Harnessing the power of circular supply chains

  • January 16, 2023
  • Blog

Harnessing the power of circular supply chainsReusing, repairing, and recycling of products is gaining traction as more and more people become concerned about the environmental impact of traditional manufacturing processes. That’s the goal of the circular supply chain, a movement driving decarbonisation of supply chains and logistics management in modern trade.

A report from Gartner suggests that 74% of supply chain leaders expect an increase in the profits by applying a circular model. The circular supply chain is a new business model that is considered as a more sustainable alternative to the traditional linear supply chain. In a linear supply chain, goods are manufactured, used and then disposed of. This creates a lot of waste and contributes to environmental pollution.

A circular supply chain, on the other hand, is designed to keep products and materials in circulation for as long as possible. This reduces waste and environmental impact, and also creates opportunities for businesses to recycle and reuse materials.

The concept should not be confused with the prevention of generating waste. Circular economy depends on the circulation of products to create more value once the life of product ends. Circular economy involves the processes of recycling, refurbishing and reusing of products.

Role of logistics in planning a circular model

A circular model can be achieved through more flexible, open and collaborative business models. Logistics services form a crucial part of this process and involve the supply of the right product at the right place at the right time. Coordination of logistics services within the supply chain of a business largely affects the circular model. It also involves strategically designing the supply chain network and ensuring efficient flow of products according to the supply.

The end of product life can be followed by a number of processes and techniques to circulate the product in a refurbished or recycled form. Circular supply chain network design is also very different from that of linear supply chain. This is because reverse logistics forms a crucial part of this network wherein used products are returned from the consumer to the point where they are refurbished and recycled. An efficient return management plan needs to be designed to successfully achieve the circular model.

Considering logistics, forward and reverse movement of products could be the foundations of the circular supply chains.

Challenges associated with the implementation of circular model

For most of the businesses, a few of the hurdles in the path of implementation of circular models can be as follows:-

  • Covering a wide geographic area.
  • Resource management and distribution.
  • Scaling up the sustainable practices within the business.
  • Maintaining the quality of product or services.
  • Planning initial investment in developing the circular model.

As the supply chains become more complicated and intricate, implementation at different levels become difficult. Consistency in the operations, changes in the infrastructure and efficient resource management need greater attention in order to make the process smooth.

Another key component of a successful circular supply chain is technology. By using smart analytics, artificial intelligence, and machine learning tools, companies can ensure that their supply chains are running as efficiently and sustainably as possible. Utilizing the right technology can help companies reduce waste, create better models of production, and make sure they are getting the most value out of their resources.

Hence, the circular supply chain model has become a means to sustainability. This has also helped in defining new techniques and methods to carry out the processes of sustainability. Maintaining the consistency of product and quality may become a challenge which is why some businesses are still struggling with the implementation of this idea. There are many benefits to transitioning to a circular supply chain. It’s a more sustainable way to do business, and it also helps businesses reduce costs and increase efficiency.