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Supply chain management in the era of circular economy

Business · 4 Mins Read

Supply chain management in the era of circular economy

In recent years, several industries have started to focus on building and incorporating sustainable and green solutions to not only address environmental concerns, but social and economic ones as well. Discover how circular economy and, by extension, circular supply chain, can play a significant role in creating a greener tomorrow.

The Earth has been dealt with multiple series of ‘tipping points’, effectively triggering dramatic changes in environmental conditions. From erratic weather patterns to the increased emergence of zoonotic diseases, climate change and its drastic consequences have made themselves known, destabilising the very ecosystem that supports human life. The very foundations of economies, health, livelihoods, and overall quality of life are rapidly declining and will continue to do so if change is not made. To alleviate the effects of climate change, new models of social and economic organisation are required, especially those that are aligned with Earth’s service capacity.

Circular economy explained

So what is circular economy and how can it reduce our carbon footprint? The concept of a circular economy refers to a regenerative system that prioritises the minimising of procurement and utilisation of resources as well as production of waste and emission by way of slowing, closing, as well as narrowing material and energy loops. It involves reengineering existing systems and processes at the production and consumption levels, incorporating frameworks that can support maintenance, repair, reuse, remanufacturing, and recycling. 

Incorporating these new, mature models is not easy, especially when compounded with the preexisting technological, financial, and institutional barriers. Unfortunately, when it comes to supply chain management, such challenges are incredibly prevalent and complex in ways that may not be systematic or consistent with the circular economy orientation.

The role of supply chain management in a circular economy

More than any other industry, supply chain management is undoubtedly one of the most crucial players in ensuring the success of a circular economy. As the bedrock of the global economy, business logistics and supply chain processes would require the immediate attention of academia, policymakers, and practitioners to ensure a quick and smooth transition from linearity to a circular economy. While there have been efforts made to make the switch, these implementations are largely in their infancy, and circular maturity frameworks within the supply chain industry are not yet available.

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Building the foundations of a circular supply chain

When it comes to integrating modes of sustainability into the supply chain, there are several existing green solutions that have shown great results. Green supply chain management (GSCM), for instance, incorporates environmental thinking into supply chain management to tackle climate change concerns at all levels, including material sourcing, manufacturing, delivery, and the management of a product’s end-of-life. Similarly, sustainable supply chain management (SSCM) looks into achieving sustainability in all aspects – from economic to social. Another mode is the closed-looped chain management (CLSCM), where all forward logistics, such as procurement of materials and production of goods, is paired with reverse logistics, the movement of goods from customers back to the suppliers or manufacturers.

Challenges of implementing a circular supply chain

Ideally, the best outcome would be to marry these frameworks with circular economy thinking. However, it remains unfeasible as the application of circular economy thinking is still very much fragmented. Plus, GSCM, SSCM, and CLSCM themselves have separate and competing goals, which makes conceptualisation and operationalisation even more difficult.

Rather than forcing these frameworks together, practitioners are encouraged to create a systematic framework by incorporating insights from GSCM, SSCM, and CLSCM while adopting a circular economy perspective and its five principles (closing, slowing, intensifying, narrowing, and dematerialising material and energy loops). For instance, both GSCM and CLSCM set the critical foundation for narrowing and possibly closing loops. Social and environmental metrics that are utilised in SSCM can help practitioners achieve a more holistic approach to circular economy. Fortunately, with new smart technologies, it’s only a matter of time before the industry can fully realise the circular supply chain dream.

DHL Express advocates for circular supply chain solutions

As a leading logistics company, DHL Express recognises and understands the need for an overhaul and makes it a point to lead by example. To gear ourselves up for a greener future, we have introduced sustainable strategies and social impact programs to help you achieve your environmental and sustainable goals. Become a GoGreen customer and make a change.

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