5 Conclusions
This chapter provided an introduction to the circular economy concept and specifically what the concept entails regarding product design, product life cycle extension, as well as a hierarchy of end-of-life possibilities (re-use, remanufacturing, and
recycling). From a logistics perspective, circular economy is predominantly about a
shift that has been conventionally referred in logistics literature as open-loop supply
chains, towards closed loop supply chains. In other words, the traditional life cycles
of products from manufacturing, product use, to product disposal is being replaced
with manufacturing, product use, and take back. In this sense, there is both a forward
and reverse flow of products between producers and consumers. This also means less
products will be treated as waste by local government, and instead manufacturers
will displace landfill and incineration with longer lasting products, re-use, and
remanufacturing schemes. The logistics sector will play a critical role in orchestrating the newly established flows between the different ecosystem actors.
The challenges that arise include:
1. Creating affordable reverse take-back programs and reverse logistics that support
geographically dispersed materials and products
2. Reducing idle products and assets by firms that invest in product-as-a-service
business models but also bear the risk of those products and assets becoming
outdated
3. Sharing logistics networks with competitors at the risk of losing market share to
competitors
The opportunities that arise including:
1. Sourcing cheaper material inputs locally that would otherwise be waste
2. Business-to-business servitization of assets reduces capital expenditure and therefore barriers to new markets for entrepreneurs
3. Circulation-platforms and open business models allow users to be directly inform
product research and development
The perspective on how supply chain networks ought to be designed and operated
differs between the strictly product design-oriented literature from the Industrial
Ecology domain and the well-established knowledge of closed loop supply chains in
the logistics domain. From a product design perspective (e.g., Stahel 2013; Bocken
et al. 2016), flows should be slowed, narrowed, and closed. In other words, the flow
of products should be reduced by designing products to last longer, using less
environmentally intensive materials, and ensuring that products are returned to the
producer at their end-of-life. From a logistics and (closed-loop) supply chain perspective, business models in the circular economy should consider three key strategic decision-making problems in the design and operation of their supply chain:
(1) the extent to which the network is centralized or decentralized; (2) the extent to
which a product is servitized; and (3) the extent to which the supply chain activities
requires a collaborative effort. A perfect circular business model and corresponding
production and logistics network does not exist, as many case-specific aspects need
1 Logistics in the Circular Economy: Challenges and Opportunities
13
This chapter provided an introduction to the circular economy concept and specifically what the concept entails regarding product design, product life cycle extension, as well as a hierarchy of end-of-life possibilities (re-use, remanufacturing, and
recycling). From a logistics perspective, circular economy is predominantly about a
shift that has been conventionally referred in logistics literature as open-loop supply
chains, towards closed loop supply chains. In other words, the traditional life cycles
of products from manufacturing, product use, to product disposal is being replaced
with manufacturing, product use, and take back. In this sense, there is both a forward
and reverse flow of products between producers and consumers. This also means less
products will be treated as waste by local government, and instead manufacturers
will displace landfill and incineration with longer lasting products, re-use, and
remanufacturing schemes. The logistics sector will play a critical role in orchestrating the newly established flows between the different ecosystem actors.
The challenges that arise include:
1. Creating affordable reverse take-back programs and reverse logistics that support
geographically dispersed materials and products
2. Reducing idle products and assets by firms that invest in product-as-a-service
business models but also bear the risk of those products and assets becoming
outdated
3. Sharing logistics networks with competitors at the risk of losing market share to
competitors
The opportunities that arise including:
1. Sourcing cheaper material inputs locally that would otherwise be waste
2. Business-to-business servitization of assets reduces capital expenditure and therefore barriers to new markets for entrepreneurs
3. Circulation-platforms and open business models allow users to be directly inform
product research and development
The perspective on how supply chain networks ought to be designed and operated
differs between the strictly product design-oriented literature from the Industrial
Ecology domain and the well-established knowledge of closed loop supply chains in
the logistics domain. From a product design perspective (e.g., Stahel 2013; Bocken
et al. 2016), flows should be slowed, narrowed, and closed. In other words, the flow
of products should be reduced by designing products to last longer, using less
environmentally intensive materials, and ensuring that products are returned to the
producer at their end-of-life. From a logistics and (closed-loop) supply chain perspective, business models in the circular economy should consider three key strategic decision-making problems in the design and operation of their supply chain:
(1) the extent to which the network is centralized or decentralized; (2) the extent to
which a product is servitized; and (3) the extent to which the supply chain activities
requires a collaborative effort. A perfect circular business model and corresponding
production and logistics network does not exist, as many case-specific aspects need
1 Logistics in the Circular Economy: Challenges and Opportunities
13