Grasp nettle on circular supply chains, Gartner urges

The time is ripe for supply chain leaders to embrace circularity, a leading Gartner supply chain analyst says.

Anne Michelle Avolio is Senior Director Analyst with the Gartner Supply Chain Practice, and was discussing circular supply chains during the Gartner Supply Chain Symposium/Xpo in Barcelona.

Avolio says that inflation and mounting concerns over a looming global recession mean now is the best time for organisations to experiment with new products or services based on a circular economy strategy.

“Disruptive times often present the best opportunities to introduce new market-offerings,” she says. “Given such disruptive economic factors, circular-based business models are beneficially positioned.”

She adds: “The ability to ease pressure on inflation-strained consumers can drive loyalty and a new revenue stream from customers that might otherwise be priced out. 

“Beyond reaching new or expanded markets, circular economy practices can also help secure supply and minimise raw material dependencies, as well as improve end-to-end supply chain visibility.”

Leaders 'need mindset-shift on circularity'

Asked how supply chain leaders can sensibly weigh up the benefits of a circular economy strategy, Avolio said supply chain leaders “need to shift their mindset in several areas”.

She adds: “There are many indirect financial benefits to a circular strategy that should be considered in the business case, including more confidence in sourcing and securing materials, improved environmental outcomes  – like reduced waste and GHG emissions – enhanced customer intimacy, and increased brand loyalty.”

She adds that the environmental and social impact of any circular offering “needs to be assessed and compared to the impact of current offerings”. 

“To be clear, there are investment costs in implementing a circular program to support the systemic shifts needed in structure, processes, and even partnerships,” she says.

She adds: “But our research suggests many companies are seeing revenue gains outpace related costs, and there is a clear expectation that a majority of global enterprises will see profit gains as a result of their circular supply chain capabilities by 2026.”