Supply chain leaders have circular economy ambitions

Some 70% of supply chain leaders from across industries are planning to invest in the circular economy in the next 18 months, according to new research from analyst group Gartner.

The survey also showed that only 12% of these leaders have linked their digital and circular economy strategies so far.

Gartner’s definition of the circular economy is “an economic model that separates the ability to achieve economic growth from the consumption of natural resources”. It also says that those business models “encourage continuous reuse of materials to minimise waste and the demand for additional natural resource consumption”, adding that the circular economy begins with good design, and with end of life and raw material reuse in mind.

Gartner’s Future of Supply Chain Survey gathered data from 1,374 business leaders responsible for supply chain and related function across high-tech, healthcare, retail and logistics industries.

“The circular economy creates an ecosystem of materials,” said Sarah Watt, senior director analyst with the Gartner Supply Chain practice.

“What was previously viewed as waste now has value. However, those ecosystems are complex and include many interdependencies and feedback loops. Digital technology has the potential to provide visibility and enable improved decision making when it comes to raw materials and services.”

Watt added: “Already, 35% of companies believe that digital technology will be a key enabler for their circular economy strategies, but very few are leveraging the technology for this purpose yet."

Gartner said several combinations of technologies can help organisations move towards its definition of a circular economy. Advanced analytics, 3D printing, the Internet of Things, and machine learning are the current focus areas of the surveyed businesses.

“It’s interesting to see that only few organisations are currently using blockchain,” Watt added.

“However, 38% of respondents are planning to explore the use of blockchain for the circular economy in the next five years. For example, the technology can be used to give materials a single digital identity and to enable trade and pay-per-use.”

The top four areas of the supply chain where digital technology is being applied, according to the Gartner survey, are delivery (46%), customer engagement (45%), manufacturing and remanufacturing (43%) and planning (43%). Only 27% of respondents are currently using digital technologies to improve reverse logistics, but 39% plan to do so within the next two years.