Executive Briefings

Four Ways to Capitalize on Circular Supply Chains

The pace at which companies are adopting circular economy business models has been accelerating for the last two decades - and it has evolved from a specialist concept to a mainstream business strategy.

Accenture Strategy recently surveyed more than 500 manufacturing companies with revenues greater than $1bn, and found that more than 90 percent said they are implementing circular business models. And nearly all larger product-based companies say they’ve put in place circular supply chains for material recovery and recycling.

But too often, programs remain “skin deep.” The vast majority of companies are utilizing circularity in principle, but they are failing to capture the full potential of the approach. As we look ahead to the next wave of circular business models, and as innovation continues to uncover brand-new opportunities to act sustainably and responsibly, it’s time to come full circle — transform supply chain operations and company cultures to build a network of partners, suppliers and markets that fully capitalize on circularity.

Circling Success

Accenture Strategy research found that, when it comes to the elements of circular supply chains that companies are prioritizing, recycling comes out on top. But while recycling materials across a company’s operations is certainly a step in the right direction, it is low-hanging fruit that only scratches the surface when it comes to squeezing value out of the circular economy.

When looking at the adoption of deeper circular economy strategies — where companies are reusing or refurbishing materials they’ve recaptured at the end of life — there is significant room for improvement. While nearly all companies report products are returned for reuse or refurbishing, 75 percent ultimately destroy 45 to 75 percent of the recaptured products — losing all the embedded value. And while 92 percent of companies surveyed say they are geared up for product life extension, about 30 to 40 percent are actually doing it.

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Accenture Strategy recently surveyed more than 500 manufacturing companies with revenues greater than $1bn, and found that more than 90 percent said they are implementing circular business models. And nearly all larger product-based companies say they’ve put in place circular supply chains for material recovery and recycling.

But too often, programs remain “skin deep.” The vast majority of companies are utilizing circularity in principle, but they are failing to capture the full potential of the approach. As we look ahead to the next wave of circular business models, and as innovation continues to uncover brand-new opportunities to act sustainably and responsibly, it’s time to come full circle — transform supply chain operations and company cultures to build a network of partners, suppliers and markets that fully capitalize on circularity.

Circling Success

Accenture Strategy research found that, when it comes to the elements of circular supply chains that companies are prioritizing, recycling comes out on top. But while recycling materials across a company’s operations is certainly a step in the right direction, it is low-hanging fruit that only scratches the surface when it comes to squeezing value out of the circular economy.

When looking at the adoption of deeper circular economy strategies — where companies are reusing or refurbishing materials they’ve recaptured at the end of life — there is significant room for improvement. While nearly all companies report products are returned for reuse or refurbishing, 75 percent ultimately destroy 45 to 75 percent of the recaptured products — losing all the embedded value. And while 92 percent of companies surveyed say they are geared up for product life extension, about 30 to 40 percent are actually doing it.

Read Full Article