How to Design for the Circular Supply Chain

Jun 29, 2023 5:00:14 PM

Circularity, Toxnot

When we discuss circular supply chain solutions with manufacturers, we hear that many obstacles to embracing circularity arise from working with materials and systems that were created for a linear supply chain. These obstacles can lead companies to conclude that circular supply chains don't work, or that they aren't worth the additional work and frustration.

It's a whole different story when teams begin with circularity in mind.

The Opportunities of Circularity for Economic Growth

In order to get the most value from the circular supply chain, companies must begin with circularity in mind. Incorporating circularity in design unlocks the potential for the product or material to be used in many different ways down the road.

In our first article in this series, we covered technology in the circular supply chain. Now, we're going to dive into how companies can design a supply chain for the circular economy by optimizing their product and process design. We'll also explore how beginning with the circular supply chain in mind unlocks worlds of potential within the circular economy.

The Circular Supply Chain Design Model: Circularity from the Start

When products and materials are designed to work within a circular supply chain from the outset, the entire process runs much more smoothly. People have the information they need at every step of the process to make an informed decision about how to optimize material and product use.

As supply chain management continues to trend towards circular business models, companies must shift their processes or risk becoming unable to fully participate in the circular economy.

Design Principles and Architecture in the Circular Supply Chain

Circularity in design applies to two elements of the process:

  • The design of the product itself, such as the materials chosen or the way the product is assembled.

    This can include using sustainable materials that are able to be safely recycled, or “engineering for deconstruction” and manufacturing products in such a way that valuable materials are easier to remove safely at the end of the process.

  • The systems created to foster circularity, such as planning out logistics on how the product can move through the circular supply chain.

    This includes creating and sharing full lists of materials, creating programs that direct used materials to the next point in the circular process, and connecting to systems that match material suppliers and buyers.

While design and systems can be optimized independently, best practices for circularity require both to work together. This removes friction throughout the process so that the cycle can work smoothly to get the most value possible out of materials. It also builds in supply chain resilience that allows companies to quickly shift to take advantage of new opportunities, rather than being boxed in by having optimized for one specific purpose.

Circular vs. Linear Design

What is the difference between designing for the linear supply chain, and designing for the circular supply chain?

Linear design

In the linear supply chain, the product or material is designed with a clear buyer and application in mind. It’s built to efficiently fulfill that one purpose, and the information collected and shared is sufficient for that purpose.

Circular Design

In the circular supply chain, the product or material may be designed with a clear first buyer or application in mind, but it’s also created to be repurposed down the road. All relevant information on composition and components is collected and shared, because the person at the beginning of the cycle doesn’t necessarily know how or where the product will end up being used or repurposed down the line.

What about recycling?

It’s a common misconception, but designing for the circular supply chain is not the same as recycling. Recycling is often a component that extends a linear supply chain, adding one additional application. Circularity keeps the product in the supply chain as long as possible, circling back to the manufacture of new goods that may themselves be repurposed.

Circularity in Product Design

Engineering for Deconstruction

Within electronics manufacturing, many of the materials used are costly to acquire. Designing with recycling and repurposing these parts in mind helps simplify the process of re-using materials.

Currently, much of electronics recycling is outsourced to parts of the world with few health and safety regulations. Optimizing consumer electronics to be recycled safely and effectively is valuable for its impact on human health. It also represents a more efficient way of getting value from the used product.

Avoidance of Problematic Materials

Technologies such as Toxnot can analyze materials lists and flag substances and materials that may later create barriers to a product's use in the circular economy. Using materials known for sustainability and reusability is not only environmentally appealing, but also allows companies to continue leveraging the material assets past the first use.

Circularity in Process Design

In addition to the product itself being designed for circularity, the process around selling, distributing, and processing the product must also be created for circularity. Companies must adjust their process from a linear-focused model to one that’s compatible with the circular economy.

Data infrastructure for circular design

Reuse of materials and items demands data infrastructure that carefully tracks what goods and materials are made of. It is extremely difficult to safely reuse materials without detailed, accurate, and trustworthy information on what it's composed of and where it’s been. Traceability in circular supply chains is just as important as transparency in circular supply chains.

Pulling all of the product data into a single system makes tracking, analyzing, and communicating data easier. Other benefits include:

  • Safety for workers handling and processing the materials.
  • Prevention of batch contamination by toxic materials.
  • Better marketability of products due to trustworthy reporting and data.
  • Ease of regulatory compliance across industries and regions.

Moving to a model of transparency in circular supply chains

In order to create the kind of robust data infrastructure that offers all of the above benefits, companies must stop thinking in terms of the minimum tracking required for regulatory compliance. Instead, they must adopt processes that meticulously track all materials used in a way that is accessible and easy to share both internally and externally.

Using common language

Look for common language being used in your industry, as well as standards being developed by trade organizations and regulators. Adopting these terms and labels before they're required helps to future-proof your process.

Logistics of circular supply chains

Circularity requires a shift in the logistics of how products are distributed, tracked, and collected. This might include pickup points where used products can be recollected for repurposing, or sorting facilities that break down products into their component parts.

Case study: Erem

For example, startup footwear company Erem has a process in place for customers to return used boots for the materials to be reclaimed. Because they began with a circularity-optimized design (using natural materials without microplastics), they can then leverage that into circularity of logistics (having customers return used boots for materials to be repurposed).

Digital technology and circular supply chain logistics

Tracking technologies such as RFID chips and barcodes can help in the process of material reclamation, as we discussed in our previous article in this series. This helps ensure that the robust information you’ve gathered is correctly paired with the specific item being handled, even as designs and materials shift over time.

Supply Chain Challenges and Barriers to the Transformation from Linear to Circular Supply Chains

Old processes that inhibit circularity

Most models are set up to optimize the linear supply chain, not to work within a circular supply chain. This leads to situations where potential buyers for used materials don't have enough data to process in order to make informed decisions.

Manufacturing processes that cannot be flexible or change to keep up with the direction of the market will find themselves at a loss.

Short-sighted business models

Manufacturers at the front end of the process may not see the need to incorporate circularity in their plans. After all, they might reason, it doesn't matter to them what happens to the product after it's sold; they are just the starting point, and linearity or circularity proceeds from there.

This kind of thinking ignores huge opportunities waiting within the circular economy. It is true that purchasers working within a linear model may not care whether or not the product or material is optimized for circularity. But by incorporating plans for circularity from the outset, manufacturers gain access to the portion of the buying market that is looking for circularity.

Lack of materials transparency

This is one of the biggest barriers we see to the growth of the circular supply chain business model. A lack of robust information on the materials and substances within a product makes it very, very difficult (and sometimes impossible) to reuse it safely, especially on an industrial scale.

Companies must shift their thinking away from concerns about proprietary design and formula, and instead embrace transparency and traceability of their products.

Access to New Markets

Most industry experts agree that the portion of the market operating within a circular supply chain model will only increase over time. Thus, incorporating circularity from the outset (be that in the choice of materials, the way the product is tracked, or the information included to the buyer) can give companies a competitive advantage.

Rather than playing catch-up when buyers begin requiring circularity, companies who embrace the circular economy will gain early access to that market.

Supply chain resilience and future-proofing your business

Technology that enables circularity is being developed all the time. New processes to reuse plastics without altering the materials’ chemical structure, for example, have seen multiple breakthroughs over the course of the past year.

Businesses should act now to future-proof their products and process, rather than reacting once the science and technology is already in place.

The Core of Your Circular Supply Chain Tech: Exchange by 3E

Toxnot is built for safe, secure data collection that automates many of the processes for sustainability, compliance, and circularity. Easily collect and track materials information to identify opportunities and risks. Share and import "product passports" to build transparency around the supply chain.

If you want to see for yourself how our software is leading the industry in data infrastructure and materials tracking for the circular economy, set up a free account here.


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