Abstract
Conventionally supply chain is a complex web, comprising multiple entities of suppliers, manufacturers, retailers, and customers. Participants put their best efforts into zeroing in on the gap between demand and supply via operational efficiency and value creation. There are various reasons for not sourcing these materials for reutilization; one of the major reasons for not using this material is the higher cost associated with its sourcing and the easy availability of fresh materials. Hence supply chain strategies need to be sustainable for searching for new avenues for sourcing these materials. In the case of technical goods, its digital manifest is important to narrate its resource composition, its quality, and quantity to determine recyclable value. Controversy with the circular economy is odd for various manufacturing and selling concepts to narrate individual ownership and obsolescence value. Its benefits are derived from gains through energy efficiency, and results obtained by practicing reverse supply chain concepts.
TopIntroduction
Corporate leadership grapples with unparalleled challenges of supply shortages, and geopolitical issues, along with sustainable climate crisis, and resource consumption. Buyers' growing demands and discarding before their full consumption/the end of life of products leads to the burning/dumping of precious resources. In the absence of adequate measures for the full utilization of products, what is left over is only a small portion for reuse, recycling, repair, and sustainable disposal. The circular economy through its feedback system minimized the sourcing of fresh technical and biological resources and the release of its wastages into the environment. Its principles are integrated into the supply chain and logistical strategies. Firms are likely to implement a circular economy through their products and compete in the market. Emphasis is to be made on sourcing reusable materials and increasing the usable life of products including capital items. Principles of reverse logistics and green supply chain practices expand their horizon with a comprehensive framework. Generally, two sub-systems are in practice, one for biological goods like perishable goods and the other for technology goods. Fundamentally circular economy supply chain differs from a conventional supply chain, firstly for product designing with socio-economic consumption with extended usages, enhanced product life cycle, and higher outputs.
The second issue is the take care of reverse logistics for used biological and technical products. Resources and products follow a unidirectional flow of taking, making, and disposing under a linear economy which is by design considered restorative and regenerative (MacArthur 2013), irrespective of being unsustainable and depleted with as high as double consumption rate every year. As per the Paris Climate goals, the shift from a linear to a circular economy is comprised of numerous challenges. Practising a circular economy is the need of time which decouples economic growth from resource consumption. Reinforced by a changeover to sustainable renewable energy sources, the circular economy propels economic, and social capital through designing processes to phase out waste and pollutants. Extending the product life cycle through reuse, repair, and recycling keeps the product value high through new business models, and finally regenerates natural systems, sharing services, and economic platforms (Ellen MacArthur Foundation, 2017). Practising a circular economy became evident as the world population is expected to increase manifold. To save nature from greenhouse gases and other disasters, we must work on renewable energy sources with the framework of resilient, sustainable, and regenerative ecosystems. Integrate distribution and manufacturing strategies. It limits infinite consumption and creates a restorative and regenerative economy that supports the well-being and health of our planet which currently follow marketing principles based on product obsolescence value. While the governance framework for social, environmental, and CSR are gaining attention, a place for a true leader who embraces circularity and tackle system problem is void. Firms reaching market saturation are likely to follow a circular supply chain as a strategy to retain a competitive position. Benefits are gained through energy efficiency, and results of sustainable supply chain performances.
Designing a sustainable supply chain network is witnessing significant changes due to the competitive business environment. As SCM is not only related to manufacturers, rather it starts and ends with the customer Pahlevan et al., (2021). SCM integrates an efficient flow of information, material, and funds and coordinates among networks (Yang et al., 2018; Wang et al., 2016). Management decisions get impacted by network decisions, which subsequently impact firms’ performance and ROI in the supply chain decisions. Planning for material flow includes allocation of suppliers, location decisions, inventory control, purchase, and distribution decisions. The importance of sustainable supply chain management practices guides supply chain managers to strategies for organizational excellence. Critical strategies for a sustainable supply chain include sustainable network selection, environmental policies, and environment-friendly responsibilities, in addition to profitability. Financial obligations with minimum social and environmental adversities also need consideration.
Key Terms in this Chapter
Reverse Material Flow: When by-products are flown back after multiple stages of product use and management of discarded materials for recycling and final disposal of the end-of-life products.
Material Flow: Material flow is the transportation of various goods such as raw materials, pre-fabricates, work-in-progress inventory, parts, components, integrated objects, and finished products as a flow of entities. The term material flow mainly applies to the advanced exhibition of supply chain management.
Reverse Logistics: Reverse logistics comprehends all processes related to the upstream and downstream movement of materials and products. Reverse logistics is “the process of moving goods from their typical destination after the end of life of the products for the persistence capturing value and proper disposal with care.
Sustainability: The ability to support and maintain a process continuously over time, in business and policy contexts consisting of fulfilling the current demands without compromising the desires of future generations. Sustainability ensures the right balance between environmental care, social well-being, and economic growth.
Recycle Recycling: A process of altering waste materials into new and usable materials.
Remanufacture: The manufacturing of a new product from similar products once it has achieved its functional life may be because of wear-n-tear or damage. Producers refurbish main components and parts and add new gears for the parts that find it difficult to be repaired. Once the product gets refurbished it is reintroduced into the supply processes.
Circular Economy: William McDonough is known as the co-creator of the “Cradle to Cradle” design and the “father of the circular economy”. Presents a vision for materials that benefit society with safe water, energy, and material by eliminating waste. It aims to use raw materials in a closed loop. Its concepts accelerate the process if applied effectively. The focus of the circular economy is to promote reverse Logistics for environmental sustenance, recycling for environmental feasibility, engaging the community by acknowledging waste utilization, and utilizing emerging technologies for mitigating waste.
Product Life Cycle: A product life cycle is considered as the length of time from a product first being introduced for use by consumers until it is aloof from the market. A characteristic of an efficacious new product is a gradual rise in its sales during the market expansion stage.
Reuse: Reuse is the practice of using a material, for the purpose it was produced and or to fulfil a diverse function. In the case of recycling, which is different from reuse, the material is broken up into reusable parts and further used as a manufacturing process.