UNVEILING THE POTENTIALS OF CIRCULAR ECONOMY VALUES IN LOGISTICS AND SUPPLY CHAIN MANAGEMENT
I. Abstract
a. Purpose – The paper aims to unveil the Circular Economy (CE) values with an ultimate goal to provide tenets in a format or structure that can potentially be used for designing a circular, closed-loop supply chain and reverse logistics.
b. Design/methodology/approach – This is desk-based research whose data were collected from relevant publication databases and other scientific resources, using a wide range of keywords and phrases associated with CE, reverse logistics, product recovery, and other relevant terms. There are five main steps in the reformulation of CE principles: literature filtering, literature analysis, thematic analysis, value definition, and value mapping.
c. Findings – Fifteen CE values have been identified according to their fundamental concepts, behaviours, characteristics, and theories. The values are grouped into principles, intrinsic attributes and enablers. These values can be embedded into the design process of product recovery management, reverse logistics, and closed-loop supply chain.
d. Research implications – The paper contributes to the redefinition, identification, and implementation of the CE values, as a basis for the transformation from a traditional to a more circular supply chain. The reformulation of the CE values will potentially affect the way supply chain and logistics systems considering the imperatives of circularity may be designed in the future.
e. Originality/value – The reformulation principles, intrinsic attributes, and enablers of CE in this paper is considered innovative in terms of improving a better understanding of the notion of CE and how CE can be applied in the context of modern logistics and supply chain management.
II. Introduction
The Circular Economy (CE) is defined as a global economic model to minimise the consumption of finite resources, which focuses on the intelligent design of materials, product, and systems (EMF, 2013a). It also supports separating treatment between technical and biological materials to maximise the design for reuse, to return to the biosphere and retain value through innovations across fields (Webster, 2015; Lacy and Rutqvist, 2015). Transitioning from the linear to a circular economy not only requires a fine-tuning that reduces the negative impacts of the linear economy, but also a whole system approach that builds upon a number of guiding principles. These principles allow resilience to be built into the CE system, ensuring the long-term generation of economic opportunities and at the same time offering societal and environmental benefits.
III. Research programme
a. Aim, objectives and approach
The aim of this paper is to unveil the Circular Economy (CE) values with an ultimate goal to provide tenets in a format or structure that can potentially be used for designing a circular, closed-loop supply chain and reverse logistics. To achieve the aim, the following objectives have been set to identify the existing principles of CE and then redefine and reformulate these into the CE values.
b. Search Strategy
The approach adopted was mainly through a systematic literature review whose data were collected from relevant publication databases and other scientific resources, using a wide range of keywords and phrases associated with CE, and other related keywords, for instance. principle, reverse logistics, product recovery, repair, refurbishment, remanufacturing, and cannibalisation. These were then combined with the publicly available materials and various media (case studies, videos, seminars, presentations
The literature in Table 1 was identified by reading the title. If the titles met this research purpose, they were collected and stored. The next process was to read the abstract and keywords. In this process the literature was classified based on its similar purpose and keywords. Reading the full paper was necessary in order to analyse CE characteristics, principles, values, concepts, case studies, and other relevant research results more deeply. Within the selection process of the literature, some filtering criteria, such as types of document (journal and conference papers) and language (English), were applied.
There are six steps that were adopted: data collection, data filtering, literature analysis, thematic analysis, CE values definition and mapping of CE value.
IV. Results
a. Reformulation of CE Principles
Data Filtering
All potential sources of papers were filtered by various processes: reading the title, abstract, keywords and full paper filtering; those filtering processes resulted in 51 papers.
Literature Analysis
The 51 papers were then analysed to obtain various essential themes (such as from the intersection of definitions, characteristics, principles, or other information across the authors). For example, Pearce and Turner (1990), EMF (2013a), and Lacy and Rutqvist (2015) conveyed CE definitions; they explained the similar terms (such as those about the economy, environment, circularity, etc.). The analysis continued by mapping the relevant information provided by each author (See Figure 2 which illustrates the 51 authors). After the analysis process and regrouping, those keys with a similar meaning will be grouped within one representative key. The results of regrouping are shown in Table 3. In this process, 12 themes were found: economy, environment, circularity, system thinking, cascades, reverse cycle, collaboration, recovery, market, technology, innovation, and waste.
Thematic Analysis
The information in Table 3 was analysed to produce the CE principles, while the values describe the specific usefulness of the concept. In this stage, a deeper analysis was required, in which each theme above will be defined in order to find the consistency of the theme. Through this stage, the CE values will be reformulated. In fact, one theme can produce one or more values and one theme possibly can overlap others as well. Basically, those themes shown above were reformulated to find the suitable CE values. For example, the “economy” theme will be analysed based on all information surrounding the theme, such as the position of the economy in this concept, in what way the economic extension will influence the implementing process, and how to implement this aspect, etc. The information discovered was elaborated to represent the CE value from the “economy” aspect.
Circular Economy Values Definition
The 15 CE values need to be defined; this process has been completed by using all of the information that was collected.
- Value #1. Systems thinking suggests that CE has to be looked at holistically, and all of the elements/components in the CE have to be considered as a system that integrates and influences one with another. (Chen, 2009; Li et al., 2009; EMF, 2013a).
- Value #2. Circularity advocates developing a circular process to preserve the value of a product or component or material by keeping it in use longer through, e.g. repair, reuse, remanufacture and recycle (Pintér, 2006; Yong, 2007; Chen, 2009; Mathews and Tan, 2011; Yang, 2011; EMF, 2015; Lacy and Rutqvist, 2015; UNEP, 2015; Webster, 2015; Blomsma and Brennan, 2017; Hollander et al., 2017).
Value #3. Innovation enables CE by suggesting the use of new, novel methods and ideas to stimulate redesign and rethink a system in CE to reach the optimum results of its purpose (IMSA, 2013; Sempels, 2013).
- Value #4. Built-in resilience is related to the internal capacity, robustness and responsiveness of a CE system to recover quickly from various disturbances, e.g. economy, technology, etc. (EMF, 2013a, 2015), hence becoming more resilient.
- Value #5. Cascades orientation aims to keep the materials, be they products, components or materials or biological nutrients, longer in circulation and for them to be transformed into different types of products or materials (IMSA, 2013; EMF, 2015; Lacy and Rutqvist, 2015; Webster, 2015; Hollander et al., 2017; Kalmykova et al., 2018; Vouvoulis, 2018).
- Value #6. Waste elimination emphasises that waste must be eliminated from the very beginning of the product design, and systematically considers, at subsequent circulation stages, how waste can be further reduced and eliminated (Geng et al., 2009; Mathews and Tan, 2011; Blomsma and Brennan, 2017; Vouvoulis, 2018
- Value #7. Technology-driven, suitable and economically viable technologies may be adopted to enable tracing the materials and products throughout the circulation, particularly in product recovery. The main goal is to achieve efficiency and effectiveness that supports the optimisation of operations (Geng and Doberstein, 2008; Pan et al., 2015).
- Value #8. Market availability, be it a new or existing one, will enable the CE to create new business opportunities, thus encouraging the reusability of products, components or materials (Geng and Doberstein, 2008; Preston, 2012; Stahel, 2013; Ma et al., 2015).
- Value #9. Optimisation of change is essential in the implementation of system or business models affected by the dynamics of problems, and takes into account the environmental, resources, technology, and consumer demand (EMF, 2013a, 2015)
- Value #10. Economic optimisation aims to achieve the production and consumption, service and supply of money, so that a resilient economy can be created, e.g. by improving material productivity, enhancing innovation capabilities, or shifting from mass production to skilled labour (Pintér, 2006; Yong, 2007; Ma et al., 2015; Kalmykova et al., 2018)
- Value #11. Maximisation of retained value aims to retain products or components that, over time, decline in value, by creating a suitable treatment system so that the value can be prolonged (Yuan et al., 2006; Huamao and Fengqi, 2007; Dajian, 2008; Mathews and Tan, 2011).
- Value #12. Leakage minimisation upholds the avoidance of loss of opportunities to maximise the cascaded usage period of (a) biological materials and the inability to incorporate the nutrient back into the biosphere due to contamination, and (b) technical materials that are lost due to loss of materials, energy, components and materials are not (or cannot be) recovered. (EMF 2013a, 2015).
- Value #13. Collaborative network is needed for the creation of materials’ standards and information flow in the circularity and allows stakeholders to work together within an industry sector or between different sectors to achieve common goals (Geng and Doberstein, 2008; Hu et al., 2011; Preston, 2012).
- Value #14. Shift to renewable energy highlights the ability of the CE to reduce the energy usage per unit of output and accelerates the shift towards renewable energy by design, treating the economy as a valuable resource (Pinjing et al., 2013; Ma et al., 2015; Pan et al., 2015).
- Value #15. Environmental consciousness promotes the conservation of environmental resources and reduction of environmental impacts by adhering to environmental regulations (Hongchun, 2006; Zhu et al., 2010; Pinjing et al., 2013; Su et al., 2013; Hollander et al., 2017).
Mapping the Circular Economy Values
The last stage is mapping/grouping. It is used to evaluate the 15 values of the CE that have been formulated before. The regrouping was done to find the consistency of the definition of CE values reformulation, the sequence between one item and others, and the implementation of the values in specific cases. The 15 items need to be classified with an appropriate name into some layers of the values of the CE. The layers are classified into: principle, intrinsic attribute, and enabler. The first layer indicates the essential activities/values/rules that should be followed to implement a CE. The second layer describes the internal CE characteristics as natural elements. The third layer is about some external aspects surrounding the CE that will support the practicality, possibility, and continuity in the implementation of a CE.
Having identified the layers of CE items, the next step was to classify the items into layers based on the above-mentioned definitions and characteristics. To facilitate the classification or grouping into the appropriate layer, the following phrases were applied. The phrases describe the characteristics of each layer.
1. First layer (a principle)
(A1) A noun that emphasises reusability
(A2) A noun that relates to the environment
(A3) A noun that relates to the economy
(A4) A noun that can be measured and controlled
2. Second layer (an intrinsic attribute)
(A5) A noun that connects with the nature of the CE
(A6) A noun that mentions an internal, genuine CE characteristic
(A7) A noun that mentions advancement and achievement
(A8) A noun that can motivate the CE implementation
3. Third layer (an enabler)
(A9) A noun that has a role as assistant/facilitator
(A10) A noun as an element from the external environment
(A11) A noun that supports at the operational level
(A12) A noun that describes external facilitation
V. Discussion
a. Circular Economy (CE) Values
The CE is a concept that has a wide coverage area: economy, ecology, social, technology aspects, etc. Within these areas, there are many activities from flow of raw material to becoming a product and vice versa. Each flow distinguishes the type of material (biological/technical). The flow also consists of some processes such as collection, maintaining, redistributing, or cascading. All of the processes are done to support regenerative and restorative determinants that can systematically support the balanced life system. This concept also has the general purpose of contributing to global economic opportunity. The understanding of a concept is needed to be able to implement the concept within the real system. By formulating CE principles in an available format, the adopting and understanding.
b. Implications for Logistics and Supply Chain Management (SCM)
The CE principles reformulation can potentially be used in the supply chain particularly into a more circular, closed-loop supply chain. The closed-loop supply chain has two distinct flows. Forward flows aiming to minimise services and cost, and reverse flows (also known as reverse logistics) to recover the unwanted, broken or end-of-life products from customers for return to the manufacturers. The complexity of products, services, and processes in the closed-loop supply chain increase as the business models of the CE grow. The business models require the supply chain to handle the transition in an agile manner, and in this respect, CE values can support this transition. As the CE focuses on keeping products, components, and materials at their highest utility and value at all times, this will affect the upstream processes in the supply chain, right from the process of manufacturing raw material to become products, until the products are received by customers. As mentioned above, in a closed-loop supply chain, the return management and reverse logistics services play an important role in handling returned or end-of-life products. Product returns have increased in recent years, along with changes in the scope and choice of product and services, and also trade-offs (Weetman, 2017) and therefore the return management and reverse logistics need to be handled properly. This can possibly be done by embedding the CE values into the design of a reverse logistics process that optimises the supply chain operations in general.
c. Embedding CE Values in Logistics & Supply Chain Management
Embedding CE values can help facilitate a better understanding in designing, structuring, and evaluation of the supply chain, which are in fact values that the SCOR model aims to achieve. Embedding implies redesigning the business processes by including CE values, for example, circularity, collaborative network, cascades orientation, maximisation of retained value, into the reverse logistics and return management. Return management deals with the return of product and the supporting services for customer post-delivery, which may involve.
VI. Conclusions
Fifteen circular economy principles have been reformulated comprehensively by Means of a systematic literature review. During the reformulation process of the CE principles, it was found that not all of them could be categorised as principles; some were termed as intrinsic attributes or the natural characteristics of CE, and enablers, which were identified as the operational drives to facilitate the operationalisation of a CE system. In this paper, the principles, intrinsic attributes and enablers are termed the CE values. The reformulation of CE principles that exist in the body of literature can also facilitate in the implementation of, for example, reverse logistics and closed-loop supply chains. Whilst some researchers previously described the CE principles at a conceptual level, this research has offered more detailed, operationalisation aspects of the CE via the three groups of CE values mentioned above.
The way the CE values have been formulated in this study opens up an opportunity to other researchers to continue to amend the collection of the CE values. Going forward, it is intended to develop a method that describes in detail the embedding process of CE values into product recovery. Imminent challenges in CE will continue to be unravelled, in particular related to the uncertainty aspects in product recovery, especially when the products have a long-life cycle.
a. transportation, warehousing, 3rd and 4th party logistics, and reverse logistics itself. The circular initiative can be developed through embedding CE principles into these functions
