The supply chain structure has remained unchanged since the time humans began distributing products to each other. The raw materials are changed into the final product and then are distributed, used, and finally discarded. This linear supply chain model has been working for decades and has been sufficient to churn the economies. However, now with changing times and circumstances, a more profitable supply chain model, the circular supply chain, has gained popularity and will ultimately become a necessity.
Across the globe, companies are paying attention to consumer demand for greener processes and products. As a result, the global supply chains are turning to circular from linear. The manufacturers are looking for ways to improve the product lifespan and the ease with which they can repair, resell, and recover goods.
The circular supply chain encourages sellers and manufacturers to take discarded material and remake them for sale. According to an article in Forbes published in 2019, “We are at a historic tipping point for the supply chain. For hundreds of years, we have operated under the assumption that the most efficient way to manage the supply chain has been to optimize it within the traditional model of take, make, and throw away. However, that traditional model is an economic dead-end. A new model, which focuses on reuse, remanufacture, and recycle – a.k.a. the circular economy – has emerged to become the most economical.”
The Circular Supply Chain Model
The circular supply chain model uses reusable and recycling advancements to avoid wasting raw materials in a landfill when they could be potentially used to make something new. In the circular model, the resources required to keep production going are in abundance and inexpensive. Both the manufacturers and consumers stand to benefit significantly from this model.
Environment And Economically Friendly
Nowadays, people are increasingly looking for things that can be serviced and put back into operation for many years to come. The “take me, and throw away” model, which has been in the system for years, is an economic dead-end and is also costing businesses as they struggle with volatility and raw materials. The businesses are now opting to loop their supply chains to cut down on costs and generate less waste. This process is more economical in the long run for businesses.
Once the processes are in place, companies will have to spend less money on raw materials and, in turn, help the environment. Moreover, they will be at less risk of volatility, and most importantly, will be able to please their customers.
Instead of throwing products away at the end of its lifespan, they can be turned into profit at less cost than making a new product altogether.
Societal Benefits
With more and more waste being created by consumers every year, it is up to both individuals and businesses to choose products with a minor economic footprint. Moreover, consumers have now become increasingly conscious of their shopping decisions. They are more willing to buy sustainable products over traditional ones.
Circular Supply Chain Success Stories
Adidas’s partnership with Parley of Oceans and Nike’s “Reuse-A-Shoe” program demonstrates the circular supply chain model’s power. Nike consumers are encouraged to recycle their old shoes at local Nike stores. These old shoes are then converted into raw material and are transformed back into new shoes for sale. This keeps the old shoes away from the landfills and helps boost the company’s image while saving them raw material costs.
On the other hand, Adidas had pledged last year to make 11 million sneakers by using recycled plastics pulled out from the ocean. It has already been an enormous success.
The Future Of Industries Now Relies On The Circular Supply Chain Model
The circular supply chain model is, by far, one of the best ways to move forward across all industries. Besides the potential benefits, it serves the industry’s need for continued production and at a lowered cost.
The circular supply chains convert the discarded opportunities on recycling, and proper disposal of manufacturing byproducts become tighter. Repeatedly the byproducts can be reused and reclaimed within the manufacturing process. The companies can develop new revenue sources for products that were discarded earlier.
Especially in the present scenario when the pandemic has taken its toll on many businesses, the only way to stay profitable is to look for ways to reduce the cost and at the same time please the customer to stay in the market. Therefore, adopting a circular supply chain model just makes more sense.
