How to Build a Circular Supply Chain for Electrification

This is a summary from the panel discussion of the same title by experts from Stafl Systems, Inventus Power, Delta-Q Technologies, ZAPI GROUP, and TE Connectivity at the Future of Electrification 2024 conference. Watch the full session here:

What is the state of circular supply chains in industrial and commercial equipment sectors? 

As the panel opened up with this thought-provoking question, a realization quickly set in: electrification has changed the supply chain game. Longer lifecycles, second-life batteries, and regional ESG (Environmental, Social, and Governance) initiatives introduced entirely new dynamics. 

Zhao Wang, Strategy and Business Development Manager at TE Connectivity, related her experience as a component manufacturer—one of the earliest stages of the supply chain.

According to Wang, the concept of circularity is still fluid. She stressed the importance of communicating with Original Equipment Manufacturers (OEMs) and system integrators to understand what circularity means to them. This idea is then refined through the lens of existing regulations to design a product that can be reduced, reused, and recycled. 

Trevor Steele, Business Development Manager at Stafl Systems, echoed this sentiment in the context of second-life for lithium-ion batteries. Despite the value, perhaps even necessity, of implementing second-life practices, Steele noted that the technology isn’t quite there yet. Was the battery dropped? Overheated? Improperly charged? Lacking historical backdrop, reuse applications remain limited.

These discussions shifted the panel to the next topic: what challenges are associated with establishing circular supply chains? 

Wang reiterated the relative infancy of the circular economy by noting that the industry is still trying to figure out how to implement it in practice. Suppliers, in particular, are facing the challenge of traceability. Circularity demands transparency, and metrics such as a material’s percentage of recyclability or CO2 emissions are increasingly called for.

Olimpia Bertarini, Global Purchasing Director at ZAPI GROUP, confirmed this demand firsthand from a customer perspective. Bertarini added that carbon neutrality reporting remains a significant challenge due to the lack of standardized measurements. Adding to this is the issue of cost. Bertarini noted that these new requirements bring new expenses, raising the question of whether customers will be willing to share them, especially if they do not understand circularity themselves.

Tom Nguyen, Vice President of Business Development and Product Strategy at Inventus Power, weighed in on these challenges from another perspective, observing that many companies likewise suffer from a purely reactive approach. The single-minded objective to achieve faster time to market—without considering the full supply chain—often results in costly backtracking. Education on this topic, Nguyen said, is needed to drive genuine sustainability.

Steele agreed, noting that the traditional company culture of focusing solely on the bottom line acts as a barrier to circularity. In Steele’s experience, only high-performing companies breed a culture of ESG, focusing on the greater ecosystem from their roots up.

This led to a discussion of possible solutions to these problems. 

Wang reiterated the panel’s statement that education and awareness are key drivers to a truly circular economy. While government entities push greener initiatives through incentives and regulations, much can also be done by grassroots, non-profit organizations and corporate entities to educate consumers. In doing so, Wang expressed conviction that consumers will be more willing to take on the added costs that come with circularity.

Emerging technologies such as the Internet of Things (IoT) and AI entered the discussion as potentially powerful drivers. Bertarini explained that such technology could enable process optimization and data visibility across the circular supply chain.

How had panelists and their companies benefited from circular supply chain adoption? 

Bertarini identified the ZAPI GROUP’s circular, compliant mindset as the primary driver in designing a web platform for tracking each component, manufacturer, and supplier in the context of regulatory compliance. 

This accountability drove a zero-waste culture down to the supplier level, Bertarini explained. On top of traditional evaluation criteria, ZAPI GROUP emphasizes the ESG dimension, targeting zero defects to improve circularity and reduce waste from returns or repairs.

Steele and Nguyen pulled on this thread further by identifying logistics as a critical link in the circular supply chain. Every delivery, every return, and every product manufactured equates to carbon emissions—be that from the production itself or the transportation method. 

Further, circularity builds a more resilient supply chain, as Steele illustrated with a geopolitical scenario. War in a country that is a major helium producer creates a shortage, and since helium is used in microchip production, the effects can easily cascade into industrial markets. Circular economies, however, will be less affected as fewer resources are consumed, and existing resources are better utilized.

Wang agreed that, from an OEM perspective, the trend is now favoring lighter and smaller components wherever possible. This contributes to easier logistical management, aligns with circular economy principles, and stimulates innovation by pushing the boundaries of performance metrics like power density.

As the panel concluded, a consensus emerged: circularity is a shared journey, and every enterprise has a part to play. The destination of Net Zero emissions is in sight, and OEMs are engineering the electric future to get us there. 

Echoing the panel’s words, building a circular supply chain is not something we can achieve today, nor something we will achieve tomorrow. Rather, it’s an ongoing process—something we will continue to improve.