Green manufacturing using ‘Circular Replenishment Chains’ model

  • Articles
  • Jan 09,24
Circular Replenishment Chains’ (CRC) are chains of industries which consume each others wastes, to produce finished products and services for consumption. Operating under the CRC framework will lead to greater transparency, lower costs, speedier deliveries, more milk runs, and a higher safety level, says R Jayaraman.
Green manufacturing using ‘Circular Replenishment Chains’ model

The term ‘Green Manufacturing’ (GM) has been in frequent use in the last few years, although it came into first use sometime in the 1990’s. I remember this because, in Jamshedpur, the top leadership of Tata Steel was getting worried about the environmental pollution being caused in the city due to the emissions from the various manufacturing units in the plant. The coke ovens emitted fumes, the LD furnace shot out brown coloured gases during the steel making process, the blast furnace had its own way of contributing, especially through the emitted slag from its belly. All these were polluting the town. In fact, it was known that if one were to sit outside in the evenings in the big, beautiful bungalow lawns adjacent to the steel plant, one could easily be coated with coal and furnaces dust, a thin film, which one could feel physically. 

The top managers felt that this was unacceptable, and went on to do something about it. The first set of ESP’s – Electrostatic Precipitators – were installed, and much of the fumes and other gases were absorbed. There were four in-house thermal power plants, supplying about 100 MW to the operations. The ESP’s picked up the dust from the emissions of the boilers and cleaned up the same. In about a few months, the MD of the company was quite proud showing the new photographs of the Jamshedpur skyline, with the fumes from the plant reduced to nil or close to. This was my first experience with GM. 

The company had two big ponds where water was stored, to meet the requirements of the plant operations. After use, much of the water was put back into these ponds. But, to improve the recovery, many more cooling water towers were installed, to capture the used water and put it back into circulation through the ponds. Around that time, some companies had found a way to use sea water in boilers and other devices. This was a step in conserving potable water. A fully equipped instrument truck was put into drive, to tour the city’s areas, to monitor the pollution level, which today, every newspaper is touting as the AQI – Air Quality Index. All these measures were taken as a part of the ‘Total Quality Movement’ (TQM) and ‘Business Excellence’ (BE) under the aegis of the ‘Tata Business Excellence Model’ (TBEM). Looking back on those times, it becomes clear what impact GM can have on a company’s business over the long term. Today, Tata Steel is a powerhouse in GM, marching speedily towards adopting hydrogen in its operations.

There are several aspects of the GM which should occupy the minds of senior management in today’s manufacturing industry, as well as many of the service industries too, especially, the food and beverages industry, the healthcare industry, the pharma industry and the municipal waste recycling industry. All these are significant contributors to environmental degradation in the long run. It is ironic that the production and consumption in these industries, as on date, largely leads to such high levels of emissions and effluents that the consumers themselves are at peril, and may not remain fit enough to consume all that they are doing so now. Only GM can prevent this rather curious situation from becoming an all encompassing one. It is said that every civilisation sows the seeds of its destruction from within. The industrial civilisation has been doing that for the last many years. To understand the severity of the threat, one needs to go back in time to understand how things came to such a pass. 

The steam engine – driver of the ‘Standard of Living’ mantra
The steam engine was the first polluter – while it drove many pumps, trains, motors etc., it also led to the emission of coal particles, as the steam was generated by burning coal. This is the origin of the irony. Had the steam engine not been developed, humans would still have drawn water from the well by using the bucket tied at the end of a rope. 

It may have taken more time, no doubt, but then there were no emissions, and the humans were kept ‘usefully busy’. Those who drew the water didn’t have to go for long early morning walks – they got their quota of exercises by doing something useful for them and their families, neighbours. This ‘socially and personally useful’ work was a winner in terms of sustainability. It met the needs of the people around, and did not pollute. But, the argument was that such a life meant a ‘low standard of living’. No cars, no big bungalows etc. Hence, the steam engine builders, in their quest for ‘raising the standard of living’ of the masses, went on a spree of discoveries and inventions, which are still not completed. 

The ‘standard of living’ (SOL) became a new mantra, the main mantra of the industrial age, under which anything and every excess could be justified. For example, one had to have high volume production of steam engines, as more and more people could travel. So, most abandoned their horse drawn carriages, and shifted to the railway. This meant that coal mines had to be operated, to keep the ‘wheels running’. And so on, and so forth. The cycle was – invent new gadget which will raise the SOL – explore and exploit new sources of raw materials form the earth (mostly) – provide new products and services – which will lead to more demands for further increasing the SOL. 

The economists were not to be left far behind – they invented the GDP, GNP, per capita et. al., so that the SOL efforts could be chronicled, measured, graphs drawn to show the ever increasing SOL. This was OK till about the middle of the last century. It is only when the chickens came to roost did people wake up. But, by then, the SOL driven industry was on more than four wheels, and thundering down a tall mountain, with no brakes in sight. What went wrong? 

A wasteful economy is developed, but ‘replenishment’ is the answer
Obviously, the SOL meant that some grabbed all the resources, exploited them well, and served a limited circle of humanity. In their quest to do so speedily, they used the old theories of colonialisation – capture the source of fossil materials like oil, gas, iron ore, other minerals, etc. by subjugating the people. This subjugation was done through a sophisticated network of economists, businessmen, with full governmental backing. So, over time, the ills became evident. For example, if the steam engine inventors had found a method by which the coal used could be mined in an environmentally friendly way, then it could have been sustained. 

How to do this? By following a policy of replenishing the lost materials – this is a simple principle using which many industries have found an economically profitable way to manage inventories. How can one replenish coal? By planting trees, by blending coal with synthetic or natural materials which can reduce the consumption of coal, but yet provide the benefits. Discovery of natural gas, and other types of gaseous fuel stopped the coal onslaught for sometime. The development of nuclear energy was another step in conservation. It was then surpassed by solar, wind, wave and waste gas driven turbines. 

This line of thinking – finding friendly alternatives, methods of conservation, developing substitutes and new processes for doing the same things, and more – is what GM is all about. Gandhiji spoke about ‘self-sufficient’ villages in India. Similarly, we need to develop and expand the concept of ‘self-sustaining’ industries. From the Industrial Revolution, we need to move to Sustained Industrial Revolution. To do this, we need to think globally and develop a ‘way of life’, to recognise that resources must be utilised in a manner which will take care of  the ‘replenishment’ angle contiguously. For example, if a company uses 1,000 cc of water, then it must look at how it can ‘regenerate’ that 1,000 cc, or parts of it. Obviously, not everyone can do this ‘regeneration’ on ones own. That is the reason why we must develop the ‘Circular Replenishment Chains’ model of industrialisation, going forward. 

The ‘Circular Replenishment Chains’ model of industrialisation
By collaborating, and exchanging material, water and energy streams between 11 public and private partners, the Kalundborg network increases resilience and economic gains for its members, while meeting ESG goals. Annually, combined benefits from the partners are 100GWh of energy, 635,000 tons of CO2, 3.6 million tons of water, and bottom-line savings of $24 million. This kind of symbiosis represents an immense opportunity for data transparency and the pairing of underused resources between companies. 

The industrialisation revolution model which started in 1770’s has run its course. It is clearly not sustainable, as many of the raw materials, which form the bedrock of this revolution, will soon run out. If we keep burning fossil fuels at our current rate, it is generally estimated that all our fossil fuels will be depleted by 2060. New reserves will probably be found before this point, extending the deadline somewhat, but it is worth remembering that if we are to limit global warming to the 'relatively' safe level of 2C by 2050, 80% of coal, 50% of gas and 30% of oil reserves are ‘unburnable’. We may run out of iron ore reserves by 2070. Thus, one key issue is the ‘running out’ of the resource. 

The second is the environmental damage that is caused due to the way of usage. This is usually measured by the carbon footprint. The third dimension is the human suffering. Due to the toxicity of the wastes, diseases and infections soar, leading to increased medical attention. The consequences could be prolonged pain and suffering, hospitalisation, large amounts of consumption of medicines. The fourth angle is the increase in the cost of goods and services due to the large wastage. The low yields means the cost has to be recovered through a lower volume of sales, leading to higher prices. Inflation and poverty are the results of such a situation. Due to the higher prices, the poor are left out of the consumption market, enhancing hunger and under nourishment related issues. So, what is the remedy? 

There are two routes. One is the ‘conservation route’, and the other, the ‘circular economy’ route. In this article we will only look at the second one. COP 28 is having many issues in addressing the first one. 

The ‘circular economy’ represents a host of solutions which are essentially centred around reducing or eliminating wastes. Companies producing goods and establishments catering to services are both waste generators. Wastes occur due to: defectives, unusable raw materials, consumers rejecting deliveries, products reaching the end of life cycle, work in process getting ‘lost’ due to in-transit, storage losses, and so on. Those who understand the lean management terminology, muda, mura and muri summarise the different wastes. The point is, by doing things ‘Just In Time’, a lot of these wastes could be avoided. This leads us to the main theme: creation of circular replenishment chains (CRC). 

What are CRC’s?
Wastes from the automobiles industry is used by the steel industry. Wastes from the food industry is used by the biomass/ biogas/ biofuel industry. In India, cowdung has many uses, there is no need to waste any of it. CRC’s are chains of industries which consume each others wastes, to produce finished products and services for consumption. The word ‘replenishment’ has been added to emphasise that even in a circular economy, producing output more than needed is to be avoided. Produce ONLY when needed, demanded, in the qualities and quantities demanded. This is a double-edged sword – it prevents wasteful production in the first place, and, second, wastes arising are processed (consumed) in the chains. Chains can be twins, triads, and multiple members. A simple twin is the iron and steel scrap industry and the steel manufacturing. Same is true for aluminium and copper. An example of a triad is the linking of the steel – automobiles – tyres industries. Similarly, pharma – chemicals – packaging. 

All these models are exemplified in the way a JIT based inventory system is managed. Goods are produced only when demanded by the distributors/ retailers. The bull-whip effect can be avoided by the use of Industry 4.0 techniques. This then becomes a role model way of managing the production – sales value chains. Thus, the CRC’s provide a new way of managing industrial progress which addresses sustainability and prevents environmental degradation. Going forward, governments should create conditions conducive to the formation of such CRC’s. The private sector also has a key role to play, especially the larger orgnisations. Those who produce in large volumes are also the ‘large waste creators’, and hence, their responsibility is greater. Industry associations should slowly get replaced by the CRC associations, which will work to promote sustainability. 

How will CRC’s benefit society? 
It is truism to say that waste reduction will improve sustainability. However, to make it happen, the world needs to introduce systems and mechanisms. It is imperative to recognise that the philosophy of CRC is the need of the hour. Companies should not only buy from suppliers and vendors, but must create a circular, closed-loop chains, to ensure JIT, replenishment oriented transactions. Those who are familiar with the Theory of Constraints (TOC) literature will recognise that the TOC advocates replenishment based inventory management, and there are several case studies available. The CRC’s will become conduits to practice this principle of TOC, which will lead to sustainability. By developing CRC’s, industry will be able to demonstrate that sustainability can be practiced. The improvement in credibility will encourage many industry players to join the CRC movement. Operating under the CRC framework will lead to greater transparency, lower costs, speedier deliveries, more milk runs, and a higher safety level. 

It is, therefore, recommended that industry should examine the CRC concept being proposed and adopt it as speedily as possible, to hasten the move towards sustainability. 

About the author:

R Jayaraman is the Head, Capstone Projects, at Bhavan's S P Jain Institute of Management & Research (SPJIMR). He has worked in several capacities, including Tata Steel, for over 30 years. He has authored over 60 papers in academic and techno economic journals in India and abroad. Jayaraman is a qualified and trained Malcolm Baldrige and EFQM Business Model Lead Assessor.

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