Today’s supply chains were designed to optimize efficiency and speed while minimizing costs. Unfortunately, the COVID-19 pandemic exposed crucial weaknesses in the paradigm. Resource shortages, product scarcity and end-to-end traceability gaps have caused system breakdowns and rampant distribution delays. Transformation is needed to create a more forgiving, sustainable supply chain that can better navigate future challenges.

In a world with finite resources, the principles of a circular economy can provide guidance to address current challenges in a sustainable way while also creating a path toward mitigating future disturbances.

Even beyond the pandemic, changing environmental issues and global economics were increasing the frequency and magnitude of supply chain disruptions, and necessitating a crucial overhaul of how supply chains are structured to accommodate shifting circumstances. By shedding the limitations of a traditional, linear supply chain model and incorporating circularity, industries can overcome material scarcity, ensure sustainability of their operations and enhance their readiness for the next crisis. Circular supply chains enable products, assets and infrastructure to be kept in use longer, while minimizing waste and ensuring continuity of supply.

In a circular system, products and resources are redesigned, reused, repaired, and recycled to reduce the use of virgin materials. This cycle enables companies to extract value from traditional waste streams so that end-of-life products can become resources upstream again. It creates openings for new supply streams that can alleviate material shortages.

Companies need to evaluate the long-term impact of product sourcing and distribution processes, and seek adaptive opportunities that will provide greater flexibility. Developing alternative strategies will enable them to pivot quickly, adopt new practices, collaborate in new ways and leverage emerging technologies to overcome current and emerging challenges.

Global data standards are essential to long-term, sustainable supply-chain solutions. Standardized product identification using GS1 Global Trade Item Numbers (GTINs), along with Global Location Numbers (GLNs) to denote touchpoints along the journey, gives trading partners a consistent way to communicate about the movement of products throughout the supply chain. This allows enhanced forecasting in real time, so companies can adjust for fluctuating supply and demand and can quickly find alternate sources when one pathway is blocked.

Standards facilitate supply-chain visibility by enabling the collection and exchange of transactional data to record a product’s entire journey. If items are persistently and uniquely identified in a consistent way, their transport from source to store or consumer is illuminated in a way that future-proofs businesses, and protects them from potential failures and financial impacts. As more trading partners embrace the global language of data standards, interoperability and circularity will enable more agile supply chains that can survive the ups and downs, starts and stops of an increasingly volatile world.

Outlook:

The developing convergence of circularity and global data standards will help industries transform vulnerabilities into opportunities, making products, assets and infrastructure more productive as they’re kept in use longer. Supply streams will ultimately benefit from the remanufacturing of new and existing resources, and more granular, interoperable supply chain data will enable more agile supply chains that can operate effectively even during times of crisis.

Melanie Nuce is senior vice president of innovation and partnerships with GS1 US.