Circular Supply Chains: digital technologies for resource loop redesign

Today, it is essential to speed up transition towards “circular” industries. This requires the complete rethink and redesign of the prevailing linear supply chains, according to the Circular Economy principles, toward the development of Circular Supply Chains. The theme was explored in an article written by Giovanni Francesco Massari, Raffaele Nacchiero and Ilaria Giannoccaro.


Circular Supply Chains are self-sustained systems designed to operate in a “restorative and regenerative” way. This happens by recapturing residual value from by-products, extracting new value from end-of-life resources, extending product life for as long as feasible, and increasing resource efficiency.


The transition to Circular Supply Chains is successfully achieved through the collective adoption of Circular Business Models by multiple stakeholders. Those models transform the prevailing linear resource management along the supply chain by closing, slowing, intensifying, narrowing, and dematerializing resource streams, leading to specific Circular Supply Chains archetypes.


So far, multiple review frameworks have been developed to summarize the vital role of Digital Technologies on the implementation of Circular Economy strategies, Circular Business Model dimensions, resource efficiency and other sustainable practices, all without relating them to a specific Circular Supply Chain archetype.


What are Circular Supply Chains?

In literature, scholars defined Circular Supply Chains in different ways. However, they all converge to the integration of circular economy thinking on all the supply chain stages and the implementation of circular economy strategies by the involved stakeholders.


For example, Genovese et al. (2017) focus on Circular Supply Chains  “diverting used products from being discarded as waste through the recovery of value and reused in production of secondary products”. On the other hand, Nasir et al. (2017) define Circular Supply Chains  as those “enabling products at the end of their life cycle to re-enter the supply chain as a production input through recycling, re-usage or remanufacturing”, and Mangla et al. (2018) as a “restorative production system, where resources, enter an infinite loop of reuse, remanufacturing and recycling”.


Circular Supply Chains configure as self-regenerative ecosystems integrating a high number and variety of stakeholders in a connected network. They extract new value from end-of-life resources, extend product life, and increase resource efficiency ideally toward zero-waste operating conditions. In Circular Supply Chains, resources move along the forward supply chains, originally separated, and the reverse supply chains.


Classifying the archetypes of Circular Supply Chains  

Different Circular Supply Chain archetypes can emerge from closing, slowing, narrowing, intensifying, and dematerializing resource loops. The principle of closing resource loops has the purpose of creating new value through the collection of non-functional products at their end-of-life stage. Then they are transformed into new valuable resources, through recycling processes, and/or reusing them by partnering industries.


Circular Supply Chains are characterized by long and structured networks of multiple interdependencies that facilitate the flow of the products that need to be transformed.


An interesting example is the supply chain of Plastics for Change which recycles waste plastics to generate new plastic materials that can be returned to the market. It is characterized by a long cycle consisting of the following players: the waste picker which recovers and collects the recovered plastic; the scrap shop that performs a first separation of the recovered material; the franchise aggregator that performs a second separation of the material; the granule producer that transforms waste into plastic granules; the manufacturer who converts the granules obtained into usable packaging; the brand that obtains the packaging and places it on the consumer market.


The principle of narrowing resource loops entails increasing resource efficiency by reducing the use material and energy for manufacturing products, through eco-design. Circular Supply Chains for intensifying resource loops elaborate structural supply chain models allowing a more value-intensive use phase for circulating materials and products. Circular Supply Chains for dematerializing resource loops represent perhaps the most complex and disruptive case of circular reconversion of the traditional supply chain model. They aim to completely transform the downstream flow to customers with a service system that eliminates the disadvantages deriving from the ownership-acquisition by the customers, increasing the longevity of the products themselves.


Results of content analyses

The results of content analyses are organized to address the following research questions:


1 Which supply chain capability is required for the design of a specific Circular Supply Chain archetype?

2 Which digital technology enables the design of a specific CSC archetype?


To this aim, the authors performed a thematic classification of the final set of samples by progressively grouping them into two groups. The first includes studies investigating the supply chain capabilities useful for the design of a certain Circular Supply Chain archetype, while the second includes those studying the Digital Tecnhologies affecting the design of a certain Circular Supply Chain archetype.


Which supply capability is required for the design of a certain Circular Supply Chain archetype?

First, the authors explored which supply chain capability is required for the design of a certain Circular Supply Chain archetype. These include intra-sectorial collaboration, inter-sectorial collaboration, flexibility, visibility, and traceability.


Regarding intra-sectorial collaboration, the author pointed out that a key enabler of supply chain collaboration is information-sharing. Intra-sectorial collaboration is the one established between two or more firms belonging to the same supply chain sector. It is a prerequisite for closing, slowing, narrowing, and intensifying resource loops, affecting the design of the corresponding Circular Supply Chain archetypes.


Circular Supply Chains demand also inter-sectorial collaborations. They involve two or more firms beyond the original sector boundaries, thus operating along different supply chains. Through them, a large number of by-products, end-of-life resources, and recovered materials become useful for different industrial sectors.


In supply chain management literature, flexibility refers to the supply chain ability to timely react to market dynamics with minimal loss on performance. Flexibility is declined into different types and constructs according to the supply chain stage in which it is studied. For example, manufacturing and product flexibility, procurement flexibility, logistics flexibility.


On the other hand, visibility is defined as the ability to access and share relevant information across the supply chain. Visibility is a key prerequisite for closing resource loops given the enhanced reverse recycling, better integration of downstream companies into recycling operations, resource recovery strategies and reverse logistic processes, and the improved performance of recycling and channels.


Finally, supply chain traceability is investigated as key determinant for the design of Circular Supply Chains. Studies found that traceability is a prerequisite for closing resource loops, in terms of waste-to-energy strategy implementation, wasted packaging material management and reduction purposes, green product quality tracing, recyclability, and control of carbon footprints.


Which Digital Technology enables the design of a specific Circular Supply Chain archetype?

Digital Technologies are described as enabling the design of specific Circular Supply Chain archetypes by closing, slowing, intensifying, narrowing, and dematerializing resource streams. These include Big Data Analytics, Artificial Intelligence, Additive Manufacturing, Internet of Things, Blockchain and Cloud Computing technologies.


Big data analytics (BDA) allow decision makers to analize large volume of data throughout the value chain. This could concern manufactured products, market conditions, consumers’ behaviours, production activities… This is beneficial for narrowing resource loops within the same supply chain stage or between different ones.


By predicting waste materials availability and the demand for goods in the marketplace, Artificial intelligence (AI) allows the business to optimize the value chain by eliminating needless storage and possible shortages. Lowering costs and boosting revenues, AI enables waste collection and recycling operations while closing and slowing resource loops.


Additive manufacturing (AM) technologies provide firms with innovative and flexible solutions for the design and manufacturing of circular products. They enable the companies to meet customer demands for high-quality items on schedule, with less waste and emissions.


Internet of Things (IoT) technologies make physical objects digitally connected to sense, monitor and interact within a company and between the company and its supply chain. This allows tracking and tracing materials throughout the entire product cycle.


Continuous tracking of resources, inventory, by-products, secondary raw materials and waste is possible through a full integration of Blockchain (BC) technologies. It can also help with restructuring and recycling from producers and consumers by tracking material and resource flows.


Finally, Cloud computing (CC) technologies have disrupted manufacturing processes, providing a networked and distributed approach for collaborative manufacturing businesses. Cloud computing platforms enable recycling practices. For example, firms in industrial symbiosis networks can share information regarding their by-product flows through them.


Conclusions

In the recent years, the design of Circular Supply Chains is becoming one among most pressing concerns of both supply chain scholars and manager as affecting the sustainable development of current and future populations.


Circular Supply Chains in fact operate as self-sustained systems designed to operate in a “restorative and regenerative” way by recapturing residual value from by-products, extracting new value from end-of-life resources, extending product life for as long as feasible, and increasing resource efficiency.


According to previous studies, this is successfully achieved through the collective adoption of Circular Business Models by multiple stakeholders i.e., those internal and external to the original supply chain boundaries. Circular Business Models transform the prevailing linear resource management along the supply chain by closing, slowing, intensifying, narrowing, and dematerializing resource streams, thus leading to specific Circular Supply Chain archetypes.


This study provides few practical implications. First, it suggests managers paying more attention on the resource loops since representing key elements for the transition from linear to circular supply chains. Second, this study raises managers’ knowledge on the capabilities playing as prerequisite for the design of specific Circular Supply Chain archetypes. Third, the authors provide managers with useful directions and guidelines about how to exploit at most digital technologies to enable the design of specific Circular Supply Chain archetypes. In so doing, they can counterfit some barriers affecting the design of Circular Supply Chains  e.g., the lack of coordination and collaboration, achieving transparency through stakeholders, the uncertain investment returns of digital technologies.


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This text is an excerpt from an article published with the following reference: “G.F. Massari, R. Nacchiero, I. Giannoccaro, Digital technologies for resource loop redesign in circular supply chains: a systematic literature review, Resour. Conserv. Recycl. Adv. (2023), Article 200189”.


It can be read in its entirety at this link.

Ilaria Giannoccaro

Ilaria Giannoccaro is a full Professor in Management and Business Engineering and in 2018 became the Deputy Director of the Department of Mechanics, Mathematics and Management at the Polytechnic University of Bari. She coordinates a research group called "Collective Intelligence," in the Department of Mechanics, Mathematics, and Management, which studies and analyzes complex phenomena and evolu... Read more

Ilaria Giannoccaro is a full Professor in Management and Business Engineering and in 2018 became the Deputy Director of the Department of Mechanics, Mathematics and Management at the Polytechnic University of Bari. She coordinates a research group called "Collective Intelligence," in the Department of Mechanics, Mathematics, and Management, which studies and analyzes complex phenomena and evolutionary dynamics of socio-technical collective systems. In 2019, she became the contact person representing the Polytechnic University of Bari for ICESP - Italian Circular Economy Stakeholders Platform. She is coordinator of the postgraduate II level Master Degree Program "Circular Economy" at the Polytechnic University of Bari. Her scientific research activity is mainly focused on the topics of integrated management of linear and circular logistics chains, from a strategic and operational point of view, and agent-based simulation of enterprise systems, industrial symbiosis networks, and organizational teams.

Between 2011 and 2015, Ilaria Giannoccaro was a visiting scholar at the Department of Supply Chain Management at Arizona State University and in 2018 a visiting professor at the Santa Fe Institute. In 2021, she was welcomed as a member of the scientific committee of Freight Leaders Council. She has authored more than 150 journal publications and spoken at many international conferences on circular economics.