Plastics have become ubiquitous in our daily lives, and their production has been on the rise for several decades. However, the negative impacts of waste from the plastic industry on the environment and human health are becoming increasingly apparent. Growing awareness of the environmental toll linked to the plastics industry has driven increased calls for the adoption of more circular systems in the plastics industry.
The aim of a circular economy is to keep resources in use for as long as possible by minimising waste, promoting recycling and reuse, and eliminating waste and pollution. In the context of the plastics industry, circularity would mean reducing plastic waste and pollution by keeping plastic materials in use for as long as possible while also re-evaluating our methods for sourcing plastic raw materials.
Moving to more circular economic and operational models will require a fundamental shift in the way plastics are designed, produced, used, and disposed of. The shift will require collaboration among stakeholders across the supply chain, including producers, manufacturers, retailers, and consumers. This will involve the development and implementation of technologies and processes for designing and producing more sustainable plastic products, promoting the recycling and reuse of plastic materials, and implementing new business models to profit from a circular economy.
The benefits of a circular economy
What’s the incentive for the plastic industry to adopt circular practices? Let's take a closer look at how the adoption of circularity can benefit businesses, particularly in the specific area of supply chain management.
By prioritising the use of recovered materials and other reusable materials, businesses can reduce their reliance on virgin plastic materials, which can lead to cost savings when products are recovered at the end of life. Moreover, using materials designed for durability, reusability, and recyclability can improve operational efficiency by reducing waste, minimising the need for raw materials, and reducing quality control issues.
Circularity can also help businesses improve their demand forecasting by promoting the use of recycled and sustainable materials, which have demand patterns different from those of virgin plastics. Circular material loops often mean materials flow from a greater diversity of origins, reducing reliance on limited sources. Accurate demand forecasting helps businesses reduce costs and improve their bottom line by minimising the need for overproduction, underproduction, or emergency orders.
Another benefit comes in the area of supplier relationships. By incentivising suppliers to develop more sustainable and circular products, buyers can develop more collaborative and cooperative relationships with their suppliers. This can result in the development of new business models that prioritise sustainability and create more value for all stakeholders in the supply chain. By working together to achieve common goals, suppliers and buyers can create a more sustainable and efficient supply chain while improving brand reputation and helping businesses access new markets that prioritise sustainability.
A circular economy also brings businesses closer to their customers by introducing greater control and visibility into product demand, service, and order processing. This makes planning and fulfilment more predictable and efficient once companies build closer relationships with customers and end users. More frequent customer interaction can also help businesses set up take-back programmes or service models.
Circularity does require additional logistics resources to facilitate the return of materials, but this can be combined with other existing delivery or repair services to maximise efficiency.
A circular model can reduce the need to transport waste materials to disposal facilities. For instance, by utilising their post-industrial (pre-consumer) “waste” plastics, businesses can minimise the associated transportation costs and environmental impact. Additionally, by optimising the local distribution of recycled and sustainable materials, businesses can reduce the need for long-distance transportation, thus reducing carbon emissions and reducing costs.
Finally, there are numerous financial benefits inherent to the circular model. Returns and repairs become pivotal to the reuse of products and components. By investing in repair operations, OEMs and component manufacturers can reduce the costs associated with creating new products. Additionally, prioritising the reuse of products can create new revenue streams, particularly in remanufacturing and repair services.
Visibility and oversight
To effectively implement the circular economy model, it’s critical to establish visibility and oversight within the value chain. Visibility refers to the ability to track and monitor the flow of materials and products throughout the supply chain, from raw materials to end-of-life. This enables businesses to identify areas of inefficiency and waste within the system, as well as to ensure that products are being used and disposed of properly.
Oversight involves having influence over all stages of the supply chain, including material planning, procurement, production, distribution, and returns. This enables businesses to optimise each stage for maximum efficiency and sustainability. It also allows companies to become more agile and respond quickly to any issues that may arise. Although full oversight is not viable for every value chain member, it is a beneficial position to aspire for.
Supply chain traceability
Traceability is pivotal to achieving a circular economy as it allows businesses to ensure that materials and products are being sourced and disposed of responsibly. A lack of traceability means that companies must resort to downcycling and waste generation, instead of utilising the end-of-life material in more efficient – and profitable – ways such as upcycling, repair, and remanufacturing.
Technology to achieve traceability already exists. The challenges to achieving traceability are implementation and value chain cooperation. The required data is available, but it is not shared reliably, efficiently, or is not shared at all. With greater connection throughout the value chain, by means of collaboration and information sharing, there is a huge potential for generating profit and mitigating environmental impact.
The adoption of a circular economy model can improve plastics industry practices in many ways, and in ways that benefit both the environment and the industry itself. If companies across the industry implement a circular economy model, the industry will move towards a more sustainable and successful future.
Mesbah Sabur is the founder of Circularise, a digital technology startup that enables supply chain actors to share sensitive data without compromising privacy and confidentiality while helping the challenges faced by society in the areas of circular economy, environmental pollution and carbon emissions.