How to Adopt a Circular Supply Chain Model in Today's Global World

By definition, a circular supply chain challenges the “take, make and throw away” model and encourages manufacturers and product suppliers to remake and resell discarded materials, eliminate waste and limit the continual use of resources. Lately circular supply chains, and the circular economy as a whole, have gotten a shot in the arm from Environmental, Social and Governance (ESG) investing, used to measure the ethical and sustainable impact of an investment in a company or business. Software can help improve that boost that.

Gartner recently released its top supply chain trends for 2022 and topping the list were sustainability tools – a broad array of applications, services and capabilities that support sustainability, environmental and circular economy mandates, and goals. The report explains from plan, to source, to make, to deliver, to the service domain, sustainability has impacts that span the entire value chain.

Better collaboration and visibility can help formalize the processes and management needed to grow and evolve sustainability programs. Supply chain operators are increasingly using software solutions and applications to gain that visibility over every link in the supply chain. Software can be used from a parts and service perspective to maintain and extend the life of the equipment and products a company buys, from air conditioning units to vending machines.

Revamping Strategy

Revising procurement strategies to align with the principles of the circular economy also has increasingly become a priority. That includes everything from vetting the carbon footprint of a supplier to creating a “climate-resilient” supply chain, or one that anticipates climate risks from severe weather to wildfires and water scarcity.

According to McKinsey, organizations that build climate factors into their supply chains will suffer substantially less in revenue losses in the event of a weather-related catastrophe, compared to unprepared competitors.

ESG principles can help vet those suppliers and partners that are farther ahead in developing a more resilient and sustainable mindset and practice. You examine more where companies are based and the implications of their location related to their climate risk, for example.

Forecasting Less Waste  

Investors are increasingly taking an interest in companies with circular supply chain and circular economy models that visibly demonstrate less waste.

That includes companies at the forefront of the “fast fashion” evolution, according to a Morgan Stanley report. For decades, inexpensive, disposable clothing became the overwhelming trend. Offering more affordable fashion and shopping convenience, consumers were lured in, but the amount of waste produced by the industry became staggering. Suddenly the fashion industry became one of the biggest producers of greenhouse gases.

Enter companies that are revolutionizing the concept of fashion by designing products with recycled or renewable materials, making major margins from clothing rental or resale businesses, and selecting products that are better recycled at the end of their use, the report shows.

The fashion industry’s sustainable and circular business models could grow, the report says, from 3.5% of the global fashion market to 23% by 2030, making them worth some $700 billion.

Watching Trends

A recent Gartner survey of 211 supply chain professionals showed that adapting new technology is the most important strategic change supply chain organizations will face in the next five years.

Further, the Gartner report noted, supply chain leaders who don’t invest in tools that support a wide range of sustainability goals and metrics will risk significant impact. Among things supply chain operators must consider when it comes to the circular supply chain are the risk of stranded assets and vulnerability to carbon tax, along with risks for climate-related disruptions.

Measuring the ethical and sustainable impact of an investment can be achieved through software solutions that offer much greater visibility, and a platform that supports real-time data analytics across every aspect of a supply chain.

ketteQ’s control tower solution provides a single source of truth and delivers end-to-end visibility of decision-grade data from all sources and systems. We help our clients with their sustainability and circular supply chain goals by offering the latest technology advances.

Ready to join the circular economy? Give us a call today.

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