Guess how many parts a car consists of? You are probably wrong: from at least 20,000 parts. Consider that each of these parts also consists of components, made from various raw materials and semi-finished products, and you understand how complex the supply chain is that ensures we can still get behind the wheel.
The industry must become more sustainable
Now industrial companies, regardless of whether they supply electric cars, chemical products or clothing, must become more sustainable. And as soon as possible. Their impact must be reduced by recycling more, minimizing the CO2 footprint or rather becoming completely circular. But how do you ensure that all the parts, all the suppliers, join in such a sustainable transition?
Circularise is the challenger of 2022 – see the Challenger50 here
It starts with: knowing what you get delivered and what you put in your products. Make the entire chain transparent, say Mesbah Sabur and Jordi de Vos from Circularise, and you will get a handle on how circular you already are and where the opportunities lie.
Digital product passport
The two Delft engineers have therefore been working with their startup since 2016 on what they call a digital product passport. They create a comprehensive digital passport of each product, of each raw material, containing the characteristics and origin. ‘We bring digital transparency to complex production chains’, summarizes Sabur.
And they don’t shout from the rooftops that blockchain is the backbone that makes it impossible to cheat. But Circularise is precisely a company that uses the system, where it really proves its added value. A nice counterbalance to the pessimism that the falling crypto exchanges are provoking around blockchain.
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Blockchain solves communication problems
“The blockchain allows us to approach the problem from a different perspective,” says Sabur. “It is largely about communication, about access to information. Now you often have to make do with an email from the supplier: I have delivered this, and that is roughly what is written in it.’
“There are also manufacturers who clearly indicate how their devices must be taken apart in order to recycle them. But it leads to paper manuals with a hundred instructions: it is inflexible and impossible to apply to, for example, all refrigerators that a white goods manufacturer makes’.
If information is available digitally and in one place for everyone who has an interest in it, that communication problem will be solved. ‘And our technology keeps it secure too: you don’t want to share how your product works with everyone, but give parties you trust access to the data they need.’
Big bucket of growth capital
Sabur and his partner founded Circularise out of college. After a significant run with a trio of pilots, they now have real momentum. With a nice group of customers, including Porsche, and in November they got a big bucket of growth capital to really roll out their circular mission.
‘In our early days, the big question was: why would you as a supplier deliver that information digitally and become our customer for it? For recycling companies, the advantage is of course clear. In the long term, there will also be legislation that will force manufacturers to provide a product passport, starting with batteries. But we didn’t want to wait for the business case for the manufacturers.’
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“That’s why we decided to approach it from the suppliers’ point of view: they want to differentiate themselves from their competitors. They succeed in this by producing more sustainably with more use of recycled or bio-based materials. Everyone tells that story, of course, but if you can also prove it hard, you stand out. Then you can indeed enter into a discussion with a Greenpeace by submitting the evidence: this goes into materials and it comes out. Then you have a stronger story’.
Each molecule in the chain in the picture
If all parties in a production chain use Circularise’s digital passport, every molecule comes into view, so to speak, when the accounts are closed. mass balancing this method is called: you don’t track every gram of substance, but at the balance level you know how much material circulates in each link in the chain.
“It is not unimportant, because you want to prevent a party from buying an organic substance, mixing it with other material and reselling it as 100 percent organic. Large amounts of money are involved in supply chains, which leads to corruption.’
It is no problem that you do not simply leave such information to a Delft start-up. That’s what blockchain solves for Sabur: ‘You wouldn’t hand over your database of product information to any individual party. But the blockchain we work with ethereum is really a world computer that no one owns and where no one has the power to manipulate information. Fortunately, customers are not deterred by the buzz around cryptocurrencies: they understand the strong concept and independence of our system.’
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Neste and Asahi Kasei invest
What makes Circularise – as a Yes!Delft startup, it has an office in the Hague branch of that incubator – something special is the combination of transparency and confidentiality, says Sabur.
‘You can specify how much you want to share and with whom. It’s not important to a coffee maker, but in chemistry you don’t want to reveal your recipe. And it’s an industry where we have a lot of traction right now. The more complex and larger the production chains, the more interesting we are to the players.’
Not for nothing, not only investors such as Brightlands Venture Partners and 4impact capital participated in the Series A round of 11 million, Neste and Asahi Kasei also joined. The first is a Finnish energy producer that is at the forefront of renewable fuels, the Japanese Asahi Kasei is active in plastics and other chemicals. ‘We are also driving strongly in Japan. Not because of the legislation there: They look more towards Europe. It is not easy to do business there, but we have now found a way.’
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Only the Porsche case. How does Porsche benefit from the Dutch startup’s passport? A Porsche also consists of tens of thousands of parts, but each of them still involves 6 to 21 suppliers who supply raw materials or process a semi-finished product. But it is not Porsche itself that has called Circularise.
“And it’s not direct suppliers either, because a car manufacturer works so closely with them that sustainability is under control. But Porsche gets less done by the suppliers in the four or five shells around it. And we turn it around, offering suppliers with our passport the opportunity to demonstrably mark themselves as a more sustainable party.’
Bio-based kitchen machine from Philips
Circularise ran other great projects with Philips, which partly manufactures kitchen appliances from bio-based plastic, and the suitcase manufacturer Samsonite. ‘They make suitcases from recycled plastic and also show how they can be traced on the product itself.’
With the fresh millions, Sabur wants to at least double his team to around eighty people. They are already spread over The Hague, Barcelona and the United States. “Half around engineers and developers, the other half is equally divided between operations and sales. We are of course looking at the recession that may come. But we also make use of this phase, where a lot of talent becomes available. Many companies’ budgets are getting smaller, but they often maintain their sustainability budget.’
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A label on each product
What is Sabur most proud of? ‘On our team and our product, actually. And to the positive feedback from customers who continue to use it and no longer look at other solutions. The next milestone will be to scale this up. For more products, and raw materials such as rare earth metals and minerals. In 10 to 20 years, we will provide all products with a digital information document, just as you have a label with a list of ingredients on all foods.’