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What is the circular economy?

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A circular economy (CE) is an economic system based on the continual (circular) (re)use of production materials and the minimizing of waste and pollution while protecting natural ecosystems and extending the effective useful life of assets.  A circular economy aims to conduct sustainable economic activity, also called "circularity", for the benefit of all socio-economic stakeholders – businesses, society, and the environment.

Sustainable procurement underlies the circular economy concept.  Sustainable procurement is the obtaining of materials and products used in business operations with the aim to reduce their consumption and/or the sourcing of materials and equipment to minimize the negative impact to the community, society and the environment.

A sustainable supply chain is a network between a company and its suppliers to produce and distribute a specific product or service that adopts sustainable development principles and such sustainable practices as sustainable utilities, sustainable materials and equipment, sustainable construction, and sustainable finance.  For the implementation of a sustainable supply chain, companies must become aware of the environmental, social and governance (ESG) impact of their business operations and the need to adapt.

A circular procurement framework is the business model and strategy that outlines the intervention points to make the purchasing choices of companies more circular, optimize capacity utilization, and extend the effective useful life of products and assets.  A company's approach to sustainable procurement and circular supply chain management depends on the circular economy business model it adopts, its industry, sector, geography, and other factors as well as its location along the supply chain value chain.

The Circular Economy Supply Chain Value Chain

A company's approach to the sustainable procurement and circular supply chain management depends on the circular economy business model it adopts, its industry, sector, geography and other factors as well as its location along the supply chain value chain.

Source: OECD

A company's approach to the sustainable procurement and circular supply chain management depends on the circular economy business model it adopts, its industry, sector, geography and other factors as well as its location along the supply chain value chain.Sustainable supply-chain management (SSCM) is the management of materials, information and capital flows, and cooperation among firms along a supply chain while considering the goals of sustainable development and applying sustainable development principles.  It applies the concepts of the circular economy along all activities of companies to enhance the sustainability of their supply chains.

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