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Why Supply Chain Leaders Need to Bolster the Circular Economy

Published January 29, 2021

Written by: Sydney Wess
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Sydney Wess

Sydney Wess is an editorial associate supporting supply chain content and research for Clutch.

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The concept behind a circular economy is simple: minimize waste by reusing, sharing and repairing goods that are already in use. That allows items to remain in the economic system, preventing the need for as many new products to be introduced.

This results in a closed loop. New resources aren’t being used, so energy is conserved.

In recent years, the rise of the circular economy is most significant in the fashion industry and supply chain. For instance, companies such as Depop and Poshmark are now widely-recognized for selling unique luxury clothing and accessories secondhand.

Corporate examples such as these have encouraged consumers to invest in the circular economy, largely for sustainability reasons.

This article explores three major reasons supply chain leaders should invest in the circular economy, satisfying the needs of their customers and embracing more sustainable business practices:

  1. Keeping products in use
  2. Fueling innovation
  3. Making your business more sustainable

Keeps Products in Use

One of the main perks of the circular economy is that it keeps previously created and processed items in active use.

This allows for a meaningful shift from the traditional procurement process of clothing items, for example. Using secondhand services also minimizes waste. When someone no longer wants or grows out of an article of clothing, it can be used by someone else.


This process includes keeping products in use, regenerating natural systems, and designing out waste and pollution.

Source: Ellen MacArthur Foundation 

This process includes keeping products in use, regenerating natural systems, and designing out waste and pollution. Each of these actions will only make the others more attainable to companies committed to sustainability.

Instead of creating waste after products are used, they’re reintroduced into the economy for purchase. By relying less on new products to be created, you also take the pressure off of your supply chain and reduce spend on inventory production.

How do you ensure your products will be able to stay in use? Companies looking to support the circular economy may need to reinvest funding from manufacturing into repairs.

Manufactured goods, especially those made using cost-effective strategies, aren’t built to withstand the test of time.

Denim clothing manufacturer Hiut Denim has figured out a way to do just that. Ethically made and sold by women in Great Britain, the company promises to repair “damage due to wear and tear” for free. This encourages shoppers to invest once in a sustainable pair of jeans, continuing to wear them over many years.

Keeping goods in circulation helps companies bolster the circular economy. It also makes it easier for you to focus on providing quality products instead of the cheapest way to create them.

Boosts Your Business’ Sustainability

When considering sustainability in the supply chain, the first concepts that typically come to mind may not involve the circular economy.

In industries such as clothing and fashion, however, adopting the circular economy is essential to achieve a high level of sustainability.

Sustainable fashion, for example, has the potential to positively impact the planet, both in terms of greener production practices and introducing labor equality to your procurement processes.

The clothing production industry is currently influenced by the popularity of “fast fashion,” which is an extremely cheap way to create mass volumes of clothing products. While this attracts customers by offering goods at very low prices, fast fashion comes at a significant cost to the environment.

Typically, in electing to adopt fast fashion manufacturing processes, a business has to invest in inequitable labor and reject the use of clean, innovative materials. For example, materials like polyester can make the production of clothing items very cheap. Since polyester isn’t naturally made like cotton or hemp, synthetic materials aren’t as good for the planet as other textile options.

Experts indicate that it can take up to  200 years for clothing to decompose. That’s especially the case for materials not found in nature. Moving away from synthetic materials won’t spark change if it’s your sole effort. It’s recommended that supply chain leaders discover methods of incorporating renewable energy into production. Taking the most holistic approach possible with your sustainability efforts will increase your ability to support the circular economy.

For instance, secondhand clothing companies like ThredUp actively contribute to the circular economy within the fashion industry. To raise awareness of the importance of buying used pieces, the company showcases how secondhand purchases contribute to a greener future.

The image below indicates that if all consumers purchased one reused product in a year, it would be equivalent to removing 449,000,000 pounds of waste from landfills.


The image belowabove indicates that if all consumers purchased one reused product in a year, it would be equivalent to removing 449,000,000 pounds of waste from landfills.

Source: ThredUp

ThredUp’s partnerships with brands like Free People and Madewell push the mission and accessibility of the circular economy to the forefront of customers’ minds.

Taking a holistic approach to sustainability is an extremely effective way to support the circular economy. 

Fuels Technological Innovation and Collaboration

Adopting new supply chain processes requires you to discover and explore technological solutions. The circular economy may push early adopters toward cutting-edge technologies that will boost efficiency.

Because the supply chain is innately a global network of companies, it can be complex to navigate in traditional scenarios. The circular economy, while consumers desire it, is challenging to efficiently implement.

Experts at Forbes recommend companies operating in the circular economy try blockchain technology.  Blockchain solutions can leverage your participation in the circular economy to an even greater extent while affording users greater traceability and process transparency. With those benefits, companies are able to execute more efficiently.

Businesses like MonoChain have leveraged blockchain in their effort to contribute to the circular economy. In fact, with the help of the technology, they’ve kept an estimated $460 billion of clothes from being thrown away and wasted.

This early success at the cross-section of blockchain and sustainability can serve as a source of inspiration for companies that are unsure they can commit to the complexities of the circular economy. Their participation through innovative, cutting-edge technologies will propel internal operations forward, making them more efficient and sustainable.

Use Your Resources to Participate in the Circular Economy

For supply chain companies everywhere, connecting yourself to the circular economy will be vital in this new decade. Consumers expect sustainability from brands they trust. You can win their trust through your commitment to both green practices and keeping products in the market for the long-term.

Additionally, you can make your presence in the circular economy benefit your internal operations. Take the opportunity to introduce blockchain technology to your team. That will ensure that you have the information you need to trace goods and information throughout the complex exchange process.


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