reverse flows in the post-use phase, as well as an emphasis on organizing logistics
and supply chain activities across the different phases (Fig. 1.2).
3 Circular Product Design and Supply Chain Network
Design
The basis of designing circular supply chains is similar to that of conventional
supply chains. The basis of supply chain network design requires making decisions
within each of the following four categories (Chopra and Meindl 2016): facility role,
facility location, capacity allocation, and demand and supply allocation. The facility
is where products are produced or where materials are stored or transferred. Each
type of facility in the chain needs to be determined. For circular products, this may
also include collection hubs, refurbishment facilities, and disassembly facilities. The
locations of each type of facility need to be determined. Transporting materials and
eventual products is an expense, and whether the product is circular or not, the
distance between facilities should be as short as possible. There is, however, a tradeoff that needs to be made between short network distances and the extent to which
facilities can be decentralized. For each facility and location, the capacity needs to be
defined. The capacity of each facility is also a function of how many facilities are in
the supply chain network.
Designing the supply chain also requires determining the share of each market
serviced by each facility. Retailer chains, for example, need to understand the size of
the catchment area that each of their stores are servicing. The catchment size in turn,
also determines the capacity at which the nodes upstream should be operated at. This
also concerns the supply side, especially when production is based on reusable or
recyclable material. On the supply side, the catchment area represents the material
supply base.
Conventional supply chains can be referred to as open-loop supply chains and
involve the flows of material and eventual products from the producer to the
Fig. 1.2 Value Hill diagram by Achterberg et al. 2016. The pyramid on the left represents the linear
economy where value is destroyed post use. The pyramid on the right represents the circular
economy where value is retained post use. The greatest value retention occurs at the pinnacle
where only maintenance is required
1 Logistics in the Circular Economy: Challenges and Opportunities
5
and supply chain activities across the different phases (Fig. 1.2).
3 Circular Product Design and Supply Chain Network
Design
The basis of designing circular supply chains is similar to that of conventional
supply chains. The basis of supply chain network design requires making decisions
within each of the following four categories (Chopra and Meindl 2016): facility role,
facility location, capacity allocation, and demand and supply allocation. The facility
is where products are produced or where materials are stored or transferred. Each
type of facility in the chain needs to be determined. For circular products, this may
also include collection hubs, refurbishment facilities, and disassembly facilities. The
locations of each type of facility need to be determined. Transporting materials and
eventual products is an expense, and whether the product is circular or not, the
distance between facilities should be as short as possible. There is, however, a tradeoff that needs to be made between short network distances and the extent to which
facilities can be decentralized. For each facility and location, the capacity needs to be
defined. The capacity of each facility is also a function of how many facilities are in
the supply chain network.
Designing the supply chain also requires determining the share of each market
serviced by each facility. Retailer chains, for example, need to understand the size of
the catchment area that each of their stores are servicing. The catchment size in turn,
also determines the capacity at which the nodes upstream should be operated at. This
also concerns the supply side, especially when production is based on reusable or
recyclable material. On the supply side, the catchment area represents the material
supply base.
Conventional supply chains can be referred to as open-loop supply chains and
involve the flows of material and eventual products from the producer to the
Fig. 1.2 Value Hill diagram by Achterberg et al. 2016. The pyramid on the left represents the linear
economy where value is destroyed post use. The pyramid on the right represents the circular
economy where value is retained post use. The greatest value retention occurs at the pinnacle
where only maintenance is required
1 Logistics in the Circular Economy: Challenges and Opportunities
5