The Supply Chain World is Not Flat
The idea that supply chain and logistics networks aren’t linear is not new, and neither is the concept of the circular economy. In our globalized world, the value chain has gotten much more complicated and difficult to manage, with many more variables now part of the equation. Add in the fact that the globe’s resources are diminishing at an unprecedented rate and commodity prices are rising, and we’ve got a perfect storm of complications on our hands.
Leading companies address these issues by aggressively adopting a circular approach to supply chain and logistics management. They identify the total impact of products and processes across the supply chain, eliminate waste, and feed outputs back into the overall value chain cycle.
Instead of making, using, and disposing of products and materials, leading companies keep components in use in the value chain and logistics process for as long as possible. They use tactics such as reducing the overall amount of packaging materials used, incorporating reusable packaging and pallets, and leveraging electric vehicles to curb greenhouse gas emissions. The approach is self-sustaining and reduces negative impacts on the external environment.
The circularity concept is another way supply chain operations play a role in community betterment, consumer confidence, and business performance. By moving away from linear approaches toward adopting circular habits, not only are products able to be used longer—saving money and the environment—but new, innovative business models are created, bringing new growth opportunities.
Additionally, companies protect their brand image as customers and investors see the steps the organization is taking to lessen its external impact.
Several market leaders have already adopted such an approach. For example, Renault, one of the world’s largest car manufacturers, is leading the circular economy throughout its vehicles’ lifecycles.
Unilever is rethinking its plastic packaging, using circular principles for climate change mitigation. Plastic producers on the whole are shifting to circular methods, and the C&A Foundation awarded funding to bridge the gap in circular business models in the fashion industry.
These commitments will continue as corporate social responsibility becomes increasingly integrated into mainstream business strategy. Relying on diminishing resources, and not delivering on the experience customers expect, exposes companies to critical risks that reduce their ability to meet demand and put them at a competitive disadvantage.
Supply chain and logistics leaders need to support their organizations and surrounding communities by proactively working together to manage complex networks and execute on the new models that the business environment now requires.