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What is a circular supply chain?

Manufacturing businesses need to focus on circular supply chains in order to ensure that they’re generating less waste and material redundancy, as they move away from the increasingly unproductive linear model.

February 5, 2024
9 min read
Ioana Neamt

Ioana Neamt

Contributing Writer

If Martin Brody had a smooth working circular supply chain in 1975, he wouldn’t have had to ask for a bigger boat when dealing with that pesky Jaws! He could’ve built one using reused, repurposed, or recycled materials.

Focus on sustainability should be top-of-mind for all businesses and individuals alike. Supply chain management is no exception, as waste and redundancies can be avoided by adopting the principles of a circular supply chain. This translates into ensuring that used products are returned with the goal to be reused, repurposed, or recycled.

Circular vs. linear supply chains

The opposite of a circular supply chain is a linear one. In this case, goods and products end up being thrown away when no longer useful, instead of being reintroduced in the supply chain. It can be visualized as a straight line, from the raw goods to the consumer, where the product life cycle ends. Often seen as a quick and easy way to handle supply, it, however, falls short when it comes to sustainability and the reduction of waste.

The circular approach is more modern, and in the long term, its advantages are bigger when compared to a purely linear one.

Why is a circular supply chain important?

Adopting a circular supply chain system is important, first and foremost, for the environment. Reducing waste and reusing as many products is beneficial, as fewer resources need to be used at a time when many goods are scarce or more difficult to source than before. It is a more modern approach than a linear chain, and it will prove a business’ commitment to being forward-thinking on matters of sustainability.

Furthermore, reusing products and goods can shorten timelines, as you have more control over your goods inventory. Especially with resources that are more difficult to find, being able to repurpose inventory is extremely helpful.

Trucks stuck in traffic.

What are the benefits of a circular supply chain?

We have already mentioned sustainability and being environmentally friendly as the main benefits of a circular supply chain. But it doesn’t stop here, as cost reduction follows from being able to reuse products and reintroduce them in the production chain. Businesses can actually save money in the long run by adopting a circular supply chain.

Though it might seem more difficult and time-consuming in the beginning, the benefits become visible over the long term.

Even more, when a business reuses certain parts, it can save production time, as some of the pieces are ready and assembled. Instead of starting over from raw goods every time, circular supply chains can help with skipping certain steps, thus saving valuable time.

Also, refurbishing and reselling previously owned goods enable businesses to return them to use instead of contributing to more waste.

Running an eco-friendly business that aims for zero waste is a good statement for your brand, and customers are more and more interested in supporting businesses that do their bit at protecting the environment.

In order to enjoy all these benefits, a business must follow a series of best practices and circular supply chain strategies aimed at making the process more efficient. So, let’s go over the top strategies to adopt.

Top 5 circular supply chain strategies

We’ve outlined how a circular supply chain can provide several benefits to businesses employing it, but how do you actually get it done? Below, we’re drilling through a few of the best ways to go about moving from a linear to a circular supply chain.

1. Aim for proper tracking and easy recycling of your packaging

If you plan to get your packaging or other parts back for reuse or repurposing, you need to make sure they are properly tracked so they can be easily returned. The same goes for recycling. The process needs to be made easy and straightforward to increase the chances of success.

As long as you have a good system in place, the results should come easily. So, in the same way you manage the supply chain to ensure products get to the end consumer, you also need to make sure packaging and other items can be returned.

2. Find partners that adopt the circular supply chain strategy themselves

Modern supply chains are interconnected, so one business alone cannot adopt a circular supply chain without the support of other partners and suppliers. All participants need to be on board and adopt measures that boost reuse, refurbishing, or recycling.

So, when assessing a new supplier or deciding whether to renew a current one, their willingness to be part of a circular should be a top selection criterion.

3. Analyze your data to minimize waste

This step is crucial to maintaining a well-oiled circular supply chain. In order to reduce waste and the carbon footprint resulting from your business, data needs to be analyzed to spot improvement opportunities. Having a clear overview of your supply chain and real-time tracking will give you direct access to all points where a circular supply chain can be implemented.

4. Focus on a shorter supply chain

Sometimes harder to achieve, a shorter supply chain could help reduce waste, as there will be fewer points to manage.

For example, if you want to recycle packaging, a shorter supply chain strategy will be much easier to implement if the end consumer is not too far off in the chain. The same applies when trying to reuse certain parts of a product, such as batteries. The shorter the chain, the easier it will be to introduce a program that targets parts meant to be reused or refurbished.

5. Motivate consumers to recycle and repair

Consumer buy-in is a deciding factor in the success of a circular supply chain. Whether your goal is recycling or having products returned to be reused or repurposed, the consumer needs to be incentivized to act. While sometimes being friendly to the environment is enough motivation, businesses often need to motivate consumers by making the process easier or by offering various discounts and perks to those who contribute.

How Katana can help businesses implement a successful circular supply chain

With so many moving pieces to handle, inventory management software will make the task easier.

Managing a circular supply chain will be smoother with real-time access to your inventory and close tracking of your products at every step in the process. Even more, with transparent access to business data and reports, waste can be reduced, and opportunities for recycling, reusing, repurposing, or refurbishing can be spotted quickly. Your staff will be empowered, and your business will thrive. Reach out to us and request a demo to discover all the ways we can help.

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Ioana Neamt

Ioana Neamt

Contributing Writer
With more than 10 years of copywriting experience, Ioana has a fondness for longform writing, investigative journalism, cats, and Victorian-style mansions.

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