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Supply Chain Management for Circular Economy
Author’s Purpose
Initiatives pertaining to the circular economy (CE) are gaining traction in developing as
well as developed nations. The reorganization of the fundamental supply chain management
(SCM) procedures that support the existing patterns of production and consumption is at the
heart of these projects. This9author's9goal is to give a thorough explanation of how supply chain
procedures may help with the effective use of CE. The purpose of this article is to encourage
collaboration between academics and practitioners in SCM, CE, and related subjects by
highlighting areas of convergence. The theory extension approach to conceptual development
used in this article employs CE as a "method" for investigating key processes in the SCM
domain (Hazen et al., 2021).
Background of Issue
By eliminating waste and pollution, reusing materials and products, and restoring natural
systems, CE seeks to disentangle economic activity from the usage of limited resources, such as
carbon-based energy sources. By doing this, CE aims to redirect economic activity in a way that
will benefit the entire population. The notion of being sustainable has become more and more
important in corporate management in the past few years. More focus is being placed on the
concept of the circular economy, which enables resource consumption and waste creation to be
decreased in order to achieve sustainable development (Gupta et al., 2019). Since the circular
economy idea necessitates the integration of economic activity and environmental well-being, it
symbolizes a significant shift in the way businesses are operated.
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Empirical research on the topic is relatively rare, despite prior studies' arguments
supporting the integration of supply chain management and the circular economy. In academic
literature, the use of circular economy ideas in the supply chain has received little attention. As a
result, research on the circular supply chain is still lacking (Geissdoerfer et al., 2018).
Application of Supply Chain Management
Closed-loop supply chain management is a system designed to optimize value creation
over a product's entire lifespan and the dynamic recovery of value from various return types and
volumes over time. This approach addresses challenges associated with a circular economy (CE)
deployment, such as customer service and returns of goods, which are strategic in nature and
affect a company's positioning in a competitive industry. The closed-loop idea is increasingly
being applied to business-to-consumer transactions, with consumer requirements, attitudes, and
decisions becoming increasingly important components of successful supply chain management
(SCM) operations.
Customers must be willing to use products made from such processes and intended for
reusing, remanufacturing, or recycling until the next generation of bio-based products remains
viable. They must also be able to return products and residuals to the supply chain. However,
customers can act as hurdles to CE if reusing, remanufacturing, and recycling are not widely
accepted. To introduce sustainable behaviors to clients, new techniques are needed, such as
remanufacturing, which has limitations, such as a lack of customer belief in the quality of
remanufactured items (Hazen et al., 2021).
Managerial Implications
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Advice to managers according to findings would be to9create a supply chain that can
function from a circular economy standpoint, a company must: (a) support the implementation of
methods that increase the sustainability (circularity) of the domestic production cycle; (b) take
multiple actions to foster cooperation with external stakeholders in creating a supply chain that
also has circular economy objectives; and (c) manage and train staff to ensure that they are aware
of and engaged in the company's green and sustainable goals.
Big data is undoubtedly beneficial for creating a circular economy supply chain since it
makes it possible to extract extensive, precise, and useful data and insights. It also helps gather
and organize information for making decisions in manufacturing, logistics, and order fulfillment
(Gupta et al., 2019). Specifically, the application of big data should prioritize stakeholder
orientation, enhance the efficiency, speed, and synchronization of logistics operations, and
maximize the sustainable solutions that companies employ for supply chain management.
Businesses are attempting to adopt new organizational procedures, carry out alternative
tactics, and collaborate with other businesses on their supply chains. Specifically, in a company's
supply chain, the key practices to consider in order to get ready to move toward a circular
economy are supply chain design, relationships, and HR management. Nevertheless, the
incorporation of circular economy ideas into the supply chain has not received much attention
from empirical investigations. Instead of attempting to determine how circular economy
strategies incorporated within the supply chain impact the performance of a company as a
measure of the firm's environmental, social, and financial success, the majority of them address
scenarios of circular economy adoption and implementation (Del Giudice et al., 2020).
Article Summary
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This article suggests topics that require joint investigation and offers a structure to help
specialists in CE and SCM collaborate more effectively. By using procedures from this field and
demonstrating how they contribute to the advancement of CE, it therefore adds a new component
to SCM theory. CE advances will require a radical rethinking of many supply chain elements,
surpassing the ideas put forward in the literature on sustainable supply chain management. The
idea that the world's population cannot maintain its current level of consumption without altering
the methods by which goods are obtained, manufactured, distributed, reclaimed, and regenerated
must be accepted by SCM academics and practitioners.
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References
Del Giudice, M., Chierici, R., Mazzucchelli, A., & Fiano, F. (2020). Supply chain management
in the era of circular economy: the moderating effect of big data.9The International
Journal of Logistics Management,932(2), 337–356. https://doi.org/10.1108/ijlm-03-2020-
0119
Geissdoerfer,9M.,9Morioka,9S.N.,9de Carvalho,9M.M.9and9Evans,9S.9(2018), “Business models
and supply chains for the circular economy”,9Journal of Cleaner Production, Vol.9190,
pp.9712-721.
Gupta,9S.,9Kar,9A.K.,9Baabdullah,9A.9and9Al-Khowaiter,9W.A.A.9(2018), “Big data with
cognitive computing: a review for the future”,9International Journal of Information
Management, Vol.942, pp.978-89.
Hazen, B. T., Russo, I., Confente, I., & Pellathy, D. (2021). Supply chain management for
circular economy: conceptual framework and research agenda.9International Journal of
Logistics Management, Vol. 32 No. 2, pp. 510-537. https://doi.org/10.1108/ijlm-12-2019-
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