November 05, 2020
November 05, 2020
Contributor: Rama Ramaswami
In the post-pandemic business environment, supply chain organizations can enhance resilience by focusing on resource efficiency and stepping off the consumption-based treadmill.
The global pandemic adversely impacted raw materials availability, pricing and the ability to get products to market. Complex globalized supply chains remain fragile in the face of global disruptions. This challenges chief supply chain officers (CSCOs) to look for opportunities to improve raw materials availability and reduce uncertainty.
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“The willingness to challenge and change that relationship is a step into the unknown,” said Sarah Watt, Senior Director Analyst, Gartner, at the virtual Gartner Supply Chain Symposium/Xpo™ 2020, Americas. “It takes courage, as there are both risks and rewards. But that one step is crucial because our continued consumption of finite resources is simply unsustainable.”
It’s time for CSCOs to create what Gartner calls a future-fit raw materials approach. In other words, supply chain leaders should move away from the traditional linear consumption-based model to a circular economy strategy. The circular economy aims to decouple growth from raw materials consumption and is based on three tenets that support resilience:
Remove waste, complexity and toxicity from products for more effective end-of-life resource management.
Keep raw materials in use for as long as possible and at their highest quality.
Return materials into the environment with a positive impact.
“The move to a circular economy is the right move because it decouples material consumption from financial growth,” said Watt. “The circular economy also has the potential to provide a new avenue of raw materials through end-of-life reprocessing.”
Moving toward a circular economy is a complex, long-term journey that requires multiple actions on multiple fronts, as well as acceptance of some failures as part of the learning process. Yet the Gartner 2020 Opportunities After Crisis Survey found that 51% of supply chain professionals expect their focus on circular economy strategies to increase over the next two years.
To achieve success, ensure you have executive management buy-in, collaborative partnerships with a range of suppliers, and a commitment to product design that supports reprocessing and recycling. Then, consider how to employ these strategies within your organization:
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Recommended resources for Gartner clients*:
Supply Chain Executive Report: Close the Loop to Create Future-Fit Raw Material Strategies
*Note that some documents may not be available to all Gartner clients.