Abstract
This chapter discusses the implementation of “circular supply chain management” (CSCM) in manufacturing companies. It also discusses the factors that influence and present barriers to effective CSCM implementation. The circular supply chain emphasizes an increase in the usage of reuse, recycling, and remanufacturing, promoting the shift of manufacturing features from linear ('take-produce-use-dump') to circular models of product, by-product, and waste flow. In the last few decades, supply chains in manufacturing industries have become global. In recent years, organizations have sought to approach circular supply chain models to lengthen the product life cycle, manage waste, and promote economic sustainability by shifting customer preferences toward secondary commodities and products. As a result, CSCM may provide a meaningful linkage between their economic growth and resource depletion, and community welfare issues, and therefore offer the potential for the sustainability of a business.
TopBackground
Supply chain management (SCM) is an area that many researchers focus on, especially in improving manufacturing performance by looking at effective, efficient, and economic factors. SCM always deals with procurement, operation management, logistics, and marketing systems that turn raw materials into finished products and deliver them to the end user. The goods and services management process actively involves streamlining supply-side business activities to maximize customer value and gain a competitive advantage in the industry. It is an important area to look after because it may help achieve several business objectives, such as improving product quality, reducing costs and the risk of a lawsuit, and helping to build a good consumer brand. Besides, SCM provides several prospects to strengthen its business margin, which is critical for large and international companies. All companies need to note five significant elements of SCM: developing a strategy, sourcing raw materials, production, distribution, and returns. The person in charge of SCM should know how to control costs, reduce wastage, and avoid supply shortages (Farooque et al., 2019). Usually, the application of SCM is to centralize or link the supply chain processes to ensure that the companies can cut excess costs and deliver the products to their end customers faster. Tight control of internal inventories, internal production, distribution, vendors, and inventories is necessary for good SCM. Every single department in the company needs to work together to meet the objective of economical and efficient production.
CSC management came into SCM regarding the economic operation whereby the companies try to reduce their waste by recycling the remainder of their manufacturing waste when converting raw materials into finished goods. Under CSC, the waste collected at the final stages connects the endpoint back to the starting line and reduces the need for raw materials. The purpose of CSC is to minimize the use of raw materials and minimize discarded waste materials. Due to this purpose, the CSC does not stop at the consumer but will be a continuous process. Many companies are shifting to CSC due to sustainability concerns, especially minimizing waste and environmental impact. It is consistent with Sustainable Development Goal (SDG) number 11 on Sustainable Cities and Communities. The aim of SDG No. 11 is to reduce resource use and environmental impact to ensure sustainable cities and societies.
Key Terms in this Chapter
Circular Supply Chain: The circular supply chain is a model that encourages product manufacturers and sellers to take discarded materials and remake them for resale. It also refers to a recovering production system in which resources are cycled through activities such as recycling, reuse, and remanufacturing in a never-ending cycle. A company that recycles its waste and accepts returned items from consumers is participating in a circular supply chain when it makes use of these materials in the production of new or previously owned goods. A circular supply chain aims to reduce both the amount of raw materials used and the amount of waste materials discarded.
Circular Economy: The concept of a “circular economy” can be thought of as a framework for systemic solutions to problems on a global scale, such as climate change, the decline in biodiversity, waste, and pollution. A “circular economy” is a model of production and consumption that entails sharing, leasing, reusing, repairing, refurbishing, and recycling existing materials and products for as long as possible. This model aims to reduce waste and preserve natural resources. The transition to a circular economy must adhere to three guiding principles in order to be successful: the elimination of waste and pollution, the circulation of products and materials, and the regeneration of natural resources.
Supply Chain Management: The management of an entire production flow of a product or service is referred to as supply chain management (SCM). This management encompasses all the processes that are responsible for transforming raw materials into finished goods. This also involves everything from the procurement of raw materials to the distribution of the finished product to the end user. It is the process of actively streamlining the supply-side activities of a company in order to maximize the value provided to customers and gain a competitive advantage in the market. A company will establish a network of suppliers in order to facilitate the movement of the product from the companies that provide the raw materials to the companies that work directly with the end users.
Cleaner Production: The term “cleaner production” refers to a strategic approach to business policy that integrates the environment into the global management of a company and gives that company the ability to maintain or improve its competitiveness within the context of the environment's ability to be sustained over time. The production of goods and services in a manner that is less harmful to the environment can be accomplished through the implementation of preventative measures by applying cleaner production. Changes in technology, processes, resources, or practices are implemented as part of cleaner production in order to lessen the amount of waste generated, reduce the amount of environmental damage and health risks, make more efficient use of energy and resources, improve the production process's overall efficiency, and increase business profitability and competitiveness. Production that is less harmful to the environment is beneficial to all types and sizes of businesses.
Resource Management: The process of planning, scheduling, and assigning resources like people, cash, and technology to a particular project or program is referred to as “resource management”. In its most basic form, it is the process of distributing resources so as to maximize the contribution those resources make to the organization. If there is proper management of the available resources, then the appropriate resources will be made available at the appropriate time for the appropriate work. The process by which businesses plan, schedule, and allot their resources in order to achieve the greatest possible amount of organizational value is referred to as resource management, which is also known as resource planning. These resources can either be intangible, such as skills and time, or tangible, such as equipment, materials, and financial resources. Skills and time are examples of intangible resources.
Circular Supply Chain Management: Circular supply chain management (CSCM) is defined as the coordinated forward and reverse supply chains via purposeful business ecosystem integration for value creation from products or services, by-products, and useful waste flows through prolonged life cycles that improve the economic, social, and environmental sustainability of organizations. The field of supply chain sustainability benefits from the introduction of a novel and compelling point of view in the form of CSCM, which is an approach that merges the principles of supply chain management with those of the circular economy. It refers to the management of material, information, and capital flows as well as cooperation among companies along the supply chain. This is accomplished while taking goals from all three dimensions of sustainable development, namely economic, environmental, and social, into consideration. These goals are derived from the requirements of customers and other stakeholders.