Circular economy contributes to greater resource efficiency and a more sustainable economic development by means of using its main principles to gain strategic advantage, where companies seek to lower the environmental burdens and improve the economic aspects of their operations. In the current environment, circular economy is considered a strategic and relevant issue for the profitability of companies and for creating value. Thereupon, managers might want to subsidize better environmental alternatives in terms of strategic planning.
Several researchers have adopted the premise that studies of circular economy contribute to strategic planning, contributing to a more sustainable organization. As for environmental aspects, the adoption of circular economy principles enables companies to close resource loops, providing ways to align the company’s strategic planning with more circular principles. Circular economy functions, thus, as a motivator for companies that wish to adopt more sustainable business models. A company may, for instance, outline its supply chain management practices to maximize resource efficiency through the reduction, reuse, and recycling of waste and attain environmental goals.
Furthermore, the adoption of circular economy principles as main philosophies for strategic planning provides companies with means to identify and tackle different sources of revenue. Companies that follow this path are able to create means to reduce operational costs through resource recycling and reuse and also reach different audiences.
Organizations may strategically develop their business models to attain greater circularity within their supply chains, by leading their suppliers into adopting practices such as the recycling of products and reuse of materials/resources, in order to make circular business models fully viable.
Cost Management (CM)
When it comes to cost management, the adoption of circular economy principles and practices plays a significant role, as it allows companies to turn products which are at the end of one of their life cycles into resources for the conception of other/new products. This allows for the minimization of waste and simultaneously decreases the need for inputs of virgin material. On top of that, resource scarcity causes prices to go up and become more volatile, negatively impacting a company’s value creation and captur. Undoubtedly, changing from linear to circular business models, both efficiently and sustainably, may require investments (of many sorts) from all parties involved in the company’s network.
Circular supply chain management (CSCM)
Circular economy is often regarded as a provider of opportunities for companies to stretch the economic life of goods, joining efforts along the chain of supply and also engaging consumers, seeking to recover the value of such products all throughout its life cycle. Thus, the potential for value recovery offers good opportunities for the creation of circular supply chain.
When it comes to supply chain management, circular economy provides means for integrating its main concepts within the existing management principles. Circular supply chain management encompasses the configuration and coordination of organizational functions within and across business units in order to close, slow, or narrow energy and material flows. This results in the minimization of resource input into the system and also prevents waste and emissions from leaking out of the system, thus improving operational effectiveness and increasing competitiveness.
Quality management (QM)
When going circular, there is still an inherent need for quality in products and processes. Companies need a shift in policy that enables protecting the environment while promoting business models that assure manufacturing/production quality and also allowing to maintain the competitiveness of a business, maintaining customer-oriented and differentiation strategies.
However, the shift from a linear to a circular economy leads to issues previously inexistent or unperceived in terms of product and process quality. Organizations should address the issue that its customers might perceive the products that have been made with the use of recovered input materials as lower quality products. This consequently drives organizations onto developing quality management practices in order to keep their reputation out of harm.
Therefore, it is important to point out the main material flows in quality management and the need to have a quality management system that is both more integrated with the circular economy and more mature. Hence, a circular economy can foster quality improvement in processes. For the performance of closed-loop systems to be considered of quality, nutrients, water, soil, wastes, and other materials must be selected and approved based on certain quality standards.
The world generates tonnes of waste annually, most of which end up in landfills. The circular economy retains the value of products or resources by putting them back into the product cycle after use. Besides mechanical recycling, one of the biggest circular economy trends is to upcycle this waste to energy by incineration, gasification, anaerobic digestion, and pyrolysis. This allows waste management companies to get rid of the waste effectively, as well as provides an additional stream of clean energy for power utility companies. While every industry produces waste, some industries like energy, food, agriculture, and fashion are larger contributors than others. Startups are working on waste upcycling solutions that focus on waste from such polluting industries. For instance, the fashion industry is now upcycling textile waste to produce new apparel, shoes, and accessories. This reduces the cost of raw materials and makes companies more sustainable.
Reusing products extends their lifecycle while reducing waste and the use of new raw materials, thus, making it one of the top circular economy trends. However, there is often a lack of information about the products available for reuse. As a result, various types of sharing platforms are on the rise. For instance, asset sharing platforms allow businesses to earn revenue by lending materials or machines that otherwise mostly remain unused.
Internet of Waste
In traditional waste management systems, municipalities and waste management companies often end up spending a lot of money and effort to collect waste. The collection system usually works on fixed schedules, without considering the trash capacities of dumpsters. As a result, garbage trucks often visit dumpsters that are not yet full or those which overflow with garbage. Therefore, startups are developing IoT-based smart waste management solutions to reduce the inefficiencies in trash collection. Such solutions leverage sensors, IoT platforms, and mobile applications. Smart bins, for example, transmit real-time fill level information to waste collectors.