Circular economy: the future of supply chain

By Georgia Wilson

May 17, 2020

undefined mins

In the next 18 months 70% of supply chain leaders are planning to invest in circular economies, however only 12% have linked it with their digital strat...

In the next 18 months 70% of supply chain leaders are planning to invest in circular economies, however only 12% have linked it with their digital strategies.

What is a circular economy?

A circular economy is an economic model that encourages continuous reuse of materials to minimise waste, as well as driving demand for natural resource consumption. “The circular economy starts with good design, end of life and raw material reuse in mind,” says Gartner.

“The circular economy creates an ecosystem of materials,” commented Sarah Watt, senior director analyst with the Gartner Supply Chain practice. “What was previously viewed as waste now has value. However, those ecosystems are complex and include many interdependencies and feedback loops. Digital technology has the potential to provide visibility and enable improved decision making when it comes to raw materials and services. Already, 35% of companies believe that digital technology will be a key enabler for their circular economy strategies, but very few are leveraging the technology for this purpose yet."

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In a recent study conducted by Gartner, the research and advisory organisation look at digital technology in the supply chain and how businesses can apply technology to enable a circular economy.

Key findings from the Gartner’s study

The study showed that there is no ‘all purpose technology’ that will enable an organisation to develop a circular economy, it is a combination of technology that leads to this. In particular supply chain leaders are using advanced analytics, 3D printing, the internet of things (IoT) and machine learning, with 38% looking to explore the use of blockchain in the next five years.

Currently within the industry, organisations are applying this technology into delivery (46%), customer engagement (45%), manufacturing and remanufacturing (43%), planning (43%) and reverse logistics (27%).