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How to Create Profitability Through Circular Supply Chains
In business, things can go haywire and cause a bunch of unexpected expenses. These unpredictable events may prompt CSCOs to cut expenditures in their sustainability programs to offset the expenses. However, sustainability can help mitigate cost increases and generate growth opportunities for small to mid-size organizations (SMBs). To offset the costs of disruption without cutting investments in sustainability programs, Chief Supply Chain Officers (CSCOs) need to leverage circular supply chain strategies to eliminate waste and ensure cost efficiency.
Circular Supply Chain
Circular supply chain principles aim to reduce material consumption by keeping them in use for as long as possible.
To make the shift to circular supply chain principles, CSCOs should follow a strategic roadmap and collaborate with suppliers, service providers, end-users, and startups to create value through sustainable material use and new business models. Basically, it's about focusing on reusing and recycling materials rather than just disposing of them.
The way we use resources and the value we lose throughout the entire process—from getting raw materials to disposing of products—affects how much everything costs. That's why it's super important to keep track of resources used and figure out ways to reduce waste. People in charge of supply chain operations can help by using smarter manufacturing methods like lean manufacturing, figuring out how much different disposal options cost, and training everyone involved to get better at reducing waste and making supply chains more circular.
“By adopting circular principles, brands can reduce waste, increase efficiency, and create long-term value for their customers and the planet.”
As George Wojciechowski, co-founder and CEO of Manifest Commerce points out, "To improve their business and become more sustainable, brands need to focus on redesigning their products, rethinking their supply chain, and engaging with consumers to promote a circular economy. By adopting circular principles, brands can reduce waste, increase efficiency, and create long-term value for their customers and the planet."
Visibility Technology and Integrations
Technology and integrations enable visibility into the supply chain, help reduce waste, and enhance circular supply chains. Supply chain collaborative visibility technology provides real-time information on the status and location of goods throughout the supply chain, enabling organizations to optimize their operations and reduce waste. Real-time data can also help organizations better manage inventory levels, prevent stockouts, and reduce overstocking. Furthermore, software that provides transparency can enable more efficient transportation planning and route optimization, reducing transportation costs and emissions.
Integrating visibility technology into the supply chain can also help enhance circular supply chains by enabling more effective reverse logistics. Reverse logistics involves managing and handling products that have been returned or are at the end of their lifecycle. By providing real-time information on returned products, organizations can identify opportunities for refurbishment, recycling, or disposal, reducing waste, improving sustainability, and creating new revenue streams.
Circular Supply Chain Challenges for SMBs
Small and medium-sized businesses (SMBs) often face significant challenges when it comes to implementing sustainability practices. For one, they often have limited resources and may not have dedicated sustainability teams or budgets. This can make it difficult to invest in sustainable technologies or to undertake major sustainability initiatives.
Moreover, many SMBs operate in highly competitive markets, where price and speed are often the top priorities. Sustainability initiatives can be seen as a distraction or an unnecessary expense, and it can be hard to make the case for sustainability when there are more pressing business concerns.
In addition, SMBs may lack the expertise or knowledge needed to implement sustainable practices. Many sustainability initiatives require specialized knowledge and skills, such as in renewable energy, supply chain management, or waste reduction. While SMBs may face pressure from their stakeholders, including customers, investors, and regulators, to prioritize sustainability practices they may lack the internal resources. Knowledge or expertise to respond effectively to these pressures may not be within their current business scope and can put them at a competitive disadvantage.
Despite these challenges, SMBs can still take steps to implement sustainability practices. For example, they can start by focusing on low-cost or no-cost initiatives, such as energy conservation, waste reduction, or employee engagement. They can also look for opportunities to collaborate with other businesses or organizations to share knowledge.
Create a Sustainable Future
Overtime, implementing sustainability practices can help SMBs to reduce costs, increase efficiency, and differentiate themselves from their competitors. By taking a strategic and holistic approach to sustainability now, SMBs can create value for their customers, employees, and communities, while also contributing to a more sustainable future.
"Companies will need to continue to shift towards circular supply chains and implement new technologies to reduce waste, improve efficiency, and enhance their sustainability practices. Those that successfully make these changes will be well-positioned to meet this demand and stand out in a crowded market."
“As we move through 2023, we can expect to see an even greater focus on sustainability across industries. Consumers are becoming increasingly aware of their impact on the environment, and they want to make a difference. Companies will need to continue to shift towards circular supply chains and implement new technologies to reduce waste, improve efficiency, and enhance their sustainability practices. Those that successfully make these changes will be well-positioned to meet this demand and stand out in a crowded market," says Chantal Emmanuel, CTO and Co-Founder of LimeLoop.
By implementing circular supply chain strategies and integrating visibility technology and integrations, CSCOs of small to midsize organizations can reduce waste, enhance circular supply chain practices, achieve cost efficiency, and improve sustainability. These strategies also create opportunities for growth and new revenue streams, making them essential for organizations looking to thrive in today's market.
Dane Baker, co-founder and CEO of EcoCart has some ideas on what specific verticals can do to optimize eco-friendliness without breaking the bank. "As sustainability continues to become more and more the status quo for online shopping experiences, how brands tackle the concept of circular commerce will vary from vertical to vertical. For example, apparel brands will continue leaning into direct resale while consumption based products, like cosmetics, will do so with recycle and upcycle programs for their packaging. That said, I think almost all brands will tie their circular commerce efforts directly to their rewards and loyalty programs in the coming years. It's obvious that sustainable shoppers are loyal shoppers, and when brands give them the opportunity to behave sustainably those brands are consciously fostering deeper relationships, which is an ideal moment to simultaneously reward them in."
"It's obvious that sustainable shoppers are loyal shoppers, and when brands give them the opportunity to behave sustainably those brands are consciously fostering deeper relationships, which is an ideal moment to simultaneously reward them in."
The journey to sustainability is a necessary step for many of today’s supply chains. Yet, many are burdened with where to begin. Let one of Osa’s supply chain experts help get you one step ahead. Contact us to learn more.
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