WEF: The Art of Scaling Circular Supply Chains

The World Economic Forum (WEF) has collaborated with Bain & Company and the University of Cambridge to create a roadmap for how businesses can move circularity goals into execution. 

In recent years, circularity has become a key approach to driving sustainability, resilience and profitability, but scaling has been problematic for some. 

The report, Circular Transformation of Industries: The Art of Scaling Circular Supply Chains, explores how businesses should approach circularity in order to scale it to unlock economic value. 

The circularity model

The role of circularity in supply chains has transformed from a 'why does this matter' to 'how can we implement this to scale?'. Supply chain leaders are eager to implement circularity but they are facing issues when bringing it to the forefront.

In the WEF survey of 491 executives across 10 industries, 95% said circularity would be important to their companies within the next three years. Despite this, the report finds that companies are still seeing it as a sustainability issue or a waste reduction tactic, rather than a means to build business resilience, creating a streamlined revenue stream and building strong customer relationships. 

Though circularity creates a streamlined flow once it has been properly implemented, the redesign of supply chains is a complex journey that businesses need to go on. It requires a strong focus, with an understanding of consumer demand and the geographical market. Once the model is fully integrated into the business, however, the company will see cost savings, time savings and greater efficiency throughout operations.

"The circular economy is entering a strategic moment," says Thom Almeida, Lead of Circular Economic Systems at WEF.

"Circularity is no longer only about environmental sustainability; it is becoming central to how companies build resilience, stay competitive, and unlock new growth."

Facing challenges to scale

The report has understood leadership concerns when attempting to scale, taking the top five challenges and finding solutions to help businesses grow.

Material returns
Circularity depends on getting the products back, so businesses are testing incentive schemes, such as loyalty points or vouchers. However, if processes are not easy to do, consumers will not follow the scheme. As quality is unpredictable, repairs and assessments could be costly, causing companies to feel reluctant about the process. To manage this, some businesses are forming partnerships, including Renault and Suez's The Future is Neutral scheme to recover end-of-life vehicles and recycle materials.

Lack of consumer demand
Though consumers are aware of the environmental impact of circularity, many still favour new products. In a global survey cited by WEF, only 29% buy second-hand furniture and only 35% buy second-hand clothing. Consumers are not trusting of second-hand items, which is why companies are implementing discounts, warranties or certifications. Patagonia's Worn Wear programme had initial issues with costs, but the resale programme gained popularity over time and the company was able to improve its operational efficiency.

Infrastructure issues
To ensure the smooth running of circularity, businesses need strong reverse logistics networks and efficient digital infrastructure. This would help them forecast supply and demand and balance inventory. Some businesses are collecting data to show their consumers what the impact of circularity is - Material Mapper tracks the origin and emissions savings of building materials to ensure transparency.

Navigating complexity
Refurbished goods can often have different product standards and compliance costs, meaning meeting regulation can be difficult. Inconsistencies within different countries can result in expensive solutions. HP ensures its refurbished products meet the same regulatory and documentation requirements as new ones in order to adapt to regional regulations.

Bridging the gap
As circularity requires supply chain reinvention and new expertise, it can expose skills gaps across the chain. Some companies are forming partnerships to meet these skills gaps, or in Hitachi's case, building specialised units to remanufacture screw processors to ensure quality.

Forming circular efficiency

Circular supply chains come in many forms - they can be integrated with current linear operations or a whole separate thing, they could be completely in-house or relying on partners. Whatever the model, businesses need to plan this before they start implementing circularity.

In the WEF survey, 56% of companies reported hybrid supply chains, with circular and linear supply chains being mostly or fully integrated. Having elements of separation provides dedicated infrastructure and flexibility.

Most businesses in the survey use external partners somewhere within their circular supply chains. 80% of organisations use outsourcing for their collection and dismantling, but effective partnerships require transparency. 

"Circularity is becoming a defining driver of business resilience and competitiveness - scaling it requires shared ambition and collaboration across industries," says Kyriakos Triantafyllidis, Head of Growth and Strategy, Centre for Advanced Manufacturing and Supply Chains at WEF.

Though circularity contributes to business resilience, cost efficiencies, revenue growth and consumer satisfaction, companies need to refocus their priorities when implementing circular strategy. They need to set out clear focus points and understand how to design for scale. 

By setting up strong partnerships and understanding geographical regulations, organisations can drive seamless circularity.

The need for efficient circularity is growing every day, as resources are tightening, climate pressure is increasing and costs are rising. The companies that can extend product life while uncovering embedded value in their items will see new levels of business resilience and success.