You don’t create a circular economy alone. Circular thinking also requires reversing and perhaps even closing previously linear chains. That requires collaboration. To determine what that collaboration might look like, you firstly need to map the parties involved – both those in your internal organisation, and externally in the chain.

Below, we look at mapping your external chain. Prefer to work internally? Follow the Internal organisation step-by-step plan.

2.1 How to get started

Firstly, identify the parties involved. You can do this like this:

1. Analyse how the external chain works, from raw material production to waste management.
2. Draw out this chain, including the relationships between parties.
3. Try to find out what the current revenue models (and thus interests) of different chain parties are.
4. Then draw the new (circular) chain, as you envision it.

Use sketches of the current and desired chain as a basis for discussions with market parties. In those discussions, you can validate assumptions and gain further insight into the chain.

2.2 Collaboration with and between chain parties

The complexity and service lives of products determine how you can collaborate with the external chain.

In the case of a complex product (such as a mobile phone), the chain comprises thousands of parties, while in the case of a relatively simple product (such as a desk), the chain is more manageable. This complexity will partly determine the chain parties between which you want to encourage collaboration.

When mapping the interests of parties, take the service lives of products into account, as well as the underlying incentives of different business models.

• In the case of products with a relatively short service life (such as work clothing), it is easier to completely close the chain.
• In the case of products with a relatively long service life (such as a building), this is not yet realistic from an organisational perspective. Supplier engagement is often difficult to secure and commitments can lose value over such a long period of time.

There are three ways to collaborate with the external chain, which are shown in the figure below:

• Close the loop: this can be done with relatively simple products with a short service life. Examples: catering, work clothing.
• Go deeper into the linear chain: in chains where reuse of products, components or materials is possible. Examples: ICT hardware or office furniture.
• Bring different perspectives together around the table: to make a product as circular as technically possible and to include the future potential for reuse in the design. Examples include buildings and infrastructure.

2.3 Create a common interest

Procurement processes often involve competing interests. An internal client wants maximum quality at the lowest possible price. A contractor wants the highest possible profit, and therefore the lowest possible procurement price from its suppliers and efficient production processes. But with a strong focus on price, the quality of a product may come under pressure. That can increase the negative environmental impact.

As, in a circular economy, we want to preserve the value of products to the fullest extent possible. We want maximum quality. A financial incentive can help. With that, you motivate suppliers to deliver maximum quality during the product’s service life.

There are two key principles to ensuring that competing interests do not stand in the way of your procurement process:

• Create a common interest between the client and the supplier. Base this on the value retention in products, parts and materials.
• Protect this common interest with a financial agreement. Do this based on minimum cost over both the purchase and use of a product (total cost of ownership or TCO).

An example

An organisation needs new office furniture. The organisation purchases this furniture, including maintenance for a period of ten years and a repurchase obligation at the end of the contract. The contract is awarded partly on the basis of the total price of supply and maintenance, and any return value (TCO). Maximum quality is the common interest of both parties – the client has furniture that functions for ten years and the supplier has to carry out little or no maintenance during that time.

Points for action

• Map out in advance which external parties are involved and could influence the project’s circular ambitions.
• Map the desired circular chain, as you envision it. Use this as a basis for discussions with market parties on chain cooperation.
• Create a common interest where both the client and supplier benefit financially from value retention in the products.