The circular economy is gathering momentum: In the future this model could, for example, mean that smartphones will not be sold and consumed anymore, but companies like Apple and Samsung will then keep scarce resources and sell a smartphone service to users instead of a product to consumers. These users will then be required to bring back the phone after a specified amount of time. California Management Review has now published a special issue on the circular economy. Several of the articles of that special issue refer to supply chains and supply chain management; and several of the authors have published in SCM journals before. This indicates that “supply chain thinking” and “circular thinking” are increasingly stimulating each other. I would even go so far to say that the 21st century’s supply chain management has to shift from linear to circular. This also has implications for our research. What we might need to re-think is whether the “chain” in “supply chain management” is still the right expression.
Today’s economy is a plastics economy, as most of our global supply chains contain plastics. A report, published by the Ellen MacArthur Foundation, is titled The New Plastics Economy: Rethinking the Future of Plastics. Herein it becomes evident that linear supply chains need to become circular: “The circular economy is gaining growing attention as a potential way for our society to increase prosperity, while reducing demands on finite raw materials and minimising negative externalities. Such a transition requires a systemic approach, which entails moving beyond incremental improvements to the existing model as well as developing new collaboration mechanisms.” The report “explores the intersection of these two themes, for plastics and plastic packaging in particular: how can collaboration along the extended global plastic packaging production and after-use value chain, as well as with governments and NGOs, achieve systemic change to overcome stalemates in today’s plastics economy in order to move to a more circular model?”
Shifting from “company thinking” to “supply chain thinking” has successfully replaced the system managers had in mind when making their decisions. This shift has put some of the parts of what has formerly been considered the company’s unmanageable environment into their unit of analysis. A supply chain, however, is per definition linear. In the age of sustainability, we might thus need to go one step further and shift from “linear thinking” towards “circular thinking”. The circular economy (or closed-loop supply chain) could replace the linear system by a circular system in the minds of decision makers. This is illustrated in a video released by the European Commission.
Our world is in crisis! Ten years ago, Time Magazine featured the headline: “Be Worried. Be Very Worried.” (about global warming). But things only got worse since. Leaked TTIP documents point to a race to the bottom in ecological standards between the EU and the U.S. New NASA figures show that April 2016 was the seventh month in a row that broke global temperature records and NOAA data show that “[t]he globally averaged temperature over land and ocean surfaces for 2015 was the highest among all years since record keeping began in 1880”. A second aspect of the sustainability debate relates to resource scarcity: Some metals might soon be in short supply. However, many companies have unsustainable business models in place. For example, Apple expects an iPhone to be replaced after just three years. Is there any hope? In their new JSCM article, Montabon et al. (2016) describe an ecologically-dominant logic which could help companies to develop sustainable business models. A must-read!
Montabon, F., Pagell, M., & Wu, Z. (2016). Making Sustainability Sustainable. Journal of Supply Chain Management, 52 (2), 11-27 https://doi.org/10.1111/jscm.12103
We all know about natural resource scarcity. However, as brand companies make consumers believe they need a new smart phone every two years, today’s global supply chains are responsible for incredibly large amounts of electronic waste. A new United Nations University report, titled The Global E-waste Monitor – 2014, details e-waste generation by region. The total amount of e-waste generated in 2014 is 41.8 million metric tonnes (Mt) and it is forecasted to increase to 50 Mt in 2018. This e-waste comprises 12.8 Mt of small equipment (e.g., toasters, video cameras), 11.8 Mt of large equipment (e.g., washing machines, photovoltaic panels), 7.0 Mt of cooling and freezing equipment, 6.3 Mt of screens, 3.0 Mt of small IT (e.g., mobile phones, computers), and 1.0 Mt of lamps. With 32% of the world’s total, the United States (7.1 Mt) and China (6.0 Mt) are responsible for most of the e-waste overall. The top per capita producers, however, are Norway (28.3 kg), Switzerland, Iceland, Denmark, and the United Kingdom.
Baldé, C.P., Wang, F., Kuehr, R., Huisman, J. (2015). The Global E-waste Monitor – 2014. United Nations University, IAS – SCYCLE, Bonn, Germany