As the
number of individual product components and actors in its construction process
rises, the supply chain rapidly becomes more complex as well, as it describes
the network of resources and actions that to produce and distribute a product
to its final buyer.
As such,
the supply chain is a linear concept due to be transformed when applied in a
circular economy context which aims at ‘closing the loop’ (or chain…) for each
product, but just as well for each of its composing elements and raw materials.
Defined by the number of components, an increase of product complexity thus directly leads to an even bigger increase in the amounts of loops to be closed and thereby an increase in (supply) chain complexity. Defined by the number of actors, an increase in product complexity leads to an equal increase of [performance] contracts and thus once again an increase in (supply) chain complexity through a need for an alignment just as well.
Conclusion: in order to counter (supply) chain complexity in a circular economy, one must strongly invest in product simplification. But why is high complexity a problem?
In their
2017 report on productivity in the construction industry, the McKinsey Global
Institute studied the root causes that lead to our sector’s struggle to
increase productivity. One of them was the high degree of personalization
options of our sector: “A house with a unique design and perfectly matched to
the shape of the land plot, and an industrial structure optimized for a
specific process. This makes the key driver of productivity gains –
standardization and repeatability – difficult.”
As standardization translates into fewer product variants, in essence, it means cutting down on the supplied product and thus chain complexity. Based on this analysis, product complexity leads to a decrease in productivity. But why is low productivity a problem?
Increased productivity translates into a margin increase that comes with options, choices to be made: higher profitability, or the option to either invest (ex. in sustainability improving innovation) or to use the increased margin to cut down prices and keep the profit on par. A combination of those actions translates into real estate projects with a ‘business as usual’ investment cost, but significantly improved sustainability through the incorporation of previously unaffordable innovative techniques and products.
Standardization and other supply chain simplifying measures incorporated in circular economy theory generate the increase in productivity. We need to both increase our ambition level for sustainability and keep profitability on par.
Apart from viewing its vast share in overall
environmental impact as an opportunity for positive impact, real estate
investors can go further through using their real estate projects as enablers
for circular economy initiatives.
When looking at circular economy as the material
equivalent of the Trias Energetica concept in energy use, we aim not only at
closing the loops, but above all on minimizing demand in the first place. An
objective that could be reached through implementation of sharing economy in
real estate translating in co-owned or co-rented real estate concepts such as
co-working, co-housing but just as well co-renting distribution center storage
space etc.
As the built environment -with real estate as a prime component-
impacts our every move, it is by investing in circular economy facilitating
real estate that we can leverage the sector’s impact to generate a radical
shift in the overall economy. An example can be found in double flow
distribution centers, ready to take in the returning flow of goods resulting
from ‘closing the loop’. A diversified set of double flow distribution centers,
ranging from small, publicly accessible inner city storage spaces to city scale
ones at its edges, circular economy initiatives are provides with the buffer
for temporary storage of goods in transfer between users and cycles.
Real estate investors can push forward the introduction of circular economy by offering the infrastructure needed for temporary storage and recirculation of diverse (recovered) goods.
CASE STUDY: BLUE GATE
ANTWERP
More than a century ago, in an effort to separate its
highly flammable petroleum activities from storage facilities in the Antwerp
harbor area, the city decided to create a petroleum cluster at the city’s
southern edge named “Petroleum South’. Decades later, the activities came to a
stop resulting in a vast, well located but -as regulation at the time was
virtually non-existent- heavily polluted site waiting for a new destination.
Based on the limited availability of materials, the
circular economy concept focusses on their re-use. Applied to the earth’s
surface area, based on its equally limited availability, this reasoning leads
to the concept of circular land use in which sites -after becoming obsolete for
their current function- should be transformed instead of simply abandoned.
Today it is the distribution of goods and knowledge
building wherein added value is created. Hence, Petroleum South became Blue
Gate Antwerp which uses its location both along the river Scheldt and the
southern edge of the city to bring those activities together and push the city
forward through a focus on innovation in digitization and sustainability. Blue
Gate Antwerp’s focus lies in (a) creating a breeding ground for innovative
ideas, bridging the gap between research and large scale production; (b)
facilitating circular economy through creating spaces for adapted city
distribution and mobility solutions.
As such,
trough facilitating circular material and product development, production,
(closed loop) distribution and mobility, Blue Gate Antwerp goes beyond circular
building, exploiting real estate’s potential for positive societal impact to
the maximum.
INCUBATOR AND OPEN INNOVATION HUB
At Blue Gate, the University of Antwerp develops ‘Blue_App’
as an open innovation hub where potential entrepreneurs and innovators from
within the university can co-work with external partners. The ‘pre-incubator’
thereby facilitates development and validation of innovative technologies up to
the ‘proof of concept’ point. Alongside with ‘Blue_App’, ‘BlueChem’ is
developed by a consortium of public and private partners as an incubator for
start-ups who have passed the ‘proof of concept’ but are not yet ‘ready for
market’ due to the need for translation into a product suited for mass
production. Once product maturity has been reached, production facilities using
circular production processes can be built alongside the (pre-)incubators,
close to both the city and multi-modal circular distribution hubs.
MATCHING ACTIVITIES
As circular production processes are based on ‘closing loops’, one process’ waste becomes another’s resource. In order to identify possible synergies between candidates, Blue Gate uses a newly developed identification tool which assesses the organizations’ match with both existing participants as with the development’s overall ambitions.
Based on the United Nations’ Sustainable Development
Goals, it provides insight on (a) an organizational level (i.e. CSR-policy
maturity and thereby value match), (b) its match with the site’s location,
being the water-bound and near the city, and (c) its connectivity potential to
external material and energy flows. An example of such a selected activity is
the creation of a construction consolidation center.
CONSOLIDATION CENTER
A
consolidation center channels and buffers raw material and goods flows. Hereby,
aimed at the Antwerp city district, it facilitates the supply chain. Today, a
research project by Bopro, Van Moer Logistics and VITO, co-financed by
Vlaanderen Circulair through its ‘Open Call for Circular Building’ program,
rethinks the concept to take the return of construction materials and goods
(‘closing the loop’) into account.
The center
will both limit the impact of Blue Gate’s construction process on its
surroundings in terms of waste generation and increased heavy transport. Later
on, it will act as a multimodal city scale distribution hub for circular
construction materials.
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