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What is Circular Supply Chain Management & What Are It's Benefits?

what-is-circular-supply-chain-management-what-are-its-benefits

The logistics industry in today’s world largely operates on the linear model where the products are discarded after consumption. However, this approach doesn’t bode well for the environment as it creates a lot of trash that compromises the ecological balance. Growing concerns towards this “wastage of goods” has led to the development of a new model for the supply chain management which focuses on sustainability for the betterment of our planet.

A circular Supply Chain involves keeping the resources in use for as long as possible and recovering the products at the end of their life cycle to regenerate them into new ones. The restorative property of the circular supply chain management makes it a greener alternative to the conventional linear model.

what-is-circular-supply-chain-management-what-are-its-benefits

Also known as reverse supply chain management, the circular economy has garnered a lot of attention in recent years due to the safety regulations laid down by local governments to decrease the carbon footprint. Moreover, by connecting the end of a supply chain with its starting point, companies have understood that this method generates more profit and less waste. Following are some more benefits of a circular supply chain for a company:

1. Low Production Cost

Since the materials are reused in circular supply chain management, a company can save its production costs by re-manufacturing the waste products. You do not need to procure new raw material every time as most of your demand will be met by the reusable products you recover.

2. Environment-Friendly Approach

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The circular supply chain aims to reduce the wastage or at least keep it to a bare minimum to prevent it from piling up in landfills. This method allows the companies to embrace sustainability by converting the "waste" into a beneficial resource for the environment. By implementing this approach, you are doing your part to save the environment by minimizing waste and reusing whatever possible.

3. Adherence To Government Guidelines

Governments across the globe are getting stricter by the day when it comes to environmental issues. Laws and regulations are being made that are forcing businesses to go green and make recycling a top priority. If a company fails to adhere to the regulations, then heavy fines are imposed, thereby reducing the profits as well as brand image for the company. With the circular supply chain, you are able to abide by these guidelines and prevent any restrictions on your business.

4. Protection Against Price Volatility

In today’s world, anything can happen that can disrupt your capacity to do business or make it difficult for you to procure raw materials due to rising costs. A circular supply chain model protects you from this kind of volatility. By knowing the quantity of raw material produced through the recycling of products, you can accurately determine the budget required for the production of new goods.

5. Improved Customer Loyalty

People are becoming more conscious of the environment and are thinking twice before buying anything to understand the product’s impact on the environment. Even though sustainable products cost more than traditional ones, people are willing to shell out more money for the sake of the earth. By embracing the circular supply chain method, you can improve your image in your consumer’s mind and strengthen their loyalty towards your business.

Shifting from the linear model to a circular economy is not an easy task. It requires you to make changes to your business at its core and blend technology with supply chain practices to ensure a smooth and flawless system. If you are unsure how to progress on this path, then get in touch with us and we will help you make your business more environment-friendly in terms of supply chain operations. ARK India offers customized solutions to all your logistical requirements and helps you take your company to new heights of success.

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