The circular economy is a theoretical concept that aims at creating an industrial system. Businesses are becoming increasingly aware of the benefits of this concept and see it as a mechanism for generating competitive advantage. This article’s main idea is to address the implications of the supply chain in terms of environment, market, and politics. According to Genovese, Acquaye, Figueroa, and Koh (2017), products are designed from the outset in such a way that they can be easily repaired, reused, and recycled. Developing products for multiple upgrade cycles not only keeps them from dumps but also lowers costs and increases profitability (Genovese et al., 2017). It costs significantly less and uses far fewer resources to recover a used item or product than to create one from scratch.
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The concept of Supply Chain Management (SCM) has been widely used in industrialized countries since the late 90s of the XX century. However, to date, there is no consensus among logistics specialists regarding its sufficiently complete definition. SCM means the application of modern information platforms and supply chain management methods to the target enterprise (Genovese et al, 2017). The supply chain is a multitude of links primarily associated with material flow, and it usually includes several manufacturing and logistics organizations, although this may be one vertically integrated company.
The supply chain begins with the acquisition of raw materials, finished materials, and components from suppliers, but does not always end with the sale of finished goods and services to the client (Genovese et al, 2017). The modern supply chain also includes features such as after-sales service, reverse, and recycling logistics.
Supply Chain Management (SCM) is a formal term for managing the physical and information flow of materials and finished products and goods in the supply chain. Speaking broadly, modern SCM requires advanced business processes provided by the latest technology. The authors say, “Significant advances in computing processing are spurring entrepreneurs to develop innovative new digital technologies andcapabilities” (Genovese et al., 2017, p. 347).
Also, for technology to work, two more components are needed: economic business models and mechanisms for ensuring business trust, which today are grouped around the blockchain ecosystem or the Internet of values.
The total economic effect of the use of logistics, as a rule, exceeds the sum of the impact developing these indicators. Thus, over 95% of the turnaround time is accounted for by logistics operations Genovese et al, 2017). The reduction of this component allows accelerating the turnover of capital, respectively, increasing the profit received per unit of time, and reducing the cost of production. The economic effect of the use of logistics also arises from lower transportation costs. Optimized driving directions, consistent schedules, and reduced idle runs, and other indicators of transport use are improved.
The logistic approach, as already noted, implies a high degree of consistency among the participants in goods distribution in the field of technical equipment of cargo handling systems (Genovese et al, 2017). The use of the same means of mechanization, the same containers, and technological methods of cargo handling reduces the cost of manual labor and the corresponding expenses of cargo operations.
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The term “supply chain” implies the beginning and end of a process that reflects classical linear thinking. However, a “circular” economy is a continuous and endless creation of the maintenance and distribution of value. According to the article, this can only be achieved through the trusted cooperation of all partners in the process, which is assured by overall transparency based on reliable data. The basic principle of a “circular” economy is the absence of losses, minimization of costs, reduction of risks, growth of profit, and increase of customer satisfaction.
Genovese, A., Acquaye, A. A., Figueroa, A., & Koh, S. L. (2017). Sustainable supply chain management and the transition towards a circular economy: Evidence and some applications. Omega, 66, 344-357.