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.
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.
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.