If you follow the Logistics Bureau blog, you might recall that we have, once or twice, made passing reference to the concept of the circular supply chain, primarily in our articles focused on developing trends in the supply chain and logistics sector.
In the summer of 2020, I had the opportunity to interview bona fide circular supply chain authority, Deborah Dull, to get a comprehensive expert overview of the concept and what it means for enterprises, organisations, and supply chain practitioners.
Circular supply chains are Deborah’s passion. Aside from founding a professional community called the Circular Supply Chain Network, she has also penned and published an entire book on the subject.
For a bite-sized but thorough glimpse at the topic, though, the following transcript of our interview, I’m sure you will agree, makes for a valuable few minutes of insight into the circular economy and the corresponding circularity of the future supply chain.
An Expert’s Take on the Circular Supply Chain
The supply chains that we have today support our current global economy, of course, and that economy works in a linear fashion. We take something out of the planet, or maybe from a forest. We make something with it very efficiently. We use that item, and then typically we throw it away.
And there’s a new realisation over the last ten years or so that we will not have infinite amounts of resources — so we’ll have to find another way to have this global economy work. So you can put circular supply chains into two categories:
- Those supply chains that support circular business models that are participating in this new type of global economy
- Supply chain operators who are going circular themselves, as a catalysing factor to support any business model
This shift towards circularity isn’t just an environmental initiative — it’s becoming a business imperative.
Whilst traditional supply chains move materials in one direction from extraction to disposal, circular supply chains create continuous loops of material usage that reduce costs and create new revenue streams. For supply chain operators, this means developing new capabilities in:
- Resource recovery and reprocessing
- Reverse logistics operations
- Product life extension strategies
- Waste reduction systems
Leading companies are already seeing significant cost benefits from circular initiatives, with some reporting up to 30% reduction in material costs through reuse programmes. The transition requires careful planning and new operational processes, but the business case is becoming increasingly clear as resource prices continue to rise.
Examples of the Circular Supply Chain in Action
A good example of circular supply chains we’re seeing is an interest in two categories of materials and resources. One of those categories is called renewable materials and comprises anything that would go back into the planet. It could be heat, water, food scraps, and composting — anything like that which goes back into the earth or its atmosphere.
One aspect of this is heat runoff. Today so much of the heat that industry generates in various operations is just lost. It’s going into the atmosphere. But now, we are starting to see regenerative processes that harness that heat and use it in another operation or for some practical purpose.
For example, I’m sitting in Seattle, not far from the biospheres that the team at Amazon has built, and those are heated with server heat runoff. So that’s the one category comprising renewable, regenerative types of material.
Then we have what’s called technical materials. Those are like plastics, metals, and other items that would not go back into the planet — and this is where it gets exciting.
In practice, these material categories are reshaping how supply chain operations handle resources. Renewable materials require specialised collection and processing systems — companies are installing composting facilities, heat recovery units, and water reclamation systems directly into their distribution centres and manufacturing facilities. The ROI on these investments often hits break-even within 24–36 months.
For technical materials, successful implementation requires:
- Robust tracking systems to monitor material quality through multiple use cycles
- Dedicated reverse logistics networks for collection and sorting
- Partnerships with specialised processors who can maintain material integrity
- Quality control processes to ensure reprocessed materials meet specifications
Leading companies are seeing 15–25% reduction in raw material costs through these circular initiatives. For example, major electronics manufacturers now operate dedicated facilities for recovering precious metals from returned devices, whilst automotive companies run sophisticated parts refurbishment programmes that reduce new material requirements by up to 40%.
These real-world applications show that circular supply chains aren’t just theoretical — they’re delivering measurable business value whilst reducing environmental impact. The key is designing systems that can efficiently capture and reprocess materials without compromising quality or increasing operational complexity.
Recycling is a Last Resort
We are starting to see material science innovations and exploring ways to use materials indefinitely. So the idea is, for instance, that the plastic we have running around the planet should continue to be used rather than trying to make new plastic.
The challenge, of course, is that every time we process or recycle any material, it loses some integrity. So a principle of the circular economy is to find other ways to be stewards of this material.
Recycling is a very last resort in a circular business model. You want to leave the material as it is for as long as possible. So it’s about things like rethinking product design. For supply chains, that could mean more modular design or refurbishment and remanufacture along the same lines as manufacturing a new product.
The name of the game really will be switching to refurbishment, remanufacture, and reuse. In the coming five to ten years, the expectation is that most businesses would shift to remanufacture rather than starting from scratch.
This shift requires major changes in how supply chain operations handle materials and products. Remanufacturing centres are becoming essential facilities in modern supply networks. Many companies are converting portions of their distribution centres into refurbishment operations, adding testing equipment, repair stations, and quality control processes.
The numbers make a compelling case: remanufactured products typically cost 40–65% less to produce than new ones. Companies running successful refurbishment operations report profit margins 20–30% higher on remanufactured goods compared to new products. The key is setting up efficient reverse logistics networks to get used products back into the supply chain.
Leading manufacturers are already making this transition:
- Electronics firms now design products with easy-to-replace modules
- Industrial equipment makers operate dedicated remanufacturing facilities
- Automotive companies run sophisticated parts recovery programmes
- Consumer goods manufacturers redesign packaging for multiple use cycles
Getting this right requires close collaboration between product design teams and supply chain operators. The goal is building products that can be easily disassembled, repaired, and put back into service — all whilst maintaining the quality standards customers expect.
Money and Risk: The Carrot and Stick of Circular Economics
So, how do we encourage companies to participate more in this circular economy? Well, money is the most effective carrot. It’s the incentive for businesses anchoring in the three circular principles. Those principles are:
- Design out waste, which we know how to do in the supply chain. That could look like product-as-a-service instead of selling products.
- Keeping materials in play — for example, refurbished mobile phones.
- Regenerating natural systems.
Those companies that anchor into these principles properly make big money doing it, so that’s the most significant incentive. If you think you’re engaged in a circular business model, but your business is not making money, you need to take another look because there may be something you’re missing.
I will say this is one of the few spaces I’ve ever seen where government policy is out ahead of the business community. There’s lots of money to be had here. Many incentives are already in place, particularly in Europe, although Australia and several Asian countries are also well incentivising businesses to take a look at this.
The other significant factor to consider is disruption and risk to your supply chain. We’re starting to see some risks around raw materials, particularly copper. Anyone in sourcing who buys large quantities of copper will already know what I mean. We’re running out.
We have less than ten years’ worth of economically viable gold reserves remaining. What that means, of course, is that there will be a dearth of gold quantities viable for mining. We use gold in everything — in many different electronics, for example. So there’s a considerable risk to the ability of supply chains to function.
At the beginning of the supply chain, we will have a substantial risk to address. But then also, as we are seeing so much more of today, the longer a supply chain is, the more chances there are for disruption in its functioning.
The premise of the circular economy is to explore whether you can get resources locally, transform them locally, and use them locally. Of course, you can’t always do that, so we’ll continue to see global trade in some cases.
But for small components, for instance, you shouldn’t need to be ordering those online from some central warehouse several hundred kilometres away. Perhaps they can be 3D printed right there in your locale. So there’s a whole shift coming, which I think could be pretty interesting.
Circular Economy: Industry by Industry
Automotive is probably the furthest ahead. If 15 years ago we were to say you could get something like a BMW-certified used car, people would have rolled their eyes and thought there’s no way that BMW would ever let that happen. But in fact, such a thing has become a reality today.
So refurbishing used cars is along that vein, and Renault is undertaking a classic example of that in France, and they’ve made tremendous amounts of money from these new types of revenue streams. The cars are not junked. They are recaptured, refurbished, and reused, so the parts concerned are already there. There’s no starting from scratch to make new or spare parts. From refurbishing like this, they’re able to make considerable sums of money.
Fashion, too, is in focus right now. We have this love affair with fast fashion as consumers. Some breakout brands are now taking approaches such as cut-to-order — so you might input your actual measurements onto a website, and they won’t even cut the fabric until they’ve received your order. Then they do the cutting with a laser, which reduces waste.
We’re seeing print-to-order, which means keeping the silhouette of an item but moving colour with the season, since colours are a bit fickle, as are consumers.
The other area we’re seeing a keen focus on is single-use plastics and single-use coffee cups, and there are many leaders in this space. Starbucks, for instance, is running an ongoing cup challenge to figure out what they’re going to do.
So they’ve done substantial research and invested in concepts such as a reusable coffee cup network, which would allow you to get your coffee in a robust to-go cup for reuse and return it at any number of other locations. The cups would all be continually captured as part of a network.
Finally, food is worth mentioning. A third of the food in the US system today is wasted. Meanwhile, we have this terrible problem globally in that some people are going hungry — and we are discarding food.
Aside from that, food production consumes water, energy, and other resources, whilst food scraps that we throw away — which could instead be composted — contribute almost 7% of the world’s greenhouse gases.
That’s more than three times the contribution of air travel. We hear a lot about how destructive air travel is environmentally, and it is, but on aggregate, something as nondescript as composting can drive huge improvements in sustainability.
See and Hear More About the Circular Economy and Supply Chain
For me, and I’m sure you’ll agree, Deborah’s insights were remarkable, and shed considerable light on the circular economy and the supply chain implications. To learn more from Deborah, you can visit her website at deborahdull.com.
