PwC Examines How Circularity Makes Supply Chains Stronger

As supply chains face mounting pressure from geopolitical shifts and resource constraints, the concept of circularity is gaining traction as both a sustainability strategy and a way to build business resilience.

According to PricewaterhouseCoopers (PwC), businesses revisiting circular models may find that what once seemed impractical could now align with evolving market forces and consumer expectations.

David Linich, Sustainability Principal at PwC US, and Tensie Whelan, Distinguished Professor of Practice at NYU Stern School of Business, argue that tariffs imposed during US President Donald Trump’s administration laid bare the weaknesses in global supply chains optimised for cost rather than resilience.

Building stronger supply chains

The tariffs introduced by President Trump were intended to reduce dependence on imports and support domestic manufacturing, but they also forced businesses to rethink how they source materials, design products and manage logistics.

“As a result, many businesses are taking a hard look at material sourcing, product design, manufacturing processes and where goods are sold,” David and Tensie write in a PwC blog post.

“In turn, that is leading them to re-examine circular business models that focus on putting used products back into new goods, reducing purchases of virgin material and decreasing waste.”

This shift creates opportunities to localise aspects of the supply chain. When used materials re-enter the production cycle, firms become less reliant on international sourcing and less exposed to geopolitical volatility.

Instead of shipping components across continents, products at the end of their life can be collected, sorted and reused domestically, keeping materials in circulation and reducing lead times.

Circular models also lower demand for orginal inputs, which in turn lessens the impact of price shocks or shortages.

David notes that even businesses that previously ruled out circularity on economic grounds may want to revisit the idea now. “If you've looked at circularity before and it didn't pencil out, it's time to look again,” he says.

Supply and demand

Customer demand is emerging as another powerful force influencing supply chain decisions. PwC’s 2024 Voice of the Consumer Survey reveals that more than 80% of consumers are willing to pay more for goods that are produced or sourced sustainably.

On average, those buyers would pay an additional 9.7% for products that meet environmental criteria—such as being locally made, constructed from recycled materials or coming from a lower-carbon supply chain.

This matters for procurement and supplier selection. Where once price and availability were the main factors, companies now face scrutiny for how and where they source.

According to the survey, buyers increasingly judge sustainability by visible features like production methods, recyclability, eco-friendly packaging and water conservation.

Generational preferences amplify this trend; Millennials and Generation Z show the highest willingness to spend more for sustainable products, a behaviour that may carry forward as these groups grow into their peak purchasing years.

Tapping into circular models offers a way to satisfy these expectations. A product lifecycle built on reuse and recycling can cut waste while also boosting the credibility of a company’s environmental claims.

Tech support

The technical side of circularity has historically posed challenges. Sorting, dismantling and reusing materials can be complex and costly.

However, David and Tensie argue that automation and digital tools are now changing the equation: “AI, robotics and other technologies are transforming everything from product development and inventory control to the breakdown, sorting and recycling of used materials.”

Artificial intelligence (AI) and robotics can now sort waste streams more accurately and faster than humans, improving the purity and value of recovered materials.

Machine learning algorithms analyse item characteristics in real time, helping to separate plastics, metals and other materials with minimal contamination.

AI also supports design decisions.

Through analysing large datasets, it can recommend product specifications that make goods easier to disassemble, repair or recycle—key features for creating a circular product.

From a supply chain perspective, these technologies also enhance efficiency.

Analytics can highlight inefficiencies in logistics, pinpoint areas of waste and optimise how materials move through the value chain.

As circularity becomes easier to implement, the case for integrating it into business strategy strengthens.

David and Tensie put it simply: “Now, though, shifting market forces are changing the equation.”

Through redesigning supply chains with circular principles in mind, businesses can reduce dependence on volatile global markets, cut emissions and waste and respond more effectively to customer concerns.