How to Prepare Your Supply Chain for The Circular Economy
- The world is rapidly shifting toward sustainable practices in which the circular model plays a key role.
- To embrace circularity, organizations need to establish clear objectives and an effective governance structure around ESG.
- Adhering to policies across levels, promoting partnerships, deploying technology and cross-functional transition are key points to prepare supply chain for the circular economy.
November 02, 2022 | Supply Chain Strategy
Circularity is not limited to the shifting to greener resources but also involves changing the mindset — moving from a cradle-to-grave to a cradle-to-cradle (C2C) approach.
Circularity includes evaluating supplier interactions and sourcing materials, rethinking product lifecycles, recycling (downcycling and upcycling), and developing greener business models.
Here are Some Critical Steps to Prepare Your Supply Chain for the Circular Economy:
1. Adhere to Circularity Principles and Legal Frameworks from Local to Global Levels
Align your ESG goals with the United Nations Sustainable Development Goals (UNSDG) as a starting point. At a regional level, align with the rules of supranational organizations. For instance, the EU Green Deal by the European Commission. And, at a business level, organizations should adopt reporting standards and implement circularity regulations as part of their ESG policies and business models. Doing these will enable 100% compliance, quicker adoption of a circular approach in the supply chain and offer greater visibility to investors and society with time.
2. Deploy Technology that Offers End-To-End Supply Chain Visibility
Invest in technology that offers visibility on ESG across your suppliers and lets you assess them against your circularity targets and KPIs regularly.
Furthermore, keep in mind the C2C approach while designing products and services. Also, embed biotechnology in production using both biochemicals and the latest technology to upcycle the nonbiological materials into the technical cycle.
Leverage IoT in daily applications, inform end users how to optimally use it and when to repair, replace or sell it back – enabling better product lifecycle management.
3. Ensure That the Transition Is Cross-Functional and Covers the Entire Business
The circularity and sustainability message should flow top-down effectively and must encompass all the leaders, employees and stakeholders for an effective end-to-end transformation.
Consider the following:
- A top-down direction and executive leadership endorsement are required for success.
- Involve procurement, operations and commercial teams from the beginning.
- Keep the finance team in the loop to track cash flows within the new model.
4. Secure Access to Expertise and Market Intelligence
Reach out to organizations that can assess your supply chain and your suppliers on circularity and sustainability. Use their experience, expertise, and data to accelerate your circular adoption.
This will allow you to understand best practices, permanently position the organization as a sustainable business, and obtain input to clarify business cases for internal projects.
Moreover, you can partner with research organizations to get empirical data on the impact of sustainability and circularity on society and the environment which could be some important metrics to measure other than your profits.
For more insights about how to enable your supply chain for the circular economy, download GEP’s whitepaper here. It lists out 10 steps to prepare your supply chain for the circular economy.
