Circular economy an increasing focus for most supply chains
51% of supply chain professionals in a survey say their focus on the circular economy will increase in the next 24 months expect
A new report from global research company, Gartner, says that 51% of 528 supply chain professionals surveyed expect their focus on the circular economy to grow over the next two years.
The circular economy emphasises recycling, re-using and remanufacturing instead of the “take-make-dispose” model.
Two main issues are expected to drive the change: Firstly, consumers may start to move to a Product-as-a-Service (PaaS) model in which they rent or lease big purchases instead of buying them; secondly the circular economy can increase an organisation’s raw material security during disruptions by providing a stream of potential recyclable materials and reducing the need to source externally.
However, the circular economy is not without its challenges.
Supply chain organisations must recover products from the consumer at the end of the their life. Leasing and subscription models are favoured here by high-tech organisations. End-of-life products must be collected and centralised for processing in a viable way. The organisation’s decision making will be based on the residual value of products.
Recycling also leads to loss of value. Refurbishment provides more value because it reduces environmental impact and enables a quick second sale. Good product design is crucial because poorly designed materials with toxic materials can be difficult and expensive to process.
Will consumers move to a model where they do not own products but must return them?