The Future of Resilient Supply Chains Is Circular

Supply chain shortages and disruptions permeate in 2022. As a result, companies continue to look inward at their supply chains to enhance resiliency and evaluate the long-term impact of how products are sourced and transported.

These current challenges are also a reminder of the lack of sustainability in supply chains. Currently, supply chains are designed to be lean, efficient, and linear. However, each time we perpetuate the “take, make, waste” model of linear supply chains, we deplete resources, contribute more waste, and leave gaps that grow costly during a time of crisis. How can we start now to end this cycle?

Let’s examine how a more circular, less wasteful supply chain benefits the future of commerce, and how the data that powers it can be shared more consistently and openly to support greater agility.

Why Sustainability Matters More Now

The COVID-19 pandemic brought more consumer attention to the globally complex and fragile nature of the supply chain. This awareness grows alongside the trend of conscious consumerism. Shoppers want to access deeper product attributes such as where a product was sourced, how the product can be recycled, and other insights into the product’s life cycle. Additionally, sustainability is becoming more of a factor in consumer purchase decisions.

The tech community is actively embracing this need. For example, during a hackathon hosted by GS1 US, a solution called Farmer-Aggregator, the “Solution with the Greatest Impact” winner, aims to create a transparent, traceable ecosystem, helping small farms digitize operations and connect to a broader market. Smallholder farmers are a vital pillar in food supply chains yet struggle to gain access to markets to offer sustainably grown foods. On the Farmer-Aggregator platform, sustainability-focused buyers can buy from businesses that meet their food traceability requirements.

The data that filters through solutions like this must be consistent and accurate for the technology to be effective. In the “new normal,” supply chains will experience a possible influx of new trading partners and data points to aggregate. Leveraging global data standards ensures the reliability and quality of the data, and facilitates a real-time view into where products are, the journey they have taken and what’s available to sell.

Circularity Defined

Many technology solutions supporting sustainability are also assisting the supply chain’s migration to greater circularity. The circular economy is a sustainable economic system that eliminates waste, reduces pollution, and ensures the continuity of resources. In such a system, products and resources are redesigned, reused, repaired, and recycled to reduce the use of virgin materials. This cycle enables companies to extract value from traditional waste streams so that end-of-life products can become resources upstream again.

The new paradigm of circular supply chains will bolster investments, reveal the availability of resources, and sustain profitable operations far into the future. The pandemic has taught many businesses an important lesson on the road to circularity: to build resilient supply chains of the future, we must bridge short term “band-aid” solutions into long-term sustainable strategies. Global data standards serve as the bridge. They help empower the scalability and interoperability of nascent solutions for a world undergoing rapid digitalization and disruption.

It’s important to realize that current threats may be intensified in the future as supply chains face continued disruptions at global scale. The pandemic, combined with international port closures, labor shortages, lack of raw materials has exacerbated the fact that human and supply chain problems are intrinsically intertwined.

Future supply chain resilience will need to rely on circularity and standards coming together to transform vulnerabilities into opportunities. Through circularity, products, assets, and infrastructure will be made more productive as they are kept in use longer, and supply streams will ultimately benefit from the remanufacturing of new and existing resources.

Achieving Agility

As more trading partners embrace the global language of data standards, interoperability and circularity will enable agile supply chains. No matter where a product is sourced, manufacturers can communicate with partners to sense and respond to demand. Standards facilitate supply chain visibility by enabling the collection and exchange of transactional data to record a product’s entire journey. If items are persistently and uniquely identified in a consistent way, their journey from source to store, or source to consumer, is illuminated in a way that future-proofs businesses and protects them from potentially massive financial impact.

As global threats continue to emerge, organizations must adapt their supply chains to become more flexible and resilient. By shedding the limitations of a traditional linear supply chain model, entire industries can be confident in their abilities to overcome material scarcity, ensure sustainability of their operations, and enhance their readiness in the face of inevitable future disruption.