Opportunities and Challenges of Circular Economy for Designing Sustainable Supply Chains

Introduction

Circular economy (CE) is not a new concept. It dates back to late 1970s and has been shaped by a number of schools of thought such as “regenerative design”, “industrial ecology” and “cradle to cradle”. For these authors, it is a generic term for economic, technological and policy guidelines striving to improve and close material loops and to make the economy less resource-dependent. It is important to note that CE, within the paradigm of sustainability, represents a model shift intended to replace the traditional Linear Economy (take-make-use-dispose), with deep repercussions at both production and consumption levels during this transition, that is, in how to use scarce resources in a smarter way. It is assumed that without circularity in the use of limited resources (in other words, without decoupling economic growth, resources consumption and environmental impact) a sustainable development cannot exist. Nonetheless, it is fair to recognize that the loops of materials cannot be closed indefinitely (always with zero losses or waste), which means that, in practice, this new model won't be totally circular, but it aims to be as close as possible to that desideratum.

Although a consensus within the scientific community doesn't exist yet with regard to its definition, the CE model is inspired by the cycles of ecological systems, trying to eliminate waste generation. In this line, in the Circular Economy Package Report issued in Brussels on 4 March 2019 by the European Commission, it is said that: “In a circular economy the value of products and materials is maintained for as long as possible; waste and resources use are minimized, and they are kept within the economy when a product has reached the end of its life, to be used again and again to create further value”. In short, CE is about keeping resources and their value in the economy and avoiding them becoming waste. This requires actions ranging from upstream product innovation to downstream waste and recycling infrastructure, as well as engagement by governments, businesses and citizens. This is made possible by designing sustainable supply chains.

With the need for sustainability, what is emerging is a focus on developing an economic system, which aims at minimizing waste and commonly referred to as “circular economy” based on the concept of “circularity”. The circular economy makes both environmental and business sense. In the circular economy, growth no longer requires an increasing extraction and consumption of resources, energy, water, and primary raw materials. There is no waste and products and resources maintain their value in the economy for as long as possible (European Commission, 2017). A circular economy is an economic system aimed at minimizing waste and making the most of resources. To eliminate waste and ensure the sustainability world over there is a refocus on economic systems and herein is the pitch of the Circular Economy (CE). The circular economy and studies related to it have gained worldwide attention, as it seems to an effective alternative economic system. That means there is likely to be a shift in how Supply Chain and Supply Chain Management opportunities will be perceived, developed and resourced. Hence, the focus of this chapter is to present the state of the art of academic research in the intersection between circular economies and supply chain designing, try and identify the approaches used by authors when studying the application of circular economy principles and initiatives in the Supply Chain Management. For this purpose, a systematic literature review approach thematic based with both bibliometric and bibliographic analysis is adopted. To conclude, a research agenda is proposed to develop this still understudied domain.