What is Circular Economy? Why it Matters to Supply Chain?

A circular economy is an all-encompassing approach to life and business that aims to create more value and less waste out of the resources we use. It is an economic model that requires us to rethink how we make and reuse products, thus increasing sustainable manufacturing and consumption. 

In the circular economic model, the goal is to reach the maximum efficiency in the use of finite resources while also encouraging the reuse, repair, and recycling of products rather than scrapping them and extracting new resources. Thus, all forms of waste are relocated from the end of the supply chain to the beginning, leading to more efficient use of resources. 

The concept of circular economy has been around for a while but is fast gaining widespread acceptance due to the urgent need to cut down on waste generation and save the planet. 

Circular economy vs. linear economy

To better appreciate the circular economy, it is vital to understand the linear economy. The linear economy is a traditional model that follows the “take-make-dispose” approach to resources. These raw materials are extracted (taken) and used to manufacture a product (make) after it is used and thrown away (dispose of.)

The two major problems with the linear problem are that it is unable to handle a rapidly growing human population on a planet with limited resources, and the waste generated in the course of production and consumption are part of the biggest problems facing the planet. Thus, it is apparent that our current system is unsustainable. 

In contrast, the circular economy proposes a closed-loop system, circular design, and more sustainable products. Products are designed in a way that allows them to be reused, either in the biological or technical cycles. In other words, all-natural resources are obtained sustainably and are reused and recycled endlessly within a circulatory system, thus preventing waste generation. 

Principles of circular economy

The circular economy is restorative and regenerative by design, and it is based on three principles:

1. Design out waste and pollution 

Our current economic model has led to the generation of enormous waste. A product is manufactured by a company, used by a consumer until it reaches its use-by date, or replaced with a newer model and then it is disposed of as waste. Disposing of these products means that everything invested in them is lost including money, energy, water, and labor. 

In the circular economy, there’s no such thing as waste as the goal is to find new and innovative ways to design out waste and pollution by reintroducing those products into the material cycle. In other words, waste must be viewed as a flaw and seen as potential materials for new products like plastic, glass, and paper. 

2. Keep products and materials in use 

The circular economy favors activities that promote the use of products and materials for longer in more ways. The idea is that since the resources on the planet are finite, the products and materials we make from them must be kept in the economy for as long as possible. Thus, all products should be redesigned to ensure they are recyclable. 

Furthermore, product life cycles are extended by maintenance and repair, so they remain in their original use for as long as possible. The goal is achieved through active reuse, repair, and remanufacturing of the products and materials utilized in the economy. Recycling products and materials also help to reduce emissions since it requires only a fraction of the energy required to make new ones. 

3. Regenerate natural systems 

The last principle of the circular economy is the most transformative principle because it aims to improve our natural environment. Rather than try to minimize the damage done to the planet as in the linear economy, the circular model emphasizes doing the planet good instead. 

In nature, there is no waste in that all the natural cycles work in closed loops with little to no loss of resources. The circular economy mimics nature by adopting the use of renewable resources, thus actively protecting and improving our environment. An excellent example of this principle is using renewable energy as opposed to relying on fossil fuels. 

Conclusion 

Since the industrial revolution, our economy has been locked into a system that favors the linear model of production and consumption, but this will not deliver the sustainable future we desire for future generations. Transitioning to the circular economy will help us to tackle emissions and achieve greater resilience to climate change.