Fairphone outlines challenges of circular supply chain

Producing, taking back and refurbishing circular products requires new ways of supply chain planning. ‘You have to be able to forecast for ten years ahead how much will be returned and in what quality. That is complex because you have no data on future products,’ says Lars Kooijmans, head of supply chain at Fairphone. He told his story during the recent Dutch National Distribution Day event.

Circularity was the theme of the 35th edition of this event, organised by Holland International Distribution Council (HIDC), the association that tries to attract foreign companies to the Netherlands. ‘We always talk about the supply chain, but actually we should talk about the supply circle,’ HIDC president and former minister Annemarie Jorritsma said in her welcome address. ‘Retrieving products at the end of their life cycle is becoming increasingly important.’

E-waste retrieval from Ghana

After that keynote speaker Lars Kooijmans of Fairphone explained how this Dutch smartphone manufacturer manages to market an e-waste neutral product and what is involved from a supply chain perspective. Fairphone makes smartphones that are easy to repair and therefore longer lasting. ‘A phone that lasts two to three years longer reduces the CO2 footprint by 30%,’ Kooijmans told the audience. In addition, Fairphone also calls on customers to return broken parts and old devices, so that the company can refurbish or otherwise reuse them.

‘We cannot enforce that all products we make come back to us, but we make sure that the amount that does not come back is compensated by recycling other e-waste. We do this, for instance, through collection campaigns in schools or by recovering e-waste from landfills in, for instance, Ghana.’

Production line dismantled after a year

From the EU, in the form of so-called WEEE legislation, there is increasing pressure on high-tech manufacturers to make their electronic devices repairable like Fairphone. One of the consequences is that companies have to decide how many spare parts to stock, Kooijmans knows. ‘In our case, devices and parts are produced sustainably in China, but we cannot endlessly reorder parts afterwards.’

In the smartphone industry, he says, it is common for a production line to be completely dismantled after, say, a year. ‘We can place one more order for spare parts after that, but then it stops. We should then be able to do ten years with that, for example.’ Having parts or complete smartphones made here in Europe is unfortunately not yet possible. The infrastructure for that is lacking.

Return flow difficult to predict

What makes it extra challenging for an e-waste neutral company like Fairphone is that spare parts also come from the return flow, from customers returning their phones or parts. ‘This is not yet in large quantities, but this circular flow is expected to grow substantially. To avoid being stuck with stock, you need to be able to predict these numbers accurately. Anything that comes back and can be refurbished, we’ll no longer have to order from China.’

Companies need systems that can better forecast and optimally align this demand and supply. Kooijmans: ‘As a company, we naturally generate more and more data on, for example, lifespan, return rate and quality of returns. However, this is historical data, while new smartphones are getting better and better. I think we can still gain a lot here with AI and other advanced techniques.’