Develop ‘circular’ supply chains to tackle ‘resource crunch’

Will Green is news editor of Supply Management
27 November 2013

Firms need to develop “circular supply chains” to deal with the problem of dwindling natural resources and increasing commodity prices.

A report, by LRS Consultancy and law firm Burges Salmon, warned the “scale of consumption and waste is unsustainable” and organisations must collaborate with their supply chains to cut waste and maximise reuse of materials.

A circular supply chain is one in which at every stage of a product’s lifecycle consideration is given to the most efficient use of resources, including lean production techniques, on-site energy production and reuse of materials and packaging.

The report, A Practical Path to Resource Efficiency, said: “There is increasing evidence to suggest that the era of cheap and plentiful resources is over and that we are now facing a significant resource crunch.”

Firms should move away from a “traditional linear economy”, where materials are use to manufacture a product that is used and thrown away, to a circular model where materials are “regarded as valuable resources”, the report said.

Nick Churchward, partner at Burges Salmon, said: “There is a real opportunity for economic growth in delivering your business along a more sustainable model.”

The report gives examples of a biscuit maker who started selling offcuts to a fast food chain for use in its ice cream, and a tomato nursery that uses heat from a nearby sugar factory.

Dee Moloney, managing director at LRS, said each person in the EU used an average of 16 tonnes of materials each year and generated six tonnes of waste.

She said the issue was becoming central to the way firms do business.

“It has moved away from the CSR department and it has hit the desks of the CFOs,” she said.

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