Circular Supply Chain and Business Model in Apparel Industry: An Exploratory Approach

Introduction

Companies are currently trying to move from the existing linear business production model to a circular one. Van Loom et al. (2018) has advised that this transition will not be easy and will demand contextual changes beyond companies’ control, such as changes in legislation, new modes of financing or changes in consumer behaviour, in addition to the needed changes inside the companies. The circular economy (CE) pursues the creation of closed material flow in productive systems to maximise the use of available resources. Along the supply chain different circles are therefore created to reduce, reuse, recycle, remanufacture, recover and redesign material during the life cycle of a product.

The life cycle of a product (including the circular production cycle) has three basic phases: pre-production, production and post-production (Turon & Czeech, 2017, quoted in Zielecki, 2006). During the pre-production phase, product design, market definition, materials and production processes are developed. In a CE, product design waste should be reduced in the pre-production phase by choosing appropriate materials that can decrease harmful substance emissions; so, for example, fossil energy resources could be replaced by renewable ones (Szita, 2017). Manufacturers will therefore look for ways to reduce consumption of raw materials by reusing products, components and materials (Van Loon et al., 2018). In a circular supply chain, a relevant driver could be to reuse an already used product or to use recycled ones; in other words, in a circular supply chain, ‘a product gets a new life in a new form’ (Turon & Czeech, 2017, quoted in Abec, 2014). This avoids the production of unnecessary waste and the use of most resources by pursuing a strategy of reduction and zero waste. Indeed, waste is considered a new input in the supply chain.

All the processes, activities and tasks to manufacture and distribute a product are included in the production phase. Thus, redesigning the production line, using clean sources of energy or new materials, producing more from less material and the consumption and reduction of losses and waste material can be added in the circular production phase (Szita, 2017).

Product sales, customer care, reverse logistics and recycling take place during the post-production phase. At this point, recycling becomes relevant so that most of the product can once again become raw material that enters the production process again to create a closed-loop supply chain.

Caniato et al. (2012) and De Brito et al. (2008) have explained that the fashion industry has had a very high environmental impact in a number of ways, including: 1) use of natural raw materials (e.g. cotton, wool or leather) that require large quantities of water or pesticides, and the use of synthetic products with a toxic production process; 2) some phases of production use toxic chemical products; and 3) the manufacture and distribution of clothing make intensive use of modes of transportation. Competitive pressures due to the increase in the number of competitors and the reduction of the life cycle of the product also lead to an increaser in pollution and waste (Chung & Wee, 2008).