply chains to circular supply chains. The large batch units made in Asia-Pacific are now becoming modular products that are personalized and assembled close to customer demand,” added Brink.
This means that logistics providers are going beyond just moving products. They are now increasingly taking responsibility for manufacturing and repair, as well as the local sourcing and procurement of products.
Panalpina’s keynote speaker Dimitri Brink, country head of marketing and sales in Canada.
The global facility networks of the large logistics providers are well placed to help customers to distribute and re-localize their new manufacturing techniques.
“Few companies in the world have a global footprint with a management team in every country, one system to govern and link all of those locations, and facilities that can manufacture and repair products locally or 3D-print parts for our customers on demand,” added Brink. “And we find that once we have the skills to manufacture products, then we already have the skills to repair and remanufacture products, something we do in our facility in Dubai.”
Apart from Dubai, Panalpina’s warehouses in Brazil, Panama, and the Czech Republic have been transformed into manufacturing facilities and gone from simply storing inventories of products made overseas to manufacturing them in or closer to the country of demand.
“We also 3D-print parts in our facility in London, and specifically to extend the life of a product, we recently completed a project with our research team at Cardiff University, where a watch repair company wanted to fix a watch but was unable to do so as they couldn’t source the parts," continued Brink. "We printed them using our spare parts on demand 3D printing and the issue was resolved. The product went from labelled for scrapping to having an extended life cycle.”
New generation of consumers as drivers of change and logistics providers as key enablers
Many factors, including macroeconomic and sociopolitical changes, are in play but probably the single biggest driver of change is us, the consumers, and especially the younger generation of consumers who are buying differently. On the one hand we expect things immediately when we buy online, and on the other hand we are environmentally conscious and open to the shared economy.
For companies that move products all over the world the transition to shorter and circular supply chains is a great opportunity. And not just a commercial opportunity but also one to combine economic advantages with wider environmentally sustainable gains.
Panalpina and the entire industry can play a major part in changing supply chains from the elongated take-make-dispose supply model of today to sustainable, circular supply chains.
“We want to drive this change. It is better for business, it is better for us as a society, and it is better for the wider environment as less raw materials are tied up in obsolete inventories. There are challenges, but this is the first step in addressing the challenges,” concluded Brink.
Panalpina is a steering committee member of the European Remanufacturing Council.