Supply Chain News Bites - Only from SCDigest

- Aug. 8, 2012 -


Supply Chain Graphic of the Week: Towards a Circular Economy?


McKinsey Says Resource Scarcity will Cause Manufacturers to Fundamentally Rethink Processes and Some Business Models


By SCDigest Editorial Staff



Are you familiar with "circular economy" thinking? We weren't much here at SCDigest until recenty, but explored it last week in a manufacturing context in an article on our site (See Will Companies Retain Ownership of Products they Sell to Harvest and Re-Use the Materials they Contain?).

The consultants over at McKinsey believe that resource scarcity (energy, water, commodities, etc.) is and will continue to have a huge impact on manufacturers across the globe - and that there are big opportunities for most of them to drive out the need for such inputs and thus costs with some truly out of the box thinking.


That includes circular economy paradigms, where products are designed to be fully harvested at end of life to recover the materials used in their construction. To get there, companies need to fundamantally rethink product design, advanced reverse logistics services need to be created, and - as we noted in our article - some say companies will eventually lease products to customers and still retain the ownership of the product when it reaches end of life, in order to better control the reverse logistics flow and material value. Wow.


McKinsey summarizes a lot of that in the "infographic" below. It's a long one, but there is some interesting material within.




Source: McKinsey



Will circular thinking take off? Our guess it will take a while, but that we will all be hearing a lot more about this in coming years. McKinsey says rising resource costs will practically force it.


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