4. What are the solutions?
The obstacles to scaling up the circular economy across supply chains at a global level are primarily the difficulties of closing the loop geographically and in terms of quality, as already described. Resolving these issues will also mean overcoming the engrained lock-in of the linear system. So how can stakeholders best start addressing these obstacles to unlock the value of the circular economy?
As with every major transformation, it is vital to take a systematic approach, unravelling the issues at the point of greatest leverage. This chapter outlines three avenues for action, all with the potential for carrying circularity to a tipping point. They represent three different perspectives on how to turn global supply chains (and open loops) into supply loops—or supply cycles—to surmount the issues just outlined: network design, materials purity, and demand-side business model innovation. After substantial research and analysis, the team behind this report have determined that the second—reorganizing and streamlining pure materials flows—would be the best with which to begin. The reasons for this are detailed in the final section of this chapter, but it is vital to see all three as a whole, as they are so intertwined. Accelerating progress on one will automatically trigger progress in the others, too.
- Set up global reverse networks for products and components. This focuses on building out reverse-network capabilities, which is essential to address the geographic dispersion challenge. This will ideally take place at a product and component level, so it will be industry specific and require collaboration along the incumbent value chain and adjacent/cascaded activities.
- Reorganize and streamline pure materials flows. Materials represent the greatest common denominator, and the most universal assets across industries and geographies: they will ultimately require closed loops at a global level to achieve full potential. The key will be to tackle materials complexity and create pure materials stocks at scale that generate sufficient economic benefits for participants.
- Innovate business models on the demand side. This will be critical to mainstreaming the circular economy. Innovation will be the way ahead for B2B-favorable setups, and wide adoption in B2C. New models will also be key to tapping the growing trend towards collaborative use of physical assets: the ‘sharing economy,’ as well as overcoming linear lock-in.