Photo by Sharon McCutcheon on Unsplash
Are you amongst the many business leaders facing difficulties in getting the raw materials you need? Are you facing a sharp rise in the cost of your raw materials?
If so, here is my simple 7-step guide to quickly discover if you can source your input in somebody else’s output. It is a DIY version of a product I have where I help companies map out potential circular business opportunities. I have now created this version and I give it to you for free because I keep hearing from business leaders about how much pressure they are under regarding the availability and price of their raw materials.
Question:
“Have you ever stopped and asked yourself if what you need as input to your manufacturing process is something other companies have as a by-product or leftover material? “
In my experience, most companies haven’t but for a great number of manufacturers, the answer will be yes. And if so, there are opportunities to get an additional source that most likely also will be cheaper.
This is the theme of this newsletter. I will make it brief and practical as I know that if you have this problem, you will also be time-constrained. My intention is to give you a quick guide whereby you in one hour will be able to find out if there are some opportunities that are worth following up on.
Brief background
Let’s just spend a minute on the background. If it is obvious to you what this approach is all about and you get it, you can skip this section.
Utilizing someone else’s leftover resources or byproducts is one of five disciplines within the circular economy. It is often called “Resource recovery” or “Waste = resources”. Here you find examples of companies that use the circular approach to get direct financial gain by converting their own or another company’s waste stream into value. While at the same time reducing the need for virgin materials.
Like when “Letbek Plast” uses polymers from abandoned or used fishnets instead of virgin polymers (from “Plastix”). Or when “Tarkett” utilizes the lime that Dutch waterworks remove from the drinking water instead of virgin lime for the backing on their carpet tiles.
We typically experience them in three different variations.
- In-house: Cut-offs, discarded products, etc. that newer make it to a final product going out of the door. Like when “Grundfos” circles back components of products with some error or already produced products that they have a hard time selling and put them in other products.
- Industrial symbioses: By-products of one company are sold or passed on to another company that uses this kind of materials in their manufacturing process. Like the companies in the “Kalundborg Symbioses” have been doing for many decades now and that have saved them more than 24.000.000€.
- Closed loops: A company takes back its own products after end-use to utilize the value of the components or materials in some way. Like when “Faerch Plast” takes back the plastic packaging from e.g., meat products sold in supermarkets and turns them into new packaging for the same kind of products.
The 7-step guide to solving the raw material problem
I have created this DIY tool for you to be able to use without prior knowledge or experience with circular economy. And it is designed to give you clarity within one hour as to whether this approach holds interesting opportunities for your business – opportunities that can lead to lower cost and/or a more stable supply of resources.
So, gather your favorite group of people for thinking or go to your favorite thinking spot and turn off all disturbance. Set the alarm for 1h, fill up your mug with tea or coffee and go to work on the following 7 steps.
1. What raw materials are the ones we today spend the biggest proportion of our budget on?
Use the 80/20 approach to make sure you only focus on something with significant value. List them.
2. Describe them briefly.
What do they consist of, special criteria or demands, rough amounts – stuff like that.
3. What other sectors use these materials?
Brainstorm and don’t stop just when the obvious ones are on your paper. Think of the example with Targett above, where it turns out waterworks produce large quantities of the material they need.
For each sector write down if the material ends as part of their product or as a by-product/waste? And if they are used in the quantity relevant to your needs. If you don’t know, make your best guess, and note down that this needs to be examined in the next round – if relevant.
4. Circle out the ones that appear to be most interesting strictly based on a match of the materials – not whether or not you can see/believe it is possible to get your hands on them. Continue with a focus on them for now.
5. Finalize this sentence: If we could get this to work, then it would give us value in terms of … and … and…
6. Ask yourself this question for each of the interesting ones:
“What would it take for this waste stream to become a resource for us?”
Write it all down without being judgmental or going down a rabbit hole on how it could work – just describe it quickly. It doesn’t have to be perfect – just be directionally correct.
Example: The quality of the material needs to meet xxxx (look at what you wrote in the first step). As this is a by-product the manufacturers must be able and willing to give it/sell it to us. We must find someone to separate it/clean it/xxx so we get the pure material.
As you can see, I write them down from a state of believing it is possible and it is just a matter of making it work.
7. Decide on the top 3 that you find most interesting.
For each of them write down the key questions you need an answer to and the key assumptions that you need to verify for this to work. Decide who goes to work on each of them and schedule time in your calendars with 7 days to take the next steps. Never leave this exercise without committing and planning out the next step.
Time is up! Pad yourself on the bag for good effort, agree on a deadline for answering the questions and validating the hypothesis and move on with your day.
Hopefully, this small guide has made you see new opportunities as has been the case for so many other business leaders. The opportunities are out there for a lot more companies than they could appear at first glance. Today we only reuse 8,6% of the 100 billion+ tons of materials that we use annually in this world. That leaves more than 90 billion tons of materials out there – in my book that is called untapped potential.
Let me know how it goes and if you have any questions just type them in the comments or DM me and I would be happy to answer them for you.
Could you see this work for you? Let me know in the comments.
Happy treasure hunting,
Jasper
P.S. If you or someone you know is looking for other ways to create competitive advantages sign up for one of my free workshops where I share how you can turn sustainability into a competitive edge. Book your seat here: https://calendly.com/jsteinhausen/an-introduction-to-creating-a-competitive-edge-using-sustainability
