New studies measure the benefits of the circular economy

This is an excerpt of the original article. It was written for the May-June 2018 edition of Supply Chain Management Review. The full article is available to current subscribers.

May-June 2018

Last month, I was in Atlanta at the Modex trade show. In one sense, it is a tribute to the automation technologies managing today’s distribution networks. And, I’m not only talking about automated materials handling systems, but also the software and NextGen technologies such as robotics, wearable technologies, including smart glasses and augmented reality solutions and sensors enabling the Internet of Things. In another sense, all of these solutions are coming together to drive fulfillment. With the increase in e-commerce, getting the right product to the right customer at the right time has never been more important.

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Two reports from prominent global think tanks bring into question some past “best practices” of supply chain management, which may soon be regarded as not only antiquated, but wasteful as well.

Researchers from the Ellen MacArthur Foundation maintain that the linear “take, make, dispose” model—the dominant economic template of our time—relies on large quantities of easily accessible resources and energy, and therefore is increasingly unfit for today’s complex global trade networks.

Unfortunately, researchers add, working toward efficiency by reducing the resources and fossil energy consumed per unit of economic output will not alter the finite nature of their stocks—but can only “delay the inevitable.”

They conclude that a more fundamental change of the operating system is necessary because the concept of the circular economy has been gaining traction for a variety of obvious reasons. According to the Ellen MacArthur Foundation, the circular economy is characterized (more than defined) as “an economy that is restorative and regenerative by design and which aims to keep products, components and materials at their highest utility and value at all times.”

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