The circular economy has been a hot topic within the supply chain community. A survey by Gartner shows that 70% of supply chain leaders have plans to invest in the circular economy. But what does this really entail?
“The circular economy is based on three principles: design waste out, circulate materials and resources, and regenerate natural systems.”
(Image source: Deborah Dull and Pyxera Global)
Essentially, the circular economy is all about optimizing the use of inventory – to, reuse manufacturing materials, repurpose them for another product line, or even eliminate excess usage of production materials altogether. Supply chain, on the other hand, is responsible for all inventory across multiple functions in the business. How then, can the supply chain industry move from a linear economy to a circular one?
Supply chain capabilities supporting a circular business model:
- Move inventory close to the customer
By having warehouses and supply chains situated closer to the customer, it reduces the buffer required or lead time taken to make necessary adjustments to meet actual customer needs.
- Create and share data about inventory
Through data collection and analysis, businesses can make cost-effective and optimal inventory decisions. Technologies like machine learning combined with data science can also help businesses make more accurate inventory forecasts and reduce the amount of waste generated.
- Managing and creating inventory around the world
- Reduce and eliminate resource requirements.
- Circulate inventory by making the best use of existing inventory and reusing it.
- Extend the life of inventory – businesses should design products with a longer life cycle and can be repaired without manufacturing new parts.
- Maintain multiple product generations. Businesses should keep modular products’ variability low to reduce response time and costs.
Three ways to start leveraging supply chain capabilities to build a circular economy
- Locate and meet your supply chain team
- Include members of your supply chain in design sessions
- Pose a challenge to your supply chain
For more detailed insights with examples, read the full article here!
About Deborah Dull
Deborah Dull is the Circular Nomad and Founder of the Circular Supply Chain Network. She focuses on building relevant digital industrial lean and kaizen products that address these needs, as well as paving the way to a circular economy.