Using AI To Enable Circular Economies
The goal of limiting global warming to 1.5 degrees Celsius committed by the G20 in Glasgow in October 2021 will require our economies to become circular. Waste is the fourth largest source of emissions, accounting for over 3% of total greenhouse gas emissions.
Businesses and people are already changing the way they produce and consume. Many companies have started a journey to become more circular, transitioning from “take-make-waste” to “reduce-reuse-recycle”. A recent global study¹ revealed that 34% of consumers were willing to pay a premium for sustainable products, and those willing to pay more would accept a 25% premium on average.
So what is stopping the recycling revolution?
Most of the time, transaction and operational costs are still higher for circular businesses. The theoretical demand for secondary goods and materials might well be growing, but the supply does not automatically follow it. And perhaps worse: innovation within circular solutions carries higher risks.
One of the most important materials — post-consumer recycled resin is made from recycled plastic, which gets re-injected in the economy to produce more goods and packaging.
Global recycled resin supply tends to witness volatility and is expected to result in supply shortages. Yet, producers and distributors are dependent on reliable supply chains. Supply assurance and economic viability of the usage of recycled materials are key focus areas for the buying organisations.
To achieve their sustainability goals, Consumer Packaged Goods (CPG) companies are working on various initiatives to ensure an adequate supply of recycled resin including through joint ventures with waste management companies and recyclers.
The ability of recyclers to provide supply assurance depends on a diversified raw material sourcing strategy. The recyclers’ engagement with multiple sources — like partnerships with collecting agents, municipal solid waste teams, and waste management entities — is likely to ensure a steady supply.
Integrated recyclers with collection, processing and production abilities are expected to provide cost-efficient end products. Integrated producers with strong logistics and warehousing abilities across the value chain are preferred.
Why is waste collection the backbone of the circular economy?
The lack of waste management infrastructure in many developing economies significantly limits the supply of recycled resins. At the same time, waste logistics costs can be as high as 75% of the total costs of recycled materials.
Recycled material suppliers and their waste collectors are facing two major waste logistics problems:
○ Where to find recyclable waste?
○ How to minimise the cost of its collection and logistic cost?
Poor quality and often an absence of waste data is the main complication for the waste industry and circular producers when planning the logistics of the waste commodity.
Orchestrating efficiently the route of thousands of trucks daily to collect materials from millions of homes and businesses is truly a fantastic challenge, yet still solved for the most part by humans, pen, paper and Excel spreadsheets.
Who is going to disrupt the first mile?
In less than a generation, we have collectively witnessed tens of disruptions in the way we buy and obtain goods: from gigantic suburban retails to online stores and same-day home deliveries, from public lockers to smart home locks, from electric bicycle couriers to autonomous delivery drones.
While the production and distribution of goods were getting ever more sophisticated, waste collection activities have remained comparatively unchanged over the last few decades. It is perhaps time to bring the same energy and innovation to the “first mile logistics”.
To generate a steady supply of cheap, high-quality plastic for the recycling industry, we need smart solutions to sort, bale, compact, aggregate, store and transport our materials, in the cheapest and most efficient way possible.
Using Artificial Intelligence can help to bridge the data gap by modelling waste flows and designing and operating efficient, sustainable and scalable waste collection systems anywhere in the world.
Artificial Intelligence (AI) can then take over the scheduling, resource allocation, daily planning and route optimisation required to send thousands of vehicles to our roads in the most efficient way. It brings waste logistics planning on par with modern logistics and enables sustainable producers to identify and source, measure and predict the supply of recyclable materials.
By adopting the data-driven approach to their waste, city councils, businesses and waste collection companies are going through a transformation to become a reliable supply chain for our new circular economies.
Waste Labs (www.wastelabs.co) is a Singapore-based Artificial Intelligence company that helps to optimise waste collection and enable recycling and circular supply chains. Waste Labs’ AI platform provides waste managers with data-driven insights and prescriptive recommendations to map out waste flows and to design and operate efficient, sustainable and scalable waste collection systems anywhere in the world.
¹The Global Sustainability Study 2021, conducted by global strategy and pricing consultancy Simon-Kucher & Partners
