Operational Trends | #02: The Reverse Flow Must Be Designed Too.

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A promise easy to say and a problem hard to do

There is a word appearing densely on labels, in advertisements, in annual reports, and it sounds very beautiful: circular. Circular clothing, circular packaging, the circular economy. The word evokes a tidy closed loop where nothing is thrown away, everything comes back and lives another life. It sounds like a promise of cleanliness. And precisely because it is easy to say, easy to print on a label, easy to drop into a campaign, most of what carries the word circular today stops right there, at words.

This week, two British fashion retailers, Marks & Spencer and New Look, joined hands to build a circular textile value chain, to deal with the environmental impact of a textile industry that contributes a very large number to the British economy. At first it sounds like yet another green story, the kind people skim and forget. But look closely and there is one detail worth pausing on: two retailers who are rivals on the shelf are joining hands. They are not cooperating to sell more, they are cooperating to get goods back. And that getting-goods-back, the act of bringing a sold shirt back around, turns out to be an operational problem far harder than selling it in the first place.

This is exactly where circular forks into two very different branches. One branch is circular as a message, a coat of green paint over the old model, where people talk about a closed loop but in substance still sell in a straight line, and the so-called collection is just a bin placed in the corner of the store for looks. The other branch is circular as a real operating system, where you must design a supply chain running backward, complete with collection, transport, sorting, grading, and processing, just like a forward supply chain but going the opposite way. This article is about the second branch, because the first needs no analysis, it needs only a graphic designer.

The central thesis, stated plainly at the outset so the reader knows where we are going, is this: circular is not a moral value stuck onto a product, it is a second supply chain running backward, and it is harder than the forward chain, so it must be designed rather than left to close itself. The loop does not close itself. The gravity of business always pulls materials along a straight line, from raw material to product to landfill, and bending that straight line into a circle takes effort, takes design, takes money, exactly like bending a straight steel bar into a ring. Whoever understands that makes money from circular, whoever does not makes only slogans from circular.

To dissect this bending of a straight line into a circle, the article will use three real operations tools, and use them exactly where they bite into reality, rather than building three disjointed lectures. The first tool is reverse logistics, the art of designing the flow that brings goods from the user’s hands back around. The second is design for disassembly and design for recycling, that is, deciding right at the drawing board whether a product will later be easy or hard to take apart and recycle. The third is break-even analysis, applied to the life-or-death question of whether this recovery loop makes money and from what volume it begins to make money. Those three tools answer three linked questions: how to get goods back, what to do with them once back, and whether doing so is worth the money.

We will not go in tool order, but follow the actual reverse flow of materials, because that is how an old shirt really moves through the system. It begins at the moment someone decides to stop wearing it, passes through collection, reaches the sorting table, then branches into one of many different fates, and finally, if the system is smart enough, it sends a signal back all the way to the drawing board to do it differently next time. Going along that loop, we will meet the three tools exactly where they belong, and see why, lacking any one of them, the loop breaks.