Circular economy is changing international supply chains

Circular Economy Innovates the Supply Chain Industry

The idea of Circular Economy is a driving force that is changing supply chain management. A report prepared by members of the World Economic Form titled Towards the Circular Economy: Accelerating the Scale-up Across Global Supply Chains, details the reasons businesses must embrace the circular economy model to support complex, international supply chains. The guiding principles focus on eliminating materials leakage and creating pure materials flow. Dominic Waughray Senior Director, World Economic Forum states, “…various global trends, statistics, and fresh economic analysis has accelerated this agenda.”

The historic “take-make-dispose” method of materials management is over. The current rate of raw material use is unsustainable, and the total depletion of certain elements that industry uses is possible. Mr. Waughray points out, “Business leaders are in search of a better hedge to avoid these risks and are moving towards an industrial model that [separates] revenues from material input: i.e. The Circular Economy.”

The circular economy coupled with digital technologies is the future of supply chain excellence. The need for preservation of resources has forced innovation and created new value chains. Mike Uskert Managing Vice President at Gartner shared his thoughts in an interview with Janessa Rivera at 2015 Gartner Supply Chain Executive Conference held May 12-14 Phoenix, AZ, (paraphrased):

“Some trends are forcing supply chain managers to rethink everything. Current drivers include the growing demand for instant service, increased regulation, the magnitude of data, and multichannel expectations. Because of this, we are witnessing innovative advances in same-day delivery, real-time visibility across value chains, predictive analytics, automation, 3D printing, green supply chains, and fully integrated forms of commerce.”

Circular economy and innovative technology will allow supply chain managers to provide their customers ultimate transparency, quality product handling, and loss prevention. To stay relevant, supply chain professionals must embrace this changing landscape and realize that Circular Economy is great for all stakeholders including the environment.