Supply Chain Data & Material Responsibility

In last week’s circularity feature we explored the unspoken, yet essential step towards circularity - material transparency. Circularity requires product knowledge in order to fulfill the maintenance, reuse, remanufacturing, and recycling standards of a circular economy, for both the quality and health of products long-term. Perhaps the most evident barrier to broad material transparency goals is the status quo set by long-established supply chains. In this part of the Toxnot Circularity Series, we will investigate the obstacles of collecting supply chain data and the idea of Extended Material Responsibility in supply chains. 

Data Collection Isn’t Easy

Toxnot’s conversation around circularity is a candid one and we aim to approach supply chain data collection in the same way. The complex supply chains that make our way of life possible can double as the barrier to entry into the circular economy. Products with short and tightly integrated supply chains are the exception rather than the rule. In most cases, suppliers have suppliers, and those suppliers have suppliers, and the pattern repeats. Additionally, full material disclosure (FMD) data (the data needed to meet circularity requirements) can be challenging to obtain no matter how few suppliers you are engaging with. To get to FMD, a complete bill of materials (BOM) is needed from suppliers, as well as any specific end-of-life data they might have.  The reality is that many product and sustainability teams can feel completely overwhelmed by the magnitude of their supply chain and there are no instruction manuals guiding teams on how to reasonably collect the material transparency data they need to meet circularity goals. 

The intention of circularity can be present in a company, but the execution of the crucial material transparency step is especially tricky because it relies on the cooperation of suppliers. There are many reasons why suppliers might not provide you with the data you need and the approaches to dealing with those challenges can vary, such as: 

• Corporate Bureaucracy & Legal teams: These two components of large supply chain actors are a large part of the “status quo” we refer to. Large supplier companies commonly embrace data secrecy to protect their formulations and are known to be slow-moving. With seemingly infinite resources, large suppliers tend to make the rules instead of following others so it can be hard to get the material data you are looking for. While this is perhaps the hardest issue to tackle in circularity, it is also the ripest for change and collaboration. Unified supply chain requests, providing visibility of benefits across the supply chain, and even regulation are ways that individual manufacturers can participate in and/or support overcoming this barrier. 

• Technological Obstacles: Traditional exchange of supply chain data has consisted of a lot of emails. In the past, companies have relied on email for exchanging their highly sensitive BOM data. It is becoming more and more standard to use secure platforms like Toxnot to survey for and collect this information, but there are still challenges present. Suppliers specifically have been behind their manufacturing counterparts in adopting software platforms to share data so this disconnect can be hard to navigate. More universal requests from the same platform across manufacturers is a way that manufacturers can approach this disconnect. In short, keep asking for data in the platforms you use; sooner or later suppliers will need to follow, especially once they understand how they can benefit from them as well!

• A Gap in Technical Understanding: Due to the complexity of supply chains as mentioned above, your data requests may not always reach the right people at the right organizations and this can be time-consuming. For instance, a textile manufacturer may survey their textile component supplier (i.e. a yarn supplier) for FMD data, and they might only receive back the composition of the yarn itself - usually a homogenous biological or synthetic substance. However, the dyes that give pigment to the yarn are completely missing and the yarn supplier isn’t sure what you’re asking for or where to get it. In order to get the complete breakdown of that dye formulation, you often need to speak to someone else in the company or go deeper into the supply chain altogether. Improving this process is also a collective effort in establishing expectations for material transparency and enforcing requirements for suppliers.

Worth the Effort

Despite the challenges, supply chain data collection is possible and absolutely essential in the path towards circularity. Erem (https://eremlife.com/), a new outdoor desert footwear company, is the perfect example of what it means for your time and resources to be worth the effort. From their inception, Erem’s brand knew they wanted to embody circularity in its entirety. Erem’s team scouted suppliers that could provide materials that would not only comply with the ability to repair and reuse their boots, but who also would be willing to provide the supply chain data they needed in order to have confidence that the materials could make their way back to nature at the end of their life. With Toxnot’s help, Erem surveyed their suppliers with Toxnot’s supplier survey capabilities, received data back, and have the complete boot(s) of their Biocircular dreams. Circularity in supply chains might take a bit more time, effort, and even money upfront, but as Teddy Roosevelt famously said - nothing worth having comes easy. 

Extended Material Responsibility

A term that we’ve coined here at Toxnot is Extended Material Responsibility (a close relative of Extended Producer Responsibility). This is the idea that all actors in a supply chain carry some of the responsibility for the products and materials they create, especially suppliers that are the last point of known material composition. Above we discussed some of the difficulties of supply chain outreach and the reality that sometimes suppliers do not provide FMD. This is where Extended Material Responsibility is key - Suppliers can withhold materials transparency data so long as they are willing to take materials back and close the loop themselves. Without material composition, there is a critical block in the circular model, so accountability must be passed down the supply chain as needed. This is yet another reason for suppliers to actively participate in transparency efforts to save themselves time, money, and effort long-term. 

In addition to holding all supply chain partners accountable for their product’s circularity, this idea of Extended Material Responsibility reaches beyond end of life and recycling efforts into the creation of products. The circular economy asks us to not only design out waste but to also end the creation and reuse of toxic materials. Adoption and enforcement of Extended Material Responsibility will encourage accountability at all levels of the supply chain, aiding the efforts toward circularity. 

The Elephant in the Room

It’s no secret that a significant challenge of circularity in action is the viability of take-back programs. Full Materials Disclosure and Extended Material Responsibility are strategies for getting supplier data but materials and products still need to be correctly identified at take-back to complete the cycle.  The purpose of a take-back program is to take products and materials and reintroduce them to the remanufacturing process. Various companies actively working towards circularity have these take-back programs, but few have really been tested at scale. This is very much still cutting-edge and perfecting the processes and infrastructure needed to achieve this will take time. However, supply chain outreach in combination with Extended Material Responsibility are readily available tools that will help us get closer to large-scale, pragmatic circularity. 

To learn more about ways to improve your supply chain outreach responsiveness or how to use Toxnot to complete your outreach, check out these resources:

Three Ways to Improve Supplier Response Rates

Supply Chain Management on Toxnot

Supplier Survey Help Resources