The shift to a circular economy (CE) is changing how businesses handle supply chains by focusing on sustainability, reducing waste, and making the most of resources. Unlike the traditional “use and throw away” approach, CE promotes reusing, repairing, and recycling materials to extend product life and minimize environmental harm. However, this transition isn’t easy.
Companies struggle with reverse logistics-handling returns, refurbishing products, and managing materials moving in different directions. They also face challenges in tracking materials, following regulations, and adopting new technologies. Without transparency and collaboration, making CE work efficiently remains a tough task.
The concept of a CE is gaining traction as industries move away from the traditional “take-make-dispose” model. However, global adoption remains low, with only 8.6% of the economy operating on circular principles. Europe leads with an 11.8% circularity rate, while nearly 28% of companies have integrated CE practices, with more planning to follow . India is actively embracing the CE model to enhance sustainability and economic growth. A study by the Council on Energy, Environment and Water (CEEW) indicates that adopting CE strategies could yield an annual profit of approximately ₹40 lakh crore (USD 624 billion) by 2050, while reducing greenhouse gas emissions by about 44% . The Confederation of Indian Industry`s (CII) `National Circular Economy Framework` projects that India`s CE could reach a valuation of $2 trillion in the coming years. Despite these promising projections, challenges persist .
Reverse logistics, supply chain transparency, and regulatory compliance remain critical barriers. Research gaps include the integration of digital tools like AI and blockchain for improved efficiency, as well as the economic feasibility of CE models, especially for smaller businesses. Consumer behaviour towards refurbished or recycled products also requires deeper exploration, along with the impact of policy frameworks on CE adoption. Addressing these gaps will help businesses transition to circular models more effectively, making supply chains more sustainable and resource-efficient.
The findings indicate that supply chain resilience and its impact on overall performance is of paramount interest. Additionally, technologies like Artificial Intelligence and Blockchain have been recognized as key drivers for the future of supply chains. Furthermore, warehousing and customer demand management have been identified as critical factors in supply chain planning. As customers increasingly expect faster and more efficient deliveries, the key challenge is to meet these demands in a way that is both sustainable and cost-effective while minimizing environmental impact.
Conclusion
The CE is revolutionizing supply chains by prioritizing sustainability, resource efficiency, and waste reduction. Unlike the linear “use and discard” model, CE emphasizes reusing, repairing, and recycling. However, businesses face challenges in reverse logistics, regulatory compliance, and integrating technologies like AI and blockchain. Transparency and collaboration are crucial for success.
Effective supply chain planning is key to managing these complexities, ensuring seamless material flows, optimized inventory management, and cost efficiency. Strategic forecasting and real-time data analytics can enhance decision-making, improving resilience and adaptability. As consumers demand faster deliveries, the challenge is to balance speed, cost, and sustainability. Embracing innovation in these areas will shape the future of efficient, resilient, and eco-friendly supply chains.
The research was conducted with the participation of esteemed scholars from various global institutions, including Ramesh Subramoniam from the University of Texas, Dallas; Donald Huisingh from the University of Tennessee; Erik Sundin from Linköping University; Ratna Babu Chinnam from Wayne State University; Bogachan Bayulken from Girne American University; Jighyasu Gaur from IIM Raipur; Kannan Govindan from the University of Adelaide; and Claudia Viegas from the Federal University of Rio Grande do Sul.
