Circular Supply Chains- The future of waste reduction

With its roots deep into the principles of sustainability and resource optimization/efficiency, circular supply chains are a budding, unconventional way of reducing waste and maximize the usage of products and materials. They alter the method of “In-Process-Out-Dispose” way of a traditional linear supply chain. This paradigm shift is mainly for businesses to minimize their waste reduction, inculcate environmentally sustainable practices, in view of the recent global concerns and simultaneously increase owns’ operational efficiency.

At the core of it, a circular supply chain goes in hand with the concept of a circular economy. With a system of materials not becoming waste and nature getting to breath and regenerate. The aim is primarily to create a closed loop system. Here, materials and processes are expected to not create waste at large. This has a keen emphasis on continuous use of resources by the means of recycling, reproducing, reusing and refurbishing. Now this concept does not only aid in waste minimization but also to reduce the dependence on finite resources, the core of why economy exists.

Now, let’s paint a picture, where you hoard your wardrobes with latest fashion, trends is what runs us right? What do we do with the ‘not so trendy’ clothes then? Here comes the brand H&M in picture, which has adopted a circular economy approach, mainly in three areas. Namely, their products and services, supply chain and non commercial resources. Bring in your old garments and H&M will reuse and recycle them into new trendy outfits. Believing in the ideology of collecting and sorting bringing the 5S’s into use they integrate the customer journey well with their sustainability powered circular supply chain.

Now let’s throw light on a famous initiative by Nike, the ‘reuse a shoe’ program, which revolves around the recycle and reuse methodology where customers can bring their used shoes, not Nike particularly and Nike will sort, clean, recycle and make them reusable, taking steps towards this sustainability initiative.

Let’s now try and understand a very basic round-about of this concept of a circular supply chain. At the beginning of our chain, the suppliers bring in materials to the manufacturers (on a very broader perspective). The manufacturer further pushes its produce to the distributors. As per the demand pull from the dynamics of the market, the distributors further sends these products to the retailers, which in most cases are the end point from whom our customers will access or purchase the product. This still remains an open loop system, as once the product is used it's nothing more than a ‘waste’ for the customer. Here come the circular supply chains into the picture. These products after exhausting their usability, if are diverted back to the manufacturer, where they can be refurbished into same or some other useful product, is what closes this entire cycle. This is the simple fundamental behind this closed loop system called ‘Circular supply chains’.

Now, to address the main concern, is this the future? It can be argued, though from a global concern perspective of waste reduction and making processes sustainable, it becomes essential to bring in this shift, but it is also factual that since decades of its existence, circular supply chains are in the stage of infancy. This can be backed by the logic that this method brings in less business benefits. There are additional costs of collecting, transporting, preserving, recycling and then distributing, associated with the entire process which makes the break even farther to reach.

One of the famous and effective ways to reduce these issues and keep the benefits high would be to create modular products, which need not be disregarded but disassembled and configured into newer products to reduce waste generation.

Another area to be focused on is the logistics. Constructing a robust reverse logistics to make the used products as a major/primary source of raw material will help in reducing our costs from the supplier end, and at the same time cut the cost of transportation short too, given the facility and transportation planning is optimized accordingly.

My last and imperative focus would be on ‘Business symbiosis,’ where the waste or byproducts of different industries or businesses can be used by each other, without compromising on the ‘profits’ of the business. In conclusion, fostering a collaborative environment among businesses or industries has become imperative and more than just an option, given the concerns about the well being of our planet.

Sunidhi Singh