SCOR Best Practice BP.282 Circular Economy

Businesses are shifting from traditional linear models toward a Circular Economy (CE). Unlike the linear “take-make-dispose” approach, a circular economy focuses on designing out waste and pollution, keeping products and materials in use, and regenerating natural systems. For supply chains, this shift requires an integrated approach, encompassing long-lasting design, maintenance, repair, reuse, remanufacturing, recycling, and upcycling.

This blog explores the processes, metrics, and people strategies for embedding a circular economy within supply chains and offers five real-world examples of organizations leading the way.

Key Processes Supporting the Circular Economy

The transition to a circular economy impacts every aspect of the supply chain. Some critical processes include:

• Planning (P): Strategic planning ensures supply chains are designed to minimize waste, from sourcing renewable materials (P3) to planning the return of products (P6).
• Orchestrating Supply Chain (OE): Circular strategies align with business objectives and regulatory compliance. Activities like modeling scenarios (OE7.4) and assessing regulatory impacts (OE8.3) ensure long-term viability.
• Transformation (T): Transforming products and services requires a focus on reusing materials, recycling, or repurposing surplus (T1.8, T2.13, T3.11).
• Fulfillment (F): Efficient intra-company and B2B fulfillment strategies (F2, F3) minimize transportation waste.
• Returns (R): Establishing robust systems for product and service returns (R1, R2) supports repair, remanufacturing, and recycling.

Metrics such as renewable materials used (EV.2.1), waste diverted from disposal (EV.2.10), and Scope 1–3 GHG emissions (EV.2.7-2.9) provide tangible measures of progress.

Five Real-World Examples of Circular Supply Chain Success

1. Philips: Circular Lighting Solutions Philips has adopted a Product-as-a-Service (PaaS) model, where customers pay for light rather than bulbs. When the lifecycle of the bulbs ends, Philips collects, refurbishes, and reuses components, drastically reducing waste. This approach integrates Plan Return (P6) and Transform Maintenance, Repair, Overhaul (T3) processes. Philips Lighting
2. Patagonia: Worn Wear Initiative Patagonia exemplifies circularity through its Worn Wear Program, which repairs and resells used garments. By focusing on Plan Transform (P4) and Return Product (R1), Patagonia has built a loyal customer base while reducing landfill contributions and emphasizing the reuse of resources. Worn Wear
3. Unilever: Recycled Packaging Unilever has committed to using 100% recyclable, reusable, or compostable packaging by 2025. This effort involves aligning Source (S1) and Transform Product (T1) processes, along with monitoring renewable materials (EV.2.1) and generated waste diverted from disposal (EV.2.10). Unilever
4. IKEA: Circular Furniture IKEA’s buy-back and resale program enables customers to return old furniture for resale or recycling. This initiative integrates Plan Return (P6) and Return Product (R1) processes while meeting EV.1.5 Waste Generated metrics, demonstrating a commitment to circularity. IKEA
5. Renault: Remanufacturing Automotive Parts Renault operates a remanufacturing plant where used parts are dismantled, cleaned, and rebuilt to meet original specifications. This process reduces material consumption and aligns with Transform Maintenance, Repair, Overhaul (T3) and Disposition Waste or Surplus (T3.11) processes. Renault Group

Strategies for Implementation

1. Leadership Commitment: Integrate circular economy principles into corporate strategy, linking them with sustainability and ESG goals (OE10).
2. Scenario Analysis: Use modeling and simulation tools (OE7.4) to assess the impact of circular initiatives on costs, risks, and resource efficiency.
3. Supplier Collaboration: Engage suppliers in Sustainability Standards and Frameworks (HS.0222) to ensure alignment with circular principles.
4. Regulatory Compliance: Monitor and adapt to evolving regulations (OE8.2) to remain compliant and competitive.
5. Training and Development: Equip teams with knowledge of Triple Bottom Line (HS.0191) and Circular Supply Chain Management (OE13) practices.

Unlocking Value Through Circular Supply Chains

A circular economy is more than an environmental imperative—it’s a business opportunity. Companies embracing circular principles see reduced costs, enhanced brand loyalty, and better risk management. By embedding processes like Plan Return, Source Strategic, and Transform Service, supply chains can become enablers of sustainable growth.

For organizations looking to transition, Supply Chain Planning.ie offers tailored workshops and courses designed to embed circular economy principles into your operations, ensuring sustainability is at the heart of your supply chain strategy. Let’s work together to shape a resilient, resource-efficient future.