Moving towards ‘economies of chains’

WE are increasingly concerned about the impact of our actions on the environment. We need to be green in order to save our planet for future generations.

There are numerous examples of local initiatives that minimise waste in production. We collect waste, sort waste to identify different valuable materials, and recycle where possible.

You might have personal experience in sorting out your own household waste in plastic, paper, glass, and others.

However, progress with the green economy and concepts such as “cradle-to-cradle” have been disappointing until now.

After so many years of investment, the green economy is only less than one per cent of the world economy. So, I guess may be it is time for new approach.

Today’s management concept is based on economies of scale (high volume production) and scope (related diversification) in order to most efficiently serve the customer.

For manufacturers and brand owners, managing reverse logistics is expensive, as supply chains are not designed for managing return flows.

Managing returns and waste is seen as a cost in order to comply with government regulations. This is old thinking and need to change!

There is an opportunity in connecting and combining seemingly disparate supply chains based upon physical processes common in the natural world, to create solutions that are both environmentally beneficial and have great financial value.

One good example is the coffee chain. Global coffee consumption today is about 155 million bags of coffee (1 bag is 60kg), of which Asia contributes about 30 million bags and has the highest annual growth.

But harvesting, processing, roasting and brewing coffee discards an estimated 99.7 per cent of its biomass, while only 0.2 per cent acquires value on the market.

Demand for mushrooms has enjoyed double-digit growth for decades. Research shows that farming mushrooms on used coffee grounds is 80 per cent more energy-efficient than conventional energy-intensive farming methods.

In fact, used coffee grounds as growing medium for mushroom farming is more valuable than a cup of coffee. The rest material of the mushroom production on the other hand is also an excellent raw material for animal feed.

By combining the coffee chain, with the mushroom and animal feed chains, you can triple or quadruple the economic value of coffee.

Because of this enormous potential value of coffee, you can even imagine coffee producers in future not selling their beans to coffee shops, but instead provide coffee beans as a service.

In this way coffee beans and its used coffee grounds remain the ownership of the coffee producer, as they want to use the valuable used coffee grounds for mushroom production.

We need change the way in which we run our industrial processes and tackle resultant environmental problems by solving our green planet supply chain puzzle.

We are moving away from a tradition thinking of economies of scale and economies of scope, towards what I would like to call “economies of chains”.

We have to search for new business opportunities by linking our supply chain to other ecological fitting supply chains and clusters that increase our business value chain significantly.

Instead of taking over your competitor, it makes far more business sense to focus collaboration, mergers and acquisitions with organisations that control ecological fitting supply chains.