What is a Circular Supply Chain?

What is a Circular Supply Chain?

As we look to an eco-friendlier future, there are some things about our industry that must change. For starters, the way we produce, consume and discard of our products needs to be revisited for better sustainability.

Of course, this isn't a new issue, it is one that supply chains have been dealing with for many years. It is a problem that has compounded over time.

An ever-growing waste reduction problem alongside the rising cost of raw materials over the past five years has been nothing short of disastrous. Unfortunately, many businesses have not yet been able to raise prices to meet this problem head-on.

Instead, and as a result of this growing problem, a handful of them have decided to go a different route. A greener, more sustainable route.

They have decided to practice reverse logistics and build circular supply chains.

But that begs the question; what is a circular supply chain?


The Difference Between Linear and Circular Supply Chains 

A linear supply chain simply describes a straight path from raw materials to production, and finally, to disposal.

Needless to say, this is not very cost-effective. The products end up being discarded at some point by the consumer anyway. So when a new product comes out, the old one is discarded in a landfill. Additionally, left-over raw materials used in production also meet the same fate.

A circular supply chain, on the other hand, is where the raw materials used are recycled back into the manufacturing operation. They get to be repurposed into the production of another product. Very little, if anything at all, goes to waste!

Overall, the point of a lean or circular supply chain is to simply eliminate waste and reduce the carbon footprint.


What is the Driving Force of the Circular Supply Chain?

In a lot of cases, consumers stand out as one of the key driving forces behind the circular supply chain. However, for most supply chains the drive towards a circular supply chain relies heavily on government regulations.

Governments impose limits on several things in this regard. They dictate what products are allowed to be sent to landfills, what products must be recycled and what methods are required for supply chains who have stepped out of the traditional processes.

Today’s manufacturers have come a long way in terms of recyclable products. Many of them have grown particularly capable of being able to manufacture huge numbers of products without any reconditioning or reprocess what so ever.

Supply chains needed to revaluate how they work together to create a better, lower-cost product-flow.  As a result, third-party logistics providers sprang up to meet the challenge and wipe out the threat of excessive competitive advantages in the linear supply chain. 

In the process, the old concept of recycling found new life as a viable and truly critical component in the logistics industry!


How Does all of This Benefit the Supply chain?

Businesses that utilize a circular supply chain are utilizing the discarded products to manufacture new ones. It is basic recycling, just done on a much larger scale. For example, reusing old mobile phone components such as gold, glass, and metals in new products. 

So, as they say in the movies; “no resources harmed in the making of this product”! Okay, maybe they don't say it quite like that, but you get it, right?

When you can simply recycle old materials versus sourcing new materials regularly, the company saves money. It is a no-brainer.

In the case of larger items, consumers can lease the items until the end of its use and then return the product back, so the supply chain can make new items from the old materials.

This entire process helps businesses and the economy to be more effective with the limited amount of resources available in modern times.

This also allows consumers to feel like they are doing their part in protecting the planet. And, they aren’t wrong! Plus, this sense of participation and purpose makes them want to buy more products from the same company who shares those same values.

Recycling pallets and more sustainable packaging further solidify this process as a critical component of any eco-friendly company. Because of this, less damage is caused to the environment, as there is no more wood being taken from the Earth.


Final Thoughts

Governments are now looking for more sustainable ways to collect and dispose of products. To accomplish such a large feat,  they are making laws and implementing this circular flow to allow our planet to recover while also building more efficient supply chains.

Implementing business models such as a circular supply chain makes products more useful once they’re broken, instead of further saturating landfills and losing all value.

Many companies have implemented this system and seen a drastic change in output cost alongside consumer satisfaction. 

Allowing materials to retain as much value as possible in today's climate is vital to any successful business, and by using models such as this allow the company to grow while producing much less waste than in traditional processes.

Want to learn more about how you can best convert your supply chain into something more productive and greener? Reach out to the experts here at Redwood Logistics today!