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Date: 2024-05-26 Page is: DBtxt003.php txt00010517

Circular Economy
Excess Inventory

As companies embrace the circular economy, are they missing a trick?


Peter Burgess

As companies embrace the circular economy, are they missing a trick?

'unwanted' products piling up in your warehouse?

Our approach to using natural resources has changed dramatically over the last 10 years, with companies becoming more aware of the need to shift from a linear production model of take – make – dispose, to a more responsible model which considers the full product lifecycle. This has placed greater focus on reducing waste and negative environmental impact. In response, many businesses are creating innovative ways of re-using and recycling the surplus and waste materials companies and consumers produce.

But are many of today's companies missing an obvious and simple opportunity to contribute positively to a circular society? Talk of a circular economy is high on the agenda thanks to organisations like Ellen MacArthur Foundation. However making this a reality may be many years away. In the meantime, our manufacturing and retail industries have a massive opportunity to use their products to support communities both locally and across the globe, demonstrating they are socially responsible brands.

For the last 19 years, the charity In Kind Direct has been working with over 1,000 companies to unlock the potential of their surplus goods, re-distributing them to UK charities and social enterprises working at home and abroad to help develop thriving, resilient communities. The model is a simple one: companies donate their products to In Kind Direct which acts as a logistics 'middle man', enabling thousands of small grass roots organisations to access the goods they need to run their services or give to people in need. The effect is dramatic. To date an estimated 13,000 tonnes of product have been diverted into productive use, enabling over 7,500 charities to save money and help millions of people every year, including some of the most vulnerable in our society.

So why is product donation not a core part of every manufacturer's model?

Successful manufacturers have built their reputations on delivering a consistent supply of faultless products to consumers. This has required sophisticated demand forecasting models, efficient production lines and stringent quality assurance protocols. But no business is perfect, and as demand and supply fluctuate, errors occur, strategies change and 'unwanted' products still emerge. More often than not those products are in perfectly usable condition but don't pass the brand test. Sometimes the packaging is not quite right, there is a slight imperfection in the product or the 'best before' date is approaching. Manufacturers are left with a dilemma between selling on to wholesalers for pennies in the pound, re-processing, or worse, sending usable goods to landfill. All options come at a cost and because the products are seen as 'unwanted', the priority is all too often to minimise loss rather than create any value. More businesses could reverse this approach and begin thinking of surplus product as an opportunity for delivering social impact.

Last year alone, over £11 million worth of goods were distributed by In Kind Direct. This included everything from clothing and toys for women and children fleeing violence, toiletries for homeless young men, or essential cleaning supplies for families struggling to make ends meet, to IT equipment helping elderly people become more digitally savvy.

The effect doesn't end there either. Businesses are starting to realise the positive effect socially responsible activities can have, not only on the organisations and beneficiaries they directly support, but also on their own workforce, their customers and even their shareholders. Employees who are proud of their company's charitable initiatives are likely to be happier and more productive in their jobs. With the rise of social media, customers are increasingly expecting a one-to-one relationship with businesses and giving preference to companies which operate in a responsible way. More and more investment is going into sustainable practices in order to face the huge challenges of climate change, resource scarcity, overpopulation and inequality. Sustainability is not just about ensuring the environment is preserved and your workforce is well treated. It's about taking a global view of the ecosystem in which businesses operate and understanding the virtuous circle started by doing what is right.

By giving a new lease of life to products that would otherwise have been sold off at a fraction of the price, remanufactured or sent to landfill, companies can instead create social value. As products are used by charities and their beneficiaries, these donations make a tremendous impact on local communities, and in turn, on consumers and employees, giving the circular economy a brand new spin.

Though every company should aim for zero waste, there is still a long way to go before surplus and slight seconds completely disappear. While companies grapple with how to develop a circular approach, product giving is something to start doing today. It's efficient, simple and it changes lives.

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