trace. Sustainability Lead, Emma Woodberry recently discussed the importance of the circular economy and how organisations can deliver more sustainable outcomes via supply chain improvements.
What is the circular economy and why is it important?
At its core, the circular economy model emphasises the importance of maximising the use of resources and minimising waste. The goal is to move away from the traditional linear approach of "take, make, and dispose" and instead, focus on creating closed-loop systems that enable resources to be reused and regenerated.
This is important because our current ways of doing business in this economy, relying on traditional linear methods, is unsustainable, and it’s leading to environmental degradation, resource depletion, and ultimately climate change. By transitioning to a circular economy, we can reduce our reliance on finite resources, reduce waste and pollution, and create a more resilient and sustainable economy.
Both consumers and governments are demanding that businesses step up and do more to contribute to driving more sustainable operations – particularly across their supply chains.
What are the benefits to an organisation or a supply chain becoming more circular?
Supply chains are where it all starts. Supply chains are the backbone of our economy – and businesses – playing a critical role in the production, distribution, and consumption of goods and services. By improving our supply chains, we can create more efficient, resilient, and circular systems that support a sustainable economy. This can take many forms, from sourcing materials from renewable sources to implementing closed-loop production systems. By embracing circularity, companies can reduce their reliance on finite resources, decrease their carbon footprint, and create new revenue streams through the sale of recycled materials and products.
Moreover, the circular economy presents an opportunity for businesses to engage with local communities and support sustainable development goals. By prioritising the use of locally sourced materials and collaborating with local stakeholders, companies can create a more resilient and sustainable supply chain that benefits both the environment and the economy.
What are some of the challenges organisations may face when implementing circular economy principles in supply chains?
There are several challenges organisations may face when trying to implement circular economy principles in their supply chain.
1. Establishing transparency across the supply chain tiers – From manufacturing to distribution and retail, each tier of the supply chain has a role to play in the circular economy. Understanding how the tiers interact within your own supply chain, monitoring and reporting compliance is critical to collaboration.
2. Identifying appropriate partners – having the right expertise and resources within any partnership or collaboration will drive success. More importantly is being able to mitigate and manage risks within a partnership, avoiding reputational and trust issues.
3. Investment required – there is a lack of infrastructure, processes, and technology to support circular practices, such as recycling facilities or reverse logistics networks. Implementing change can be costly and companies need to be willing to make this investment to recognise the long-term benefits of a circular economy.
4. Change in culture – the need for collaboration and cooperation across the business and supply chain, as circular practices require all stakeholders to work together to close the loop. Employees will need to think differently and adopt a new set of values and principles.
5. Regulatory barriers – there are regulatory challenges that need to be addressed to create an enabling environment for a circular economy such as high upfront costs or lack of incentives.
What advice would you give to businesses that want to adopt the circular economy principles.
You’ve made the right first step! The circular economy offers a promising path forward for businesses looking to reduce their environmental impact and drive sustainable growth. By adopting circularity principles within their supply chains, businesses can not only contribute to a more sustainable future but also unlock new opportunities for innovation, growth, and community engagement.
My advice would be to start small and focus on tangible areas where there is the most potential for impact. You don’t have to overhaul the supply chain and transform all practices, but you can unlock opportunity in collaboration with your suppliers and service providers from switching to green energy, using recycled materials in your production, or channeling your waste into local, innovative recycling streams – it all counts.
Contact us today, trace. your supply chain consulting partner.