Circular Economy in Logistics: CIRCULAR SERVICE DESIGN FOR LOGISTICS PROVIDER: AN ARVATO CASE STUDY

July 28th, 2022, was Global Earth Overshoot Day.Earth overshoot day means we use more resourcesthan the Earth’s biosphere can produce in a year.The use of Earth’s resources at a rate faster thanthey can be regenerated leads to severe effects onpeople, the planet, and industry for current and futuregenerations, such as increasing competition over afixed resource base, rising prices of resources, and adecrease in the quality of life.Companies have made themselves dependent onincreasingly scarce natural resources; meaning theywill lose their flexibility to produce any number ofproducts and therefore bear higher production costs.Lastly, the effect on Earth is climate change e.g.extreme weather, global flooding and heat waves,mass desertification and wildlife loss. These naturalphenomena, exacerbated by humans, are having animpact on our and future generations’ quality of lifeand pose a threat to businesses’ flexibility and supplychains. To counteract these effects, the framework ofsustainable development was introduced in 1987.The concept of ’sustainability‘ consists of three pillars:people, profit and planet (the 3 P’s), which have toremain in balance for a system to be sustainable.With current resources depleting faster and faster,the concept of ‘Circular Economy (CE)' has beenintroduced. The basic idea of this model is to ‘closethe loop’: avoid the use of virgin raw materials, and ifnot possible, extend the life cycle of a product.To further examine the role of a logistic provider,especially Arvato, in the short- and long-term,interviews with Arvato’s customers and projectmanagers were conducted. The results show thatmost technology clients have a sustainability strategybut it is mostly limited to carbon neutrality and is notfocused enough on the core of circularity: no waste generation and circular products. If we want circularityto be regarded in projects and decision-making, itmust become a strategic goal/aspect, including keyperformance indicators and reward schemes. Circularity as a concept stresses the importance ofcollaboration. To succeed, companies must cooperateup and downstream in their value chain. Logisticproviders can strategically leverage and design thesupply chain network to support life-cycle extensionand product recycling. In the long term, this enablesthe logistics providers to become the consultants andfacilitators of CE activities. Rethink is the key in allstages. We fundamentally need to rethink how ourvalue chains are organised and proactively engagewith suppliers, and customers in a partnership. Alogistics provider should use its existing network toengage and enable its partners in open discussions.However, companies must also overcome 4 challenges(Laws & Regulations, People & (Company) Culture,Costs & Economy, and Product Design & Innovation),if they want to engage in CE. To do so, productsneed to be designed modularly and people needto be trained. Companies need to understand thenew generation’s priorities and rethink their valueproposition. They must understand the true cost oftheir current and CE practices. For example, they canevaluate their goods and services based on Flexibility,Ethics & Environment, Brand image, Risk management,and Cost saving & Efficiency.However we do it, our clients, as well as internalstakeholders, agree that now is the time to takeaction