The world is inhabited by a growing number of people. An ever larger share of them is living in cities and is ageing.

Wealth is increasing globally, creating a larger middle class, for which we extract more and more natural resources.

Causing increasing CO2 footprints and waste production. As a result, global consumption currently goes above and beyond the earth’s regenerative capacity.

 

The linear “Take – Make – Dispose” system which depletes natural resources and generates waste is deeply flawed and can be productively replaced by a restorative model in which waste does not exist as such but is only food for the next cycle.

- Ellen MacArthur Foundation -

The upside is clear to many …

Increase in economic growth* with 1% to 4% through circular strategies which entail maintenance & repair, reuse, remanufacturing, refurbishment and recycling.

 

These strategies enable companies to:

•Enter new markets (C2C and C2B)
•Gain market share
•Offer new / differentiating (service) propositions
•Create competitive advantage
•Utilize latest technology
•Apply solutions to sustain our planet & their business

* Ellen MacArthur Foundation

… but what does this mean in practice
and which challenges will you encounter?

Valuation of materials and components

Laws and regulation

Counterparty risk

Value chain collaboration

Control mechanisms

Reverse logistics

Ownership of goods

Product quality

…to help companies and individuals understand and experience the opportunities and challenges of adopting circular strategies.

Simulation gaming is a powerful way to facilitate learning, engage with clients and to profile your expertise.

 

Game setup in a nutshell

•Participants play the online simulation in teams of 4 people; either virtually or in class room setting.
•Minimum playing time is 4 hours, but it can be stretched over a longer period as well
 

Residual value

Waste does not exist. Value is kept at all times throughout the cycle; as a product, component or raw material.

 

Ownership

If producers retain ownership during the product lifecycle it provides them with strong incentives to maintain them.
It also involves balance sheet extension and the question of how to value goods on the balance sheet.

Cash flow

Pay per use models create a longer lasting financial relation. But as the payment is stretched over a longer period, it comes with cash flow uncertainty and increased credit risk

Purchasing

Negotiate conditions with different types of suppliers regarding:

1. purchasing contracts (e.g. quality, reliability, sustainability)
2. material sales contract (e.g. volume, reliability)
3. service contract (e.g. ownership, warranties)
 

 Supply chain

Negotiating with the Recycling and Logistics Service Providers on quality and volumes

Decisions regarding safety stocks and lot sizes in light of reverse products flow

Decisions regarding maintenance programs and warehousing

Sales

Negotiate conditions with different types of buyers regarding:

1. sales contracts (e.g. MCI, INCOterm)
2. repurchase contract (e.g. quality, volume)
3. service contract (e.g. ownership, lease, maintenance, warranties)

Finances

Negotiating with the Financial Service Providers (e.g. Vendor lease, Loans, Insurance)

Decide on Buyback value of the repurchased products

MCI ambition level for the whole company

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