Journal Article Review: Purchasing and Inventory
Rebecca Tomes
Department of Marketing, Liberty University
BUSI 613: Supply Chain Management
Dr. Brooke Quigg
September 19, 2022
Hazen, B. T., Russo, I., Confente, I., & Pellathy, D. (2020). Supply Chain Management for
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Circular Economy: Conceptual Framework and research agenda. The International Journal of
Logistics Management, 32(2), 510–537. https://doi.org/10.1108/ijlm-12-2019-0332
Author's Purpose
Circular economy is a recent idea that promises to be an efficient approach to organizing
and prolonging sustainable economic activity for the future. The strategy in itself places high
emphasis on reusing and recycling materials from past products to create new ones. Recently,
circular economy initiatives are becoming more popular among first world countries and
developing nations alike, and the most prominent part of this process is the reconfiguration of the
main supply chain management processes utilized in current production. The purpose of this
research journal article is to inform of the benefits of circular economy initiatives and how
supply chains can support their implementation. (Hazen et al., 2020).
Background of the Issue
Circular economy as a whole presents itself as an ideal model for what a truly sustainable
supply chain pattern should look like. The term circular economy refers to “a regenerative
system in which resource input and waste, emission, and energy leakage are minimized by
slowing, closing, and narrowing material and energy loops” (Geissdoerferet al., 2017, p. 776).
The goal of this strategy is to increase the percentage of products made of recycled material as
much as possible. The idea of a circular economy is no new phenomenon, but it has recently
become a popular initiative due to the high probability of reducing waste, stalling global
warming and creating a positive impact on the environment. Though some problems with the
system have been noted, such as finding and using renewable energy sources for a decent price,
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the advantages of endorsing the circular economy strategy far outweigh them. “The European
Commission (2020) estimates that a shift to a functioning circular economy would grow
Europe’s gross domestic product (GDP) by almost 0.5% by 2030 and the net increase in jobs will
be approximately 700,000 compared to actual baseline case.” (Hazen et al., 2020).
Application to Supply Chain Management
Supply chains have a history of employing petroleum-based fuels such as diesel and
gasoline during the process of shipping and delivering products. Though alternative fuel
technologies are being explored today to reduce operating cost and increase sustainable
operations, companies that have a large carbon footprint are still looking for more effective ways
to avoid harming the environment (Quigg, 2020). In general, green supply chain management is
hailed to be a cure-all for the environmental problems humans have created over the past few
hundred years from fossil fuels, and circular economy presents itself as the most efficient way to
do so. By recycling materials from previous products, companies are able to reduce waste and
emissions significantly more than if they were only trying to cut down emissions from the
machines that make the products.
Circular economy is the perfect example of sustainable development, a movement which
“draws an ideal end state of the world with an appropriate balance between the economic, social
and environmental dimensions” (Del Río et al., 2021). If more businesses do what they can to
implement circular economy into their supply chains, they could significantly decrease the effect
they have on the planet.
Managerial Implications
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Supply chain managers have been prolific in maximizing productivity through waste
reduction and the introduction of new technologies for decades. However, “there are aspects of
intensifying loops in the broader supply chain that managers may be less familiar with” (Hazen
et al., 2020). The idea of a circular economy as a whole implies the complete reengineering of
many aspects of production and consumption. On the production side, this would include
“investment in long-lasting product design, with processes that support maintenance, repair,
reuse, remanufacturing, refurbishing and recycling” (Geissdoerfer et al., 2017, p. 759). The
difficulty in utilizing a fully circular economy is the reality of a world that was built upon fossil
fuels. Managers would need to rethink supply chains entirely if they aimed to incorporate a
circular economy within their processes and use its full potential.
Companies are always searching for initiatives that both contribute to business
competitiveness and help the environment. The findings from their research is leading to
innovative ideas that go beyond emissions management that can create new circular
opportunities and don’t hinder the company as a whole. “It has long been sensed and is now
corroborated that environmental sustainability and firm competitiveness can be achieved
simultaneously through innovations leading to lower environmental impacts of production or
consumption activities” (Del Río et al., 2021). Due to the nature of many of the issues involved,
middle-range theorizing, which implies a clearer understanding of why particular outcomes
occur in a given setting, would be particularly important for managers hoping to implement
circular economy initiatives into their supply chains (Hazen et al., 2020).
An old saying about reputations is that reputation takes years to build but days to lose.
This is the main reason why supply chain managers are hesitant to fully enforce a circular
economy, despite the overwhelmingly positive outcomes. Though circular economy is good for
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the environment and for the businesses that incorporate it on the back end, it is very difficult to
implement on the front end. Managers would be advised to plan and budget time, energy and
money to be able to properly set up a circular economy, taking into account how much it cost to
recycle resources to make more products or if the products created with the recycled materials
can still function the same.
Summary
With the rise of climate change and frequency of natural disasters in recent years, it is
clear that large companies need to take action and do their part to save the environment. The
circular economy initiative aims to combat climate change, reduce waste and emissions and
conserve energy by utilizing a larger percentage of recyclable materials to create new products.
“Circular economy aims to decouple economic activity from the consumption of finite resources,
such as carbon-based energy sources, by designing out waste and pollution, keeping products and
materials in use and regenerating natural systems.” (Hazen et al., 2020). Due to the effectiveness
of circular economy in how it seeks to repurpose and monitor economic activity, more
companies worldwide are implementing it into their supply chains.
References
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Del Río, P., Kiefer, C. P., Carrillo-Hermosilla, J., & Könnölä, T. (2021). Managerial and public
policy implications. The Circular Economy, 167–181.
https://doi.org/10.1007/978-3-030-74792-3_7
Geissdoerfer, M., Savaget, P., Bocken, N.M.P. and Hultink, E.J. (2017), “The circular economy –
a new sustainability paradigm?”, Journal of Cleaner Production, Vol. 143, pp. 757-768.
Hazen, B. T., Russo, I., Confente, I., & Pellathy, D. (2020). Supply Chain Management for
Circular Economy: Conceptual Framework and research agenda. The International
Journal of Logistics Management, 32(2), 510–537.
https://doi.org/10.1108/ijlm-12-2019-0332
Quigg, B. (2020). Supply Chain Management. Liberty University School of Business.
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