Seventy percent of supply chain leaders are planning to invest in the circular economy in the next 18 months, according to a recent survey by Gartner, Inc. However, only 12% of those have linked their digital and circular economy strategies so far.
Gartner defines the circular economy as an economic model that separates the ability to achieve economic growth from the consumption of natural resources. Those business models encourage continuous reuse of materials to minimize waste and the demand for additional natural resource consumption. The circular economy starts with good design, with end of life and raw material reuse in mind.
“The circular economy creates an ecosystem of materials,” said Sarah Watt, senior director analyst with the Gartner Supply Chain practice. “What was previously viewed as waste now has value. However, those ecosystems are complex and include many interdependencies and feedback loops. Digital technology has the potential to provide visibility and enable improved decision making when it comes to raw materials and services. Already, 35% of companies believe that digital technology will be a key enabler for their circular economy strategies, but very few are leveraging the technology for this purpose yet."
Gartner’s Future of Supply Chain Survey gathered data from 1,374 respondents responsible for supply chain and related function across a broad range of industries including high-tech, healthcare, retail and logistics.
Digital Technology in the Supply Chain
There is not a single technology that will enable organizations to move toward the circular economy. Rather, several combinations can lead to this outcome. The survey results show that organizations focus on four key technologies to advance their circular economy activities: advanced analytics, 3D printing, the Internet of Things (IoT) and machine learning (ML) (see Figure 1).