The circular economy: why should brands care?

The events of the past couple of years have turned the spotlight on the supply chain like we’ve never seen before. The pandemic, Brexit and instances like that of the Suez Canal blockage all caused issues that raised consumer awareness of supply chains, something many of us wouldn’t have otherwise considered before. Our research, for example, found that 79% of consumers say they are more aware of how supply chains impact availability of products than before the pandemic.

This increased awareness has brought increased scrutiny, and what we’re now seeing is how consumers are seeking out and championing brands that commit to sustainability and behaving ethically – particularly within their broader supply chain. Our research also showed that 83% of consumers would be more likely to buy from a brand that supports and sources from local suppliers and a further 83% would also be willing to compromise for ethically sourced products.

So as consumer demand now extends to the supply chain, the big question is, what can brands do to address them?

 

What goes around, comes around

The circular economy is at the heart of sustainability efforts, in particular, whereby products and materials are kept in use, by design, for as long as possible to get the maximum value from them. This could be by sharing, leasing, reusing, repairing, refurbishing or recycling. Many organisations now operate within this space and big brands are also embracing it, with the likes of Burger King, Adidas and IKEA all developing products or offerings that play into the circular economy in some form. It’s therefore not surprising to learn that the circular economy is one of the main building blocks of the European Green Deal and in achieving the EU’s 2050 climate neutrality target.

While our research showed that nearly three quarters (73%) of UK consumers didn’t know what the circular economy was, when explained, the majority said they would be more likely to shop from brands that are contributing towards it (62%).

As such, working with suppliers operating in this space is a way to not only create a more sustainable business model, but also to respond to evolving consumer demands.

 

Making it happen

Brands now want to know how they can work with suppliers that operate in the circular economy. This really lies in having better visibility into the supply chain to understand who a business’s suppliers are, their operations and ESG goals and, importantly, if they contribute to the circular economy. The only way this visibility is afforded is through leveraging cloud-based technology that moves them away from a traditional linear supply chain model to a digital supply network.

Unlike linear supply chains, supply networks shift away from singular, point-to-point processes to a many-to-many structure that enables 360-degree visibility. Digital supply networks leverage technology and data analytics to provide a continuous flow of information, allowing business leaders to gain holistic insights into all business areas. Not only does this help to quickly respond to demand and address unforeseen circumstances, but it also allows organisations to understand what partners they are operating with and their practices, and it’s this data that is important here; it’s no good setting sustainable targets for your business if the partners you transact with don’t adhere to them.

Once an organisation is connected to a network, it can become both a buyer and a supplier. This allows for broad visibility into the interconnected operations of an organisation’s trading partners, including those operating in mines, farms and other providers of raw materials. Not only does this provide organisations with greater transparency to ensure that the company’s ethics and values are not compromised at any stage, but it also enables them to find and collaborate with new partners, like those in the circular economy.

It’s clear that the circular economy is not only good for society and our planet, but it’s also a business opportunity, especially in the long term. So, as consumer interest in sustainability further translates into action, organisations must increase focus and investment in circular practices. Digital supply networks will help brands to not only monitor suppliers’ sustainability performance and hold them accountable, but also find new partners – circular ones.

 

Leave a Reply

Your email address will not be published. Required fields are marked *