Circular Supply Chain – The Sustainable E-Commerce/Business Model Aaj Enterprises March 17, 2020

Supply Chain Management

Circular Supply Chain – The Sustainable E-Commerce/Business Model

The resources of this planet are finite. That is an inevitable truth to be faced by the dwellers of earth some day or other. Perhaps those times are now here and both manufacturers and consumers have to worry about sustainable development and living.

The prerequisite of running a successful business is the minimization of operational costs and wastage. A very effective and somewhat ubiquitous method of implementing this strategy is the use of circular supply chain.

In its essence, a circular supply chain aims at reclaiming the waste and converting it into products that can be resold.

The reclamation covers reusing discarded waste products, by-products, returned items and damaged inventory.

How is the circular model helpful for companies?

Reducing waste and reusing goods can be a major economic driver for a manufacturer. As a matter of fact, 75% companies claim that they destroy about 50% of the recaptured products. However, such products do not lose much in value and can be refurbished which involves lesser costs than manufacturing a new unit

Countries are now becoming more aware and strict about the resolution of waste materials. Many new laws have been enforced in many major countries of the world that require companies to cut on their manufacturing waste and facilitate recycling to counter the problem of landfills and pollution.

The circular supply chain helps in reducing the overall carbon footprint and substantially lowers costs. Moreover, it lets bigger logistics companies compete with smaller firms who provide lower costs due to the small scale of their operation.

Implementation of the circular supply chain

With the involvement of technology in manufacturing, logistics and other related procedures. Implementation of the circular supply model is not very difficult.

The manufacturers need to collaborate with the retailers and the logistic companies(including 3PL warehouses) to track returns and damaged items.

This implementation starts at the upper managerial level and with the use of latest technology like RFID’s, CRM, and IoT. This sustainable model of product flow can be easily brought into effect.

Each company implementing this method must chalk out a precise and detailed procedure to eliminate the chances of clash or errors. Since each company has a different working methodology and work culture.

While the circular supply chain can prove to be a complex initiative at some point where multiple lines are drawn to involve different contributors of the demand-supply cycle. Sustainable business models like this are need of the hour. Especially due to the dwindling resources of the planet and the ever increasing population.

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