Mystery behind circular supply chains

By Charles Nyika | 4h ago

In a circular supply chain, waste is perceived as an opportunity to create value.

IN an era where change has become the only constant, businesspeople will continue to question the status quo.

It would appear old school business practices are finding themselves on shaky ground. The current VUCA environment has clearly demonstrated the vulnerability of the traditional linear supply chain model.

Over the past few years, supply chain disruptions and pandemics have taught us that businesses do not resolve such bottlenecks, supply chains do. Agile supply chains are, therefore, the need of the hour.

Many businesspeople across the industry divide appear to be giving the traditional linear supply chain model a serious second look. As we move into the future, it would appear the adoption of circular supply chains is slowly gaining momentum.

It is generally believed that circular supply chains could easily unlock new value propositions for organisations. It is strongly believed that unlike the traditional linear supply circular model where the supply chain process ends at the customer’s doorstep.

With the newly-advocated circular supply chain model, products tend to move in a continuous cycle where products are reborn and regenerated anew. The old linear practices of take-make-dispose are likely to be put on hold as we move into the future.

It is generally acknowledged that in a linear traditional supply chain model, raw materials are extracted from the environment; they are then processed into goods.

The goods are then sold and used by consumers but at the end of their useful life span, they are discarded as waste. That explains why the linear supply chain model is generally regarded as a “take-make-dispose” supply chain framework.

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It is regarded as wasteful and pollution rich business model. The traditional linear supply chain model production system takes raw materials for the production of a finished product with no further use after the product’s useful life span.

With this model, waste is created at every supply chain node, which will result in huge amounts of resources being thrown away. It is generally agreed this type of supply chain model can be visualised as a one-way street model, which is an economic dead-end.

Instead of using a linear “in and out” methodology, evangelists of the circular supply model advocate the need to convert waste into business opportunities. The “take, use, waste” approach to raw materials has come at a cost to the environment and human health.

It is, therefore, important for organisations to keep the demands of the environment and social compliance in mind. Our planet’s natural resources and ecosystem are under tremendous strain due to the linear production model’s careless attitude towards raw materials and pollution.

Supply chain professionals can improve sustainability issues by reusing whatever parts of the discarded products that can be put back into the system. There is no need to treat materials or products that have reached the end of its life as trash.

It is, therefore, claimed that “waste is just excess material in the wrong person’s hands”, because in the circular supply chain model, waste is taken back by the manufacturer to remake or refurbish products for further use. In some cases, they melt down old products or materials to reuse them as raw materials for making new products. This will obviously mean developing new revenue streams from products that were previously discarded.

In a circular supply chain, waste is perceived as an opportunity to create value. In a world where resources are finite and environmental issues are of major concern; the traditional linear economic model’s shortcomings are becoming glaringly evident.

The linear supply chain model is characterised by a relentless cycle of raw material extraction, followed by production, followed by consumption, followed by disposal. This will obviously lead us to a path of unsustainable resource depletion, waste accumulation and environmental degradation.

The circular supply chains will, therefore, relieve pressure on the dwindling, finite natural resources. The circular supply chain framework represents a transformative vision for the future. In this model, waste is not treated as an end in itself but as a new beginning to a new supply chain cycle.

Unlike the linear economy, which often discards products after a single use, the circular economy thrives on the principles of reuse and remanufacturing. In this model products are generally designed to be easily disassembled easily, enabling components to be repurposed or refurbished.

Raw materials are continuously looped back into production, reducing the need for virgin resources. As we move away from a take-make-waste linear model, the circular economy is offering supply chain professionals the space to reconfigure the supply models to suit the current challenges.

Advocates for the circular supply chains are pushing for products to be recycled, refurbished or repurposed, creating a continuous cycle that minimises waste and maximises resource efficiency.

The circular economy recognises that when a product reaches the end of its life, it can be remanufactured, broken down, reused or recycled. The idea is to ensure that products, components and materials are in circulation and in use for as long as is practical. This is central to the circular economy ethos. The philosophy of minimal waste, maximum utility lies at the heart of circular supply chain models and the broader circular economy. The idea is to promote the design of products with durability, reliability and recyclability in mind.

In a circular supply chain model, supply chain professionals are more inclined towards the use of products or parts which are generally returnable or are processed with a view to repair, resell, refurbish or recycle.

After use, the same products are returned to begin a new journey in the supply chain. Examples of the circular supply chain in motion are the use of refillable containers for products. Rather than relying on single-use packaging, the idea is to create value by keeping a product or part in use many times over — so it is a method of make, use, recover, reuse and reclaim.

Instead of producing disposable products, products are used for as long as possible to get the most value during its life cycle. This will ensure that products and resources maintain their utility value over time, helping to strengthen and futureproof your own supply chain.

It is seen as a way of extending the product life cycle for the benefit of the supply chain. The primary crisis we are facing in supply chain sectors is the blatant over consumption of resources.

In a world teetering on the brink of resource depletion, the time to act is now. The circular supply chain tries to avoid a situation where products are made, used, and then thrown away as waste creating unnecessary pollution and wasting valuable resources. The model advocates the need to break this cycle and keep resources in use for as long as possible.

It must also be noted that when a business reuses certain parts, it can save production time as some of the pieces are readily available for reassembling. Instead of starting all over from raw goods every time, circular supply chains can help skipping certain steps saving valuable time, putting residual value back into the production cycle, resulting in the creation of an infinite loop of goods.

The longer a product holds value, the less frequently it will need to be replaced. Embracing renewable energy sources and cutting carbon use marks the urgency of reducing greenhouse gas emissions, minimising damage to the environment by extending the lifespan of the materials used in the supply chain ecosystem.

A growing number of governments are already enacting regulations to curb waste and stimulate recycling. Laws and regulations are being made that are forcing businesses to go green and make recycling a top priority. It is anticipated that these regulations will tighten, nudging businesses to embrace the circular models.

The success of the circular supply chain model is a function of collaboration. Supply chain actions will not happen independently but will be inextricably linked with a mutually reinforcing loop.

It may even involve working with competitors to circularise every link in the supply chain with a view to drive a unified circular vision. But as we collectively turn the page to a greener chapter, no single supply chain can achieve circularity independently. Circular economy opportunities are bigger than any one organisation or industry.

In recent years, it would appear the concept of circular economy is increasingly gaining momentum as a promising supply chain model for achieving sustainability goals. The circular supply chain model uses a more integrated and collaborative approach across the entire supply chain.

It is a progressive model, which propagates the generation of wealth out of waste by reusing and recycling the products collectively as a supply chain ecosystem. The collective approach will advocate that waste should not be regarded as rubbish; it must be regarded as a valuable resource for creating further new products.

Imagine a world with no waste. The circular supply chain model, therefore, advocates that instead of producing one-time-use-products, the collective approach to use refurbished materials and parts is the way to go.

In the new era of commerce, supply chains will receive increasing scrutiny. The switch to the circular model is no longer a question of if, but when. The circular supply chain is not a mere trend. It is a necessity.

The potential rewards make it a compelling prospect. Circular supply chains could easily become the new standard in supply chain. Customers usually do not just buy products. They buy values.

A circular supply chain or circular economy resonates with the customer’s eco-conscious approach, allowing customers to bond with businesses.

It is more than the latest buzzword, it is a necessity, a watershed moment that is shaking up industries and giving mother earth a much-needed breather. The sustainability and circular supply chains mind-set is not merely a moral and ethical necessity — it is a business imperative designed to create a more sustainable future for future generations. It is about creating a sustainable revolution that goes beyond our immediate goals.

For now, circularity is still mostly a buzzword, a term that is thrown around much more than it is actually put into practice. It might feel overwhelming to flip the script from linear to circular.

Transitioning from traditional linear models to circular ones poses several significant hurdles. However, the writing is on the wall, adapt or die. The time to act is now. It is not all gloom and doom.

Circular supply chains have never been more relevant. Defending the linear supply chain business model becomes a formidable challenge. The shift to a circular model is not just about sustainability, it is about smart business. Companies can ignore the change in the wind at their own peril. The clarion call for sustainability is louder than ever. It is emerging as an undisputable value and revenue driver, transforming vulnerabilities into strengths.

The future of supply chains lies in embracing circularity, positioning your company to thrive for years to come. The wide-ranging appeal of circular supply chain is therefore undeniable. The potential payoffs are tremendous.

In conclusion, it is important to note that supply chains ordinarily account for more than 80% of greenhouse gas emissions. The planet is drowning in a sea of discarded goods polluting the environment at an alarming rate.

This idea of input equals output is an overall economic dead-end and environmental threat, creating a lot of waste that compromises the ecological balance. It is becoming increasingly clear that natural resources are on the verge of extinction.

The circular supply model offers the promise of a future where supply chains are aligned with environmental stewardship and societal well-being. Reducing the ecological footprint through the reduction of waste will resultantly reduce the carbon footprint, promoting environmental stewardship.

The circular supply chain model also stresses the reliance on the alternative use of fuels which are environment friendly. The use of recyclable or biodegradable materials will minimise environmental degradation.

Such practices will facilitate the alignment of economic growth with environmental responsibility, giving the atmosphere a much-needed breather. It is, therefore, believed that circularity holds the promise of saving the environment.

Naturally, this also means near-perfect sustainability of supply chains. It is a noble idea for supply chains to go green to avoid seeing red on the balance sheet. I repeat, imagine a world with no waste.

Nyika is a supply chain practitioner based in Harare. — [email protected]