How Jaguar Land Rover ditched traditional supply chain thinking to create a closed-loop value chain
Paul Cassell, Vehicle Engineering, Jaguar Land Rover
8 March 2016
What’s the most important thing that goes into making a car more sustainable? The engine? The chassis? The fuel system? Metal does matter. But after analysing Jaguar Land Rover’s REALCAR closed-loop aluminium project we discovered it’s not parts but people that are truly at the heart of making our cars more sustainable.
At Jaguar Land Rover we recognised that using aluminium in our vehicles’ bodies would reduce weight and improve fuel consumption, which is better for tailpipe emissions and better for our customers’ pockets. However, with aluminium more energy-intensive to manufacture, we needed a new method to reduce costs and environmental impact during production.
Luckily we weren’t the only company grappling with this. Our aluminium supplier, Novelis, was on a similar journey to transform its practices and reduce its carbon footprint. Novelis was looking for a like-minded customer with a similar appetite for improving sustainability performance with whom it could collaborate. In 2007, the REALCAR project was born: a closed-loop value chain collaboration between Jaguar Land Rover, Novelis, Innovate UK and other partners, with the aim of introducing more closed-loop aluminium into Jaguar Land Rover cars.
In 2014, a group of employees from Jaguar Land Rover and Novelis got together to step back and critically evaluate the REALCAR project to see what could be learned from the project. We wanted to investigate what could have been done better, or faster, and share this for use by other companies and sectors looking to implement closed loop value chains and circular economy business models.
Our evaluation project was undertaken as part of the University of Cambridge Institute for Sustainability Leadership (CISL) Postgraduate Certificate in Sustainable Value Chains, a nine-month, part-time Masters-level programme designed for individuals and groups looking to embed sustainability into supply chains / value chains.
The course gave us the opportunity to explore the entire value chain, addressing business model innovation, customer consumption and critiquing existing tools and techniques. With this knowledge, we were able to reflect on the REALCAR project.
We also investigated our current business models, external engagement, communications and collaborations. Together, this gave us the understanding, support and tools to critically analyse the REALCAR project in a neutral space with support from academic colleagues.
As we worked through the project, we highlighted the key learnings for creating closed-loop supply chains / value chains. We believe these are transferable to other commodities and sectors when developing circular economy practices. They are:
Material suitability and innovation
The material used must be appropriate for closed-loop value chains. It is also vital to generate fresh thinking, nurtured by committed stakeholders. To start recycling more aluminium, we had to challenge previous ideas and best practices.
Establishing a value chain network
Traditional transactional supply chain thinking has to be replaced by a win-win value chain approach, where partners work in true collaboration to achieve collective goals, rather than those of the individual business. In order to be successful, a thorough communications and engagement plan for each stakeholder needs to be implemented.
Unwavering support and advocacy at a senior level is a must, as with any process that involves change in your business. It gives everyone confidence and momentum – and a means to help remove roadblocks. To make a circular economy work, all parties have to move towards shared values and broader project objectives beyond the individual interests of each party – and that takes leaders who are willing to champion this approach.
The Postgraduate Certificate in Sustainable Value Chains gave us the academic space to thoroughly investigate the REALCAR project and explore techniques other industries could use when creating a circular economy.
Our attendance on the course has delivered innovative insights and has expanded our network within companies addressing similar sustainability challenges. It has also improved collaboration with our suppliers and we hope it will inspire others, beyond the world of automotive aluminium at Jaguar Land Rover, to collaborate to transform their linear supply chain models into closed loop value chains which benefit everyone.