E nterprises are doubling down on goods as long as possible, instead of letting them go immediately to waste. About 55% of organizations responding to a recent Bain & Company survey had made some commitment to circularity. “That number is much higher than it would have been in the past, and we expect it to go up,” says Hernan Saenz, global head of performance improvement and lead of the circularity practice with Bain. “Circularity has accelerated significantly in the past three to four years, especially in the apparel industry,” their commitment to circular supply chains, which use materials and says Marcus Chung, chief operating officer of Coyuchi, which, in 2017, became the first brand to launch a resale business in home textiles. In the past year or so, a few other brands have launched similar initiatives. Circularity’s Benefits Sustainability and circularity are important to value-driven consumers. Savvy brands are recognizing the growing business opportunity that comes with serving these customers. Sustainability initiatives also help companies stay ahead of the expanding number of environmentally focused regulations. For instance, in 2020, the European Commission adopted a circular economy action plan, which promotes circular economy processes, among other goals. In the United States, almost half the states have implemented some type of extended producer responsibility legislation, the National Conference of State Legislatures reports. By implementing solutions to quickly determine the optimal path for returned goods—say, whether to repair and offer them for resale or move them to a discount seller—companies can reduce expenses and boost sales as they enhance sustainability, says Tom Perry, CEO of G2 Reverse Logistics, which provides a reverse logistics platform. Circular supply chains also tended to perform better than linear ones during the disruptions of the past few
years. Because organizations have more control over input materials, circular supply chains can be more resilient. This will become increasingly important, given resource constraints and geopolitical tensions. “In this world, controlling your inputs makes a massive difference,” Saenz says. Circular Challenges At the same time, executing a circularity approach isn’t easy. “It requires not just the adoption of new tools and signing agreements with suppliers, but also hinges on rethinking the levels of collaboration, redefining risks, and adding a new level of flexibility to planning,” says Inna Kuznetsov, chief executive officer of ToolsGroup, a supply chain planning and optimization firm. Circularity often requires partnerships—at times, between direct competitors. For instance, it’s more efficient and easier for consumers if all electronics manufacturers collect every brand of used electronics than if each manufacturer accepts only its own products. Partnering with competitors, however, typically isn’t the natural way of doing business. That may be changing, however, as companies realize they can’t solve circularity on their own. There are so many players who influence what
happens within a supply chain for a given material or product. “There’s more open-mindedness from brands about what that collaboration looks like,” says Cassie Gruber, director of business solutions for Jabil, a global manufacturing company that makes products for companies in multiple industries, including healthcare, automotive, and home appliances. Some institutional investors have pushed back on circularity and sustainability initiatives, often out of concern over the time frames required to generate returns. “Circular supply chains are a long-term investment,” notes Abe Eshkenazim, CEO of the Association for Supply Chain Management (ASCM). In contrast, the investment community tends to measure returns in quarters. Despite these challenges, a growing number of companies are implementing circularity initiatives and reaping multiple benefits. Here’s a look at some companies in action. Textiles Bring It Home Coyuchi, a provider of organic bedding, towels, and other home goods, has always embraced sustainability, Chung says. It crafts its products from organic fibers sourced from Fair Trade-certified suppliers, and its dyes are low-impact and natural.
Through its ReEntry program, which includes partnerships with independent recyclers, flooring company Interface reclaims used carpet tile and luxury vinyl tile and ensures that nothing ends up in a landfill.
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