Consumer preference for tighter-fitting jeans has had unexpected consequences for US Currency, a product that has for more than a century been printed on cotton-based paper made from the garment industry's denim scraps.  Now that virtually all denim contains skin-hugging spandex, a material that can ruin the paper on which bills are printed, the nation’s supplier of paper for minting currency, Crane’s, has abandoned its relationship with denim manufacturers in pursuit of purer cotton resources—specifically, cotton fiber straight from the field. In addition to removing a revenue stream for denim manufacturers—and increasing their waste disposal costs—the shift to raw cotton fiber increases material costs for the paper makers and may require investment in new production technologies to accommodate less refined inputs.

This supply chain disruption illustrates the risk connected to using waste as a process input. To be clear, using wastes as a feedstock is a strategic way to captures value that would otherwise have been lost—closing the loop and keeping existing resources in circulation and out of landfills. But waste is nothing more than a design flaw, and for any process, whether it generates waste as a byproduct or uses wastes as an input, there is a business incentive to reduce resource use or prevent resource loss upfront. Any business that relies on waste as a feedstock must assume that acquiring their "raw materials" will become harder and more expensive—and eventually go away. In a world of increasingly constrained resources, this is happening even faster.

By no means should this risk discourage closed loop processes that use waste. Instead, this illustrates the necessity for businesses—whether they rely on the byproducts of another process or a raw material extracted from the earth—to anticipate resource risks and be able to find opportunities for innovation in the event of disruption. For example, in the above situation, can other producers of cotton textiles source their scraps to Crane’s? Can the papermaking process be modified to use lower-quality cotton or other fibers? Can Crane’s—or the US Mint—recycle old currency into new?

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