Supply chain players must transform operations to suit a 'circular economy'

Supply chain executives need to prepare to transform their operations from a linear to circular model, as sustainability increasingly becomes a priority for consumers and corporations alike.

According to supply chain consultancy Gartner, the economy is increasingly becoming “circular”, which it defines as “an economic model that separates the ability to achieve economic growth from the consumption of natural resources”, and which has been championed by former British solo sailor Ellen MacArthur.

“Circular economic business models encourage continuous reuse of materials to minimise waste and the demand for additional natural resource consumption,” Gartner said.

It added that this switch from linear to circular economies would take place over the next decade, and that by 2029 logistics operations would need to reflect this shift.

“Organisations are under pressure to reduce the amount of waste they’re producing — from consumers and governments alike,” said Steven Steutermann, managing vice president in Gartner’s supply chain practice.

“The solution to this challenge is a shift towards a circular, waste-free economy. The supply chain will play a key role in this process.

“84% of participants in Gartner’s recent Supply Chain and the Circular Economy survey stated that the supply chain has, or will have, decision-making authority when it comes to their organisation’s circular economy strategies and initiatives.”

However, Mr Steutermann explained that this was not a straightforward transition, and that supply chain designers needed to begin working on it now. They will additionally need to work together with “internal product designers and suppliers to understand exactly how products are consumed and disposed after consumption”.

He said: “Ten years is not a long time to turn around a supply chain system. Chief supply chain officers should deploy change management programmes and start pilots now to provide valuable learning and help build momentum for further circular economy initiatives.”

However, the Gartner survey also highlighted one of the chief challenges of the circular economy envisaged by many: how to set meaningful, measurable goals.

“While some metrics on sustainability exist, they are mostly related to linear metrics, such as reducing waste to landfills or carbon dioxide emissions,” said Mr Steutermann. “It is important not to confuse those metrics with the circular economy.

“Good metrics for the circular economy could be the percentages of reclaimed, reused materials for production and the reduction of single-use plastic.”