Fixing the Recycling Supply Chain: A Blockchain Solution
Originally published on Waste Advantage
The changing economic landscape of domestic recycling opens many opportunities for growth in business. Recyclers can now use information technology in operations management to gain key insights into their daily procedures and transactions that can lead to pivotal reductions in operations costs and growth in top-line figures.
Every day, companies, governments and municipalities publish statistics on recycling rates. Yet these measurements are often inaccurate because the system behind it is broken and disconnected. Each operation in the recycling supply chain is only able to confirm their own data, using packing lists and trading transactions. Nothing public exists to protect and support the recycling activity of the haulers, transfer stations and recyclers. These businesses have no honest exchange of information that allows them to communicate within the supply chain.
The issue of recycling begins with well-meaning consumers who do not know what bin to use or are confused by the ever-changing laws. Their mistakes at the curb become contaminants that fall on haulers and material recovery facilities to solve. The blame for these high contamination rates is cast up and down the supply chain, causing unease in our struggling recycling system. Recyclers across the country are trying their best but cannot prove their efforts without a unified system that is immutable and factual. Haulers live in constant worry about contamination and the effects to their bottom line. Little financial spread is available to improve recycling education. To meet ever-growing demands, we need a system that unifies the entire supply chain to turn waste into marketable material.
Data Analytics: Optimizing Daily Operations
Recycling operations have made significant strides in the past two decades. The U.S. EPA reports that recycling in 2017 reached its highest numbers ever in terms of both tonnage and diversion rates. That being said, we all recognize the sudden 2018 shift in international commodity markets and the toll it took on all recyclers, limiting a once diverse material acceptance list and affecting daily trade around the world. In this new global market, recyclers are looking with renewed interest at their revenue streams, operational costs and material flows to make calculated business decisions in order to avoid downsizing.
The use of technology can help rectify the pains the industry is experiencing. Technology helps businesses reduce operational costs in both time and money. Modernization can include operation optimization needed to integrate daily operations like vehicle routing, POS, inventory and facility monitoring. Upgrading current recycling operations using available technologies can help reduce operational costs and inefficiencies across the entire industry. Simply adding up-to-date technologies to existing recycling and hauling operations helps businesses save money by storing data and giving analytics with pinpoint accuracy. When applied across an entire network of operations, these data analytics will lead to system-wide improvements. No supply chain solution compares to the capabilities of blockchain.
Blockchain: What Is It?
In the past decade, the idea of blockchain as a verification platform has spread from its use in Bitcoin to applications in other economic sectors. Its popularity in technology comes from its ability to safely validate private data transactions. Essentially, a blockchain is a secure, shared database in which each connected computer adds new rows of information that are immediately verified and protected from manipulation. Once on the blockchain, general transaction details (such as time and date) are available for viewing, but private information is not included. Technically speaking, a blockchain is a distributed ledger comprised of users, called nodes, that uses third-party verification and cryptographic hashing to securely validate each datapoint entered by a node. Each time a new line of private information is entered onto the ledger, it is converted into a new and unique identifier, or “hash”, and represented on the ledger only by this hash. Since all the nodes are sharing the same hash data records, if someone like a hacker tries to alter or add false information, this change is immediately noticed by the other nodes in a way similar to a domino effect. This characteristic of blockchain guarantees that data entries are immutable and unbiased.
In this way, blockchain platforms work well to build a network of trust between users as well as viewers. While detailed information on each transaction remains private, its existence on the blockchain validates that it happened. Users can then point to the blockchain as a way of proving their activity to others.
Blockchain Applications in the Recycling Industry
In recycling, blockchain-backed reporting provides the trust that is currently missing between the public, producers and recyclers. By ensuring that transactions happening between multiple parties are trustworthy, each user of the recycling blockchain receives indisputable verification of their recycling activity. With each action guaranteed using recorded, data-derived proof, it begets a lot more confidence for recyclers to report their waste diversion rates and contributions to zero waste goals. Having publicly available certified procedures will not only increase the chances of winning contracts from sustainability-oriented governments or companies, but will also gain consumer trust. Ultimately, it will increase recycling rates and consumer confidence.
When considering the state of recycling, critics have claimed that the current system lacks trust and accountability. From a recycler’s perspective, issues have bred from a sudden shift in international trade markets and a rapidly growing interest in waste diversion targets; when combined they have exposed inefficiencies in the domestic recycling infrastructure. Lack of consumer engagement leads to unacceptable contamination levels in operations already under the pressure of low trading prices. Gaps in regional processing capacities and value chain networks prevent many programs from accepting materials for which feasible markets no longer exist.
With the recycling system under the scrutiny of the public eye, more of these supply chain challenges are rising to the surface, and recyclers as a whole are being forced to reconcile them. While this pressure is starting to promote domestic growth, good actors have become wrongly distrusted by the public and heightened anticipation has placed a tall order for system-wide improvements that cannot be implemented overnight. Since nationwide infrastructure development will indeed take time, blockchain-backed reporting of current recycling activity can serve to both rebuild trust with consumers and illuminate systemwide opportunities.
As the recycling industry continues to integrate optimization software, Internet of Things (IoT) sensors and other technologies into everyday recycling operations, the data collected by these systems can easily be connected to a blockchain platform. While data details would be anonymized on the blockchain ledger, their validity would be proven via the blockchain platform and the proprietary details would remain private to the business owner. Each load of material transported or processed would become blockchain-certified without sensitive data being shared outside the business. This transaction-by-transaction recording with verification by the blockchain has the potential to lead to operational reports with successive scales of benefit. Internally, these detailed analytics can indicate to recycling business owners their potential cost-savings and revenues. Publicly, the verification of waste diversion operations can be added to company sustainability reports, investment portfolios and future project proposals that can lead to new contracts and renew trust with existing customers.
Looking Forward: Efficient and Verifiable Recycling Supply Chains
The changing economic landscape of domestic recycling opens many opportunities for growth in business. While the timelines for municipal recycling goals and corporate recycled content targets are narrow, recyclers can use information technology in operations management to gain key insights into their daily procedures and transactions that can lead to pivotal reductions in operations costs and growth in top-line figures. In an economy that increasingly values sustainability, many operational efficiencies also positively impact the environment: reducing vehicle idling time and empty loads, maximizing material throughput and reducing contamination levels all reduce the strain on the environment by lowering company emissions and increasing waste diversion rates. By validating this sustainability and recycling activity on a blockchain, recyclers can certify their recycling behavior to concerned customers, governments and other public onlookers. These new public-facing benefits will support more business innovations by proving that what is good for business can also be good for the environment.
By Stan Chen and DeNeile Cooper – March 1, 2020