“Circular supply chain” is a big part of business lingo these days, but what does it actually mean, and is it a more sustainable option? The circular supply chain business model is increasingly in demand in an eco-conscious society, but you might find that the circular economy supply chain has other benefits in addition to being good for the planet.
In this article, we’ll talk about what a circular supply chain is and share circular supply chain examples. In addition, we’ll talk about what you need to keep in mind in circular supply chain management and how to recognize circular supply chain benefits. Let’s get started.
What Is Circular Supply Chain?
Let’s start by answering the question, what is circular supply chain? The circular supply chain definition seems simple, but is a big shift from traditional business thinking. Our inherited business models treat resources as infinite, but a circular supply chain business model recognizes that this is not the case. A circular supply chain aims to reuse and repurpose goods and resources wherever it can. Essentially, it’s the idea of recycling applied to a business model.
Businesses are applying this idea in many creative ways, and this type of creativity is an integral part of the circular supply chain philosophy. At its essence, it’s about assessing what you have, what you need, and what you use, and finding ways to reuse your goods and materials as much as possible. It’s a type of innovation that often has flow-on benefits.
Circular Supply Chain Management
What is circular supply chain management, and how does it differ from traditional management?
Because the circular economy supply chain requires such a shift in thinking from previous business models, circular supply chain management also requires a change in perspective. A circular supply chain is most effective when it’s adopted at every level of business, so managing it well means thinking holistically about a business’s practices, inputs, and outputs. It means looking at business processes through fresh eyes and asking whether there’s a more effective way to get things done and reduce waste.
Circular Supply Chain Business Model
It’s commonly understood that there are 5 main circular supply chain business models. That doesn’t mean you can adopt only one - companies sometimes adopt two or more at once. These examples will give a more concrete sense of what the circular supply chain is and how it can work for you.
- Resource recovery: this means buying and selling products at the end of their lives for parts.
- Circular supplies: this means making a company’s resources fully recycled, rather than linear.
- Sharing platforms: This means creating a platform so users can share services.
- Product life extension: This means a company works to extend the lifespan of a product for as long as possible.
- Product as service: This means that rather than buying the product, a customer rents it when they need it.
Circular Supply Chain Examples
Did you get milk delivered when you were a kid? I remember it being a comforting part of my childhood. Each week, we’d get milk delivered in glass bottles, and each week we’d leave out the glass bottles we’d used the week before. The milkman would collect the bottles, refill them with milk, and send them out again. This is one of the most basic circular supply chain examples.
A more complex example comes from an unexpected source: Walt Disney World. Like an increasing number of companies, Walt Disney sends its food waste to a facility that processes it into both electricity and fertilizer. This circular supply chain benefits not only the organization, but the state of Florida (by contributing to its electricity supply) and the world.
Circular Supply Chain Benefits
It’s getting more and more difficult for companies to act without thinking about the environment. Consumers are looking for products that weigh their environmental impact. Circular supply chain benefits are many: a circular supply chain benefits the environment, thus also making it appealing to consumers, but it will also save money for companies. The circular supply chain examples listed above are effective for both these reasons.
A circular supply chain, when managed well, can also help with morale among workers. People want their work to make society better in some way - a circular supply chain is a way of reimagining business to support a more sustainable future.
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Conclusion
The circular economy supply chain prioritizes reusing and repurposing goods, yielding myriad benefits - companies can save money and become more appealing to consumers. Circular supply chain management also means thinking holistically, which might have unexpected benefits: it might help the company function more effectively as a whole. We hope this article has given you an understanding of circular supply chains and their benefits - to companies and the world!
Additional Reading:
- Supply Chain: Keeping Business Moving
- What Causes Inflation?: Common Questions About Inflation
- Impact Of Covid-19 On Tax Revenues
- Leadership: Where Everything Rises and Falls
- Pyramid Principle Applied