Week 4: Technology Enablers for Circular Business Models ...

Week 4: Technology Enablers for Circular Business Models

Unit 1: Circular Economy: It Takes a Network

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Circular economy: It takes a network

Content overview

▪ What is meant by “networked economy”?

▪ Why are networks important in the context of the circular

economy?

▪ How does SAP plan to support the networked economy?



Kristen Hanel in an interview with Paige Cox

Paige Cox,

SVP, Head of SAP Business Network,

SAP

Kristen Hanel,

Solution Advisor, SAP


BusinessCommunity

A global network of partners

Network-wide process orchestration

that redefines collaboration

To enable the “loops” in the

circular economy, SAP believes

we need:

Integrated intelligence to deliver

predictability

One platform to easily connect with

SAP and third-party networksAriba

Network

Logistics Business

Network

Asset Intelligence

Network

Other

Networks


SAP Business Network



Learning points

▪ Economy is evolving to a networked economy.

– The trend goes from the intelligent enterprise to the network of intelligent enterprises and network resource planning.

– Transparency of the entire value chain and material flows in a multi-enterprise collaboration is key to bring the circular economy to life.

▪ SAP aims to build a business community network that allows companies to connect with their entire ecosystem in a holistic, non-fragmented way. In a first step, procurement, logistics, and manufacturing are brought together, allowing cross-network collaboration beyond company borders. Data and insights provided by the network allow better decision making across these “ecosystems” of companies—enabling circular loops.

▪ SAP is concentrating on a cross-functional network of networks that combines procurement networks, logistics networks, and manufacturing networks to give multi-enterprise commerce flow.

▪ Procurement traditionally comprised buying and selling.

– Today, companies require transparency and traceability of sourced products and material, for example, in order to act sustainably and responsibly and to meet legal and compliance requirements.

▪ Logistics was traditionally fragmented with point-to-point connections to, for example, several logistics partners.

– Today, companies require full transparency of downstream and upstream product and material flow. In the context of the circular economy, this is required to close loops. This can be multiple tiers. (Paige calls this “N-Tier networks”.)

▪ Manufacturing traditionally comprised order fulfillment.

– Stimulated by the trend toward a circular economy, companies now use other business models like “pay to lease”. This requires more visibility of where products are after they have been shipped, how they perform with the customer, and technology solutions like “digital twins” of materials.

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Unit 2: Analytics with the Internet of Things


Analytics with the Internet of Things

Content overview

▪ What (briefly) is the Internet of Things (IoT)?

▪ How can/why should IoT with analytics support

circular business models?

▪ Let’s look at a few examples

▪ Summary



What is the Internet of Things?

▪ Connecting things to the Internet

▪ Supporting sensor hardware, with software tying

the things together

▪ Supported by data analytics capabilities



How do IoT and analytics enable the circular economy?

Source: https://www.sap.com/products/iot-data-services.html

▪ IoT and analytics can support circular economy

business models with:

− Performance tracking

− Predictive maintenance

− Track and trace of materials and assets

− Digital twins

https://www.sap.com/products/iot-data-services.html



Farming example

Source: Screenshots from SAP Analytics Cloud presenting data from small holder farmers in Africa



Some examples…

▪ Compressed air as a service

▪ Tracks performance of compressors

▪ Increased service efficiency

▪ Higher customer satisfaction

▪ Less waste



Summary

▪ The Internet of Things allows physical objects to be

connected to the Internet, allowing the analysis of

performance using analytics capabilities.

▪ This connection and tracking allows businesses to

create a performance feedback loop to allow the

company to maintain the product and bring it back for

upgrading, remanufacture, or recycling at the most

optimal point.

▪ It helps guarantee a high level of reliable product use

for the consumer.

▪ IoT and analytics can be used to build product-as-a-

service models.



Further links and material

▪ SAP Internet of Things (IoT) technology


▪ SAP Analytics Cloud – advanced analytics

https://www.sap.com/uk/products/cloud-analytics.html

▪ Digital twins

https://www.sap.com/products/supply-chain-

management/digital-twin.html

https://www.hannovermesse.de/en/news/news-

articles/sap-introduces-a-cloud-solution-for-digital-twins

▪ Predictive maintenance

https://www.sap.com/products/predictive-asset-

insights.html

▪ Compressed Air Service from Kaeser

https://www.kaeser.com/int-en/company/press/press-

releases/l-sigma-air-utility.aspx


https://www.sap.com/uk/products/cloud-analytics.html

https://www.sap.com/products/supply-chain-management/digital-twin.html

https://www.hannovermesse.de/en/news/news-articles/sap-introduces-a-cloud-solution-for-digital-twins

https://www.sap.com/products/predictive-asset-insights.html

https://www.kaeser.com/int-en/company/press/press-releases/l-sigma-air-utility.aspx

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Unit 3: Technology for Reverse Logistics


Technology for reverse logistics

Content overview

▪ What is reverse logistics?

▪ Technology for reverse logistics

▪ How this works in real life: example of Lexmark



What is reverse logistics?

“Simply put, reverse logistics is the process

of moving materials back from their consumer

destination to their point of manufacture or

the distribution centre in order to recapture

their value for re-distribution, or dispose of

them properly. Reverse logistics is only

necessary when a product or material is

being sent ‘backward’ in the supply chain.”

Source: Hollingsworth

https://www.hollingsworthllc.com/guide-reverse-logistics/




Technological enablers – market study

“67% of Companies

Use Technology to

Improve the Reverse

Logistics Process”

Source of diagram and quotation:

UPS – Reverse Logistics in Today’s Digital Landscape (2019)

Automatic data capture

44%

Cloud computing

37%

Predictive analytics/Big data

25%

Blockchain

14%

Other

7%

Technology: 80%

Manufacturing: 64%

Technology: 36%

Manufacturing: 28%

https://www.uspsdelivers.com/wp-content/uploads/Reverse_Logistics_in_Todays_Digital_Landscape.pdf



Other technological enablers

Additional technology to consider:

▪ Sensors and monitoring devices

▪ Asset inventory management

▪ The Internet of Things (IoT)

Source: Circular Economy Practitioner Guide – Reverse Logistics:

https://www.ceguide.org/Strategies-and-examples/Dispose/Reverse-logistics




Kristen Hanel in an interview with John Gagel

John Gagel,

Chief Sustainability Officer, Lexmark

Kristen Hanel,

Solution Advisor, SAP



Learning points from the interview

▪ Lexmark’s Cartridge Collection Program includes:

– The box the new cartridge is shipped in is used to return the used cartridges

– The used cartridge goes back to Lexmark and is remanufactured or recycled

▪ Lexmark runs this program:

– To meet regulatory requirements (for example, in the EU)

– To help customers to be more sustainable

– To reduce Lexmark’s costs and footprint (less usage of virgin material and fossil fuels, less landfill, etc.)

▪ What can go wrong?

– Think through the logistics plan–both outgoing and reverse and the lifecycle of the product

– Design your products to be circular from the outset, and for multiple lifecyles

▪ The program is successful because:

– The product is designed for reuse (multiple lives) and longer use (durability) and with the entire circular

lifecycle in mind

– Three pillars: Sustainable Design, Efficient Use, Responsible Reuse and Recycling


▪ Technology and research paper from UPS, Reverse Logistics in Today’s Digital Landscape (2019)


▪ Hollingsworth – Guide to Reverse Logistics – an excellent overview of processes and all the jargon!


▪ Circular Economy Practitioner Guide – Reverse Logistics


▪ SAP Asset Intelligence Network

https://www.sap.com/products/asset-intelligence-network.html

▪ Information on Lexmark’s circular economy initiative

https://csr.lexmark.com/circular-economy.php

▪ Information on Lexmark’s recycling program

https://csr.lexmark.com/return-recycle.php

▪ Information on Lexmark’s cartridge collection program

https://www.lexmark.com/en_us/products/supplies-and-accessories/reuse-and-recycling-program/cartridge-

collection-program.html






https://www.sap.com/products/asset-intelligence-network.html

https://csr.lexmark.com/circular-economy.php

https://csr.lexmark.com/return-recycle.php

https://www.lexmark.com/en_us/products/supplies-and-accessories/reuse-and-recycling-program/cartridge-collection-program.html

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Unit 4: Analytics for Your Environmental Footprint


Analytics for your environmental footprint

Content overview

▪ Climate action challenges

▪ Emission categories

▪ Climate 21 North Star demo (Labs preview)

▪ SAP Product Footprint Management architecture


Access to capital

Customer demandLocation strategy

Sourcing strategy

Regulatory Risks Investor Risks Reputational RisksMarket Risks

Product portfolio

Business model

NO Data

Product Carbon Footprint is unknown

NO Insights

NO Steering

NO Calculation


Climate action challenges


e

e

CO2e from

Purchased

Materials

CO2e from

Production

CO2e from

Outbound

Transport

Product

CO2ee

e

ee

CO2e from

Inbound

Transport

e


Emissions categories – example carbon footprint



Climate 21 North Star demo


Intelligent Enterprise Applications

Sustainability

Content

(Data & Rules)

Footprints

Footprint

Assessment(Actual & Planned)

Footprints

(Absolute & Relative)

ASSESS

C21 Shared Footprints

OPTIMIZE

C21 Scores

Life cycle inventory data service from

external content providersShared footprints by other

companies

Design to Operate

Lead to CashSource to Pay

Record to Report

ActivateCollect

Business Activities

Analytics

(Dashboards &

Benchmark)

Reference

Cloud Content

EVALUATE

Pro

du

ct

Fo

otp

rin

t

Man

ag

em

en

t

SA

P

S/4

HA

NA


SAP Product Footprint Management architecture

SAP Business Technology Platform

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Unit 5: Blockchain


Blockchain

Content overview

▪ Why is traceability important in the context of

sustainability and circular economy?

▪ How can blockchain support raw material traceability

across supply chains?


Blockchain

Traceability in the context of the circular economy – benefits

Increasing Circularity

Minimizing the input of virgin

natural resources and increasing

the use of return flows, such as

recycling

Enabling Interorganizational

Accountability

Validating sustainability claims

and substantiating ethical

sourcing claims

Risk Reduction

Ensuring companies only source

from suppliers that meet their

sustainability and ethical policies


Blockchain

The current problem with batch traceability

“Overall supply chain transparency is poor, with 65% of procurement leaders having

limited or no visibility beyond their tier-1 suppliers.”

Source: The Deloitte Global Chief Procurement Officer Survey (2018)

Non-sustainable

and sustainable

inputs

A, B, C… are often mixed up

during production

Meaning traceability is

extremely difficult

Aggregation Comingling Refining/Production Supply Chain Transparency

A

B

C

?% A

?% B

?% C


Blockchain

How can this be solved?

are traced using digital twins of the

material (tokens) that are written into a

blockchain…

allowing transparency from

different origins to be measured

by counting the digital tokens

Non-sustainable

and sustainable

inputs…

Aggregation Comingling Refining/Production Supply Chain Transparency

A

B

C

30% A

20% B

50% C


Blockchain

Darren West in an interview with James Veale

Darren West,

Business Development Director, Circular Economy,

SAP

James Veale,

Co-founder, GreenToken by SAP


Blockchain

Learning points

▪ Companies need visibility into where their raw materials are from and to what extent they are sustainable.

▪ Raw material is usually traded on a bulk basis. Sustainable and non-sustainable commodities are mixed up

during aggregation and production. Because they all look the same, and get all mixed together, traditional

technology solutions using batch traceability don’t work!

▪ GreenToken by SAP uses tokens to distinguish sustainable raw materials and non-certified raw materials.

– Example: 1 green token for 1 ton of sustainable palm oil; 1 red token for 1 ton of non-certified palm oil

– The tokens serve as digital twins. When material gets mixed up, the tokens are mixed up in the same

way. This way, the mass balance of sustainable and non-certified palm oil can still be tracked.

▪ GreenToken uses blockchain to store the information.

– The advantage is that information cannot be manipulated—a risk with traditional database technology.

– Because the algorithms are not as complex as cryptocurrency, it does not need a lot of power.


Blockchain


▪ Web page www.green-token.io

▪ Contact James Veale LinkedIn I email

▪ Blockchain: Lets talk about the Elephant in the room...

https://www.linkedin.com/pulse/blockchain-lets-talk-

elephant-room-james-veale/

▪ A battery of misleading information?

https://www.linkedin.com/pulse/battery-misleading-

information-james-veale/

▪ Plastic announcements:

https://plasticenergy.com/saps-greentoken-and-plastic-

energy-announce-plastic-tracing-blockchain-partnership/

▪ GreenToken: Sneak preview of our 2021 plans

https://www.linkedin.com/pulse/greentoken-sneak-

preview-our-2021-plans-james-veale/

http://www.green-token.io/

https://www.linkedin.com/in/james-veale-green-token/

mailto:[email protected]

https://www.linkedin.com/pulse/blockchain-lets-talk-elephant-room-james-veale/

https://www.linkedin.com/pulse/battery-misleading-information-james-veale/

https://plasticenergy.com/saps-greentoken-and-plastic-energy-announce-plastic-tracing-blockchain-partnership/

https://www.linkedin.com/pulse/greentoken-sneak-preview-our-2021-plans-james-veale/

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Unit 6: Machine Learning and Artificial

Intelligence


Machine learning and artificial intelligence

Content overview

▪ What is machine learning (ML) and artificial intelligence (AI)?

▪ How can ML/AI enable the circular economy?

▪ Example: Reducing pesticide, fertilizer, and water use in an

agricultural cooperative



What is machine learning and artificial intelligence?

Software that emulates human intelligence:

▪ Computer vision

▪ Natural language processing

▪ Classification

▪ Clustering



How can ML/AI enable the circular economy?

ML/AI can help with:

▪ Design – products, components and materials

▪ Circular business models

▪ Optimizing circular infrastructure


▪ Global population growth and growth of middle class

▪ Need to feed the world

▪ Technology and AI needed to support regenerative

and efficient food production



https://www.un.org/en/global-issues/population


▪ Real-time crop and weather tracking

▪ Satellite and drone imaging

▪ Data-driven recommendations

▪ Reduced pesticide, fertilizer, and water use

“A team of agronomists at ACA has trained the

machine learning algorithm using appropriate

information for the region and the crops it supports.

With such precise data, the group takes preventive

action when it spots anomalies.”

SAP News, October 2019



https://news.sap.com/2019/10/sap-asociacion-de-cooperativas-argentinas-sustainable-agriculture/



Summary

▪ AI simulates human intelligence to carry out activities

such as computer vision, natural language

processing, classification, and prediction.

▪ AI has an important role in the circular economy in

materials and product design, business model

optimization, and circular infrastructure optimization.

▪ AI is a powerful capability to (among many other

things) optimize natural resource use.



Further reading and links

▪ Artificial Intelligence and the Circular Economy, Ellen MacArthur

Foundation (2019)

https://www.ellenmacarthurfoundation.org/publications/artificial-

intelligence-and-the-circular-economy

▪ AI and ML – an opinion on the difference from Bernard Marr, published in

Forbes

https://www.forbes.com/sites/bernardmarr/2016/12/06/what-is-the-

difference-between-artificial-intelligence-and-machine-

learning/?sh=3208817a2742

▪ United Nations global population estimates


▪ ACA – the Asociación de Cooperativas Argentinas C.L.

https://www.acacoop.com.ar/nosotros.html and SAP News article

https://news.sap.com/2019/10/sap-asociacion-de-cooperativas-

argentinas-sustainable-agriculture/

▪ Artificial Intelligence at SAP

https://www.sap.com/products/artificial-intelligence.html

https://www.ellenmacarthurfoundation.org/publications/artificial-intelligence-and-the-circular-economy

https://www.forbes.com/sites/bernardmarr/2016/12/06/what-is-the-difference-between-artificial-intelligence-and-machine-learning/?sh=3208817a2742


https://www.acacoop.com.ar/nosotros.html

https://news.sap.com/2019/10/sap-asociacion-de-cooperativas-argentinas-sustainable-agriculture/

https://www.sap.com/products/artificial-intelligence.html

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Unit 7: Digital Inclusion


Digital inclusion

Content overview

▪ Context

▪ Interviews with rePATRN and PYXERA Global

▪ Learnings for the circular economy


Digital inclusion

Background

“We see plastic waste as a threat

to our way of life and danger to the

environment.

But we also look at this as an

opportunity.”

Oliver Boachie, special advisor from the Ghanaian Ministry

of Environment, Science, Technology, and Innovation

(MESTI) – Interview for SAP News, 2020

https://mesti.gov.gh/

https://news.sap.com/2020/10/minimize-plastic-waste-in-ghana-domestic-recycling/


Digital inclusion

Social inclusion benefits of a circular economy

“By connecting the informal

economy of the waste collectors

to the formal economy, we can

ensure they receive a fair wage,

and later on, get services like

training or child care”

Maggie Buggie, Chief Business Officer at SAP Services –

speaking to the World Economic Forum about the Ghana

project in 2020 and quoted in SAP News.

https://news.sap.com/2020/10/minimize-plastic-waste-in-ghana-domestic-recycling/


Digital inclusion

Darren West in an interview with Jeffrey Provencal

Darren West,


SAP

Jeffrey Provencal,

Founder and Managing Director, rePATRN


Digital inclusion

Learning points from interview with Jeffrey Provencal

▪ rePATRN recycles plastic bottles in Ghana. Currently exports, but

hopes to bring the closed loop to Ghana.

▪ Goals: to get volume to recycle and raise the living standards of the

individual waste collectors who are “unseen” – in the shadows – the

“informal sector”; they are the core of rePATRN.

▪ How does technology help with digital inclusion?

− Identify the actors. Support them and elevate their status from

informal to formal so that they can access social contributions and

further benefits.

− When it gets to 900 tons per month of volume, rePATRN can buy

land and equipment and recycle PET in Ghana (rather than

export), which brings the circular loop close to home.

▪ What holds rePATRN back in implementing the circular

economy?

− Volume

− Regulation for food-grade plastics and laws to mandate minimum

recycled content (to achieve a level playing field with virgin plastic)


Digital inclusion

Darren West in an interview with John Holm

Darren West,


SAP

John Holm,

Vice President, Strategic Initiatives, PYXERA Global


Digital inclusion

Learning points from interview with John Holm

▪ PYXERA Global is working with native American tribes in

Alaska, Montana, Colorado, the Great Lakes, and other

regions on circular economy transition that can be inclusive,

particularly to traditionally disadvantaged communities.

▪ The circular economy affects so many social issues

directly that we have to frame the entire ecosystem to

identify the issues for community.

▪ Look for where they need help to transition to a new

economic, circular model. Use an ecosystem model; have

everyone moving together, for example: health, education

– might be important to the circular economy

transition, particularly disadvantaged communities.

▪ Also bring in leading partners to enable these communities

and work collectively (John mentions First Mile and

Metabolic, who are specialists in social engagement and

systems thinking). For example, in Alaska, native

American tribes have issues with housing, technology.

Use technology to drive inclusion.

https://www.pyxeraglobal.org/circular-economy/

https://www.firstmilemade.com/

https://www.metabolic.nl/


Digital inclusion


rePATRN

▪ Web site: www.repatrn.com

▪ Instagram: https://www.instagram.com/repatrn/

▪ Twitter: https://twitter.com/repatrn?lang=en

▪ SAP and rePATRN mentioned in SAP News: https://news.sap.com/africa/2020/10/ghanas-

ambitious-plan-to-minimize-plastic-waste/

PYXERA Global

▪ Web site with focus on circular: https://www.pyxeraglobal.org/circular-cities/

▪ Paradigm Shift publication: https://www.pyxeraglobal.org/paradigm-shift/

▪ Inclusive Circular City Design Webinar: https://www.youtube.com/watch?v=tkOLq6axqAo

▪ SAP and PYXERA Global: https://www.pyxeraglobal.org/partnerships/

Further reading

▪ Chatham House on CE and Inclusion: https://www.chathamhouse.org/2019/05/inclusive-

circular-economy

▪ PACE Action Plan for Plastics:

https://pacecircular.org/sites/default/files/2021-02/circular-agenda-plastics-feb2021_FINAL.pdf

http://www.repatrn.com/

https://www.instagram.com/repatrn/

https://twitter.com/repatrn?lang=en

https://news.sap.com/africa/2020/10/ghanas-ambitious-plan-to-minimize-plastic-waste/

https://www.pyxeraglobal.org/circular-cities/

https://www.pyxeraglobal.org/paradigm-shift/

https://www.youtube.com/watch?v=tkOLq6axqAo

https://www.pyxeraglobal.org/partnerships/

https://www.chathamhouse.org/2019/05/inclusive-circular-economy

https://pacecircular.org/sites/default/files/2021-02/circular-agenda-plastics-feb2021_FINAL.pdf

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