The environmental catastrophe and resource shortages are being caused by the quick rise in product and service demand. To address these issues, a new economic paradigm known as the circular economy was developed. In order to maximise the value of resources, it investigates novel approaches to rethink and redesign goods and services and prolong their useful lives through recycling, remanufacturing, and reuse, among other methods. Based on the circular economy model, circular supply chain management (CSCM) integrates circular thinking into supply chain management. This new area of study has grown quickly over the past five years, which has piqued the interest of scholars, decision-makers, and practitioners.
Sustainable business strategies are developed using circular business models. Measuring the real performance of every supply chain operation in a circular business model is essential for assessing sustainable business strategy. It is an economic system that aims to reduce negative effects without endangering growth and prosperity by minimising resource input and waste, emissions, and energy leaks out of the system. Determining the performance goals being followed for each supply chain operation in a circular business model is necessary in order to gauge actual success. The literature generally agrees that a supply chain operating under a circular business model is not the same as one operating under a linear business model.
Nevertheless, there are currently no research on the procedures and performance goals that conceptualise a supply chain in a circular business model. Eight processes make constitute a supply chain in a circular business model, according to recent research: Planning, sourcing, making, delivering, using, returning, recovering, and enabling are the first steps. Subprocesses must be added to a number of processes in order to facilitate usage and recovery planning, maintenance product distribution, and end-of-use product return. Moreover, a number of procedures must change their emphasis to align resource (material, water, and energy) availability with supply chain demands, source materials that reduce waste and facilitate returns and recovery following end-of-use, resource-efficient production, sustainable packaging, waste disposal, buy-back and take back programs.
Creating an economical delivery system is the main goal of global supply chain management. But in the last few decades, two major problems with global supply chain management have inspired many academics and professionals to reconsider its place in the dynamic world. First, as global trade has grown and developed over time, we have become more conscious of the ways in which our environment is being harmed globally, including the rise in marine pollution from discarded plastics and climate change brought on by the increased use of fossil fuels. There is growing doubt about whether our current way of life is sustainable.
As a result of grave worries about the detrimental effects of industrial operations on the environment and society at large, we are currently dealing with corporate sustainability issues more and more. Many stakeholders have called for greater accountability from companies whose actions harm society and the environment because of the risks to the welfare of our present generation and the possibility of leaving a depressing legacy for future generations. Fundamentally, supply chain management as it exists now is predicated on a "linear economy" (i.e., make, use, and discard) paradigm, where businesses' main responsibility is to create, produce, and deliver goods downstream to end users at the lowest possible total cost.
Supply chain management theory has not taken into account how those products should be disposed of after their useful lives are up. Classic books like Thornstein Veblen's The Theory of the Leisure Class (Veblen, 1899) and the Club of Rome's The Limits to Growth (The Club Of Rome, 1972) have historically critically examined this topic. Although they brought up the sustainability issue, they never even attempted to offer viable answers. But in their 1977 report to the European Commission, Walter Stahel and Geneviève Ready-Mulvey promoted the concept of a "circular economy"—that is, make, reuse, remake, and recycle—which was later developed and published in a book called Jobs for Tomorrow (Stahel & Reday-Mulvey, 1981).
By establishing a closed-loop industrial system to minimise resource inputs and eliminate waste, pollution, and carbon emissions, a circular economy would transform items that are nearing the end of their useful lives into resources for others (Stahel, 2016). For the sake of resource sustainability in developed countries, circular systems use recycling, re-use, sharing, repair, refurbishment, and re-manufacturing. It is a strong argument. The global supply chain's stakeholders must, however, manage resources (i.e., materials, components, and final products) by reusing, refilling, reprogramming, repairing, remanufacturing, and upgrading technologically for increased efficiency if the circular economy paradigm is to succeed. This endeavour will be referred to as "circular supply chain management."
The idea of a circular economy has also lately become a political objective in light of climate change and growing resource costs (Gregson et al., 2015). But the concept is more frequently questioned and criticised than praised. Recycling and reuse turn garbage into a resource that may be recovered and revalued in a circular economy. According to Lacy and Rutqvist (2015), five models of the circular economy—circular supply chains, recovery and recycling, product life cycle extension, shared platforms, and product as a service—are arising and fast proliferating across organisations. At the price of linear thinking, businesses wishing to implement these circular models will need to create new business models (Sehnem et al., 2022). These models assist businesses in improving differentiation, cutting expenses, creating new revenue streams, lowering risks, and lessening their influence on the virgin resource supply.
Although there are still many opportunities for change, the use of these five circular business models has increased significantly over the last ten years. At first, start-ups were the ones driving innovation through the circular business model. These days, big international corporations are likewise acting extravagantly. Several supply chain participants must modify procedures, practices, and behaviours in order to adopt sustainable business models while promoting the circular economy story (Morali and Searcy, 2013). Regenerating materials, preserving the value of resources, re-signifying natural ecosystems, and lowering waste and pollution are all achieved through the usage of circular business models. Despite this understanding, there is a dearth of material in the literature regarding the implications for creative supply chains and sustainable business. The circular economy has the ability to produce sustainable solutions at the micro, meso, and macro levels and promotes the use of clean energy and cascading resources.
FAQ Here:
What is a sustainable or circular economy and how does it relate to supply chain management?
A circular economy is an economic model in which resources are recycled and reused, reducing waste after production and consumption. It is important in supply chain management because it improves efficiency in material, energy and resource management and helps reduce environmental impact.
What are the main challenges of supply chain management in a circular economy?
There are several challenges to effectively managing a circular economy, such as the lack of reusable materials, the investment required to transform existing supply chains, and changing consumer behaviour. In addition, the lack of appropriate infrastructure for material collection, reuse, and recycling is also a major challenge.
What are the benefits of supply chain management in a circular economy?
Supply chain management in a circular economy offers many benefits. It ensures waste reduction, energy savings and resource reuse. In addition, it helps reduce business costs and have a lower impact on the environment, thereby enabling long-term profitability and sustainable development.