How digitization of supply chains can boost circular economies

digitization of supply chains

It is possible that the digitization of supply chains boosts circular economies because circular supply chains are interconnected systems like ecosystems in nature.

This means that companies will use technology to walk across supply chains. This will enable us to reduce and maximize resources by getting them from each other instead of from the planet earth.

What Is The Need For A Circular Economy?

The linear approach to industrialization is under enormous strain, as a growing and urbanizing global population drives resource price volatility and scarcity.

The circular economy is an alternative to the predominant linear “take make dispose of” of the economy of production and consumption, which relies on large quantities of relatively cheap materials and inputs and produces a lot of waste.

A circular economy keeps products, components, and materials at the highest utility and value at all times.

It is regenerative by design, it is essential to decouple economic growth from the consumption of finite resources.

A circular economy provides a solution to this ever-increasing problem. A circular economy works with a circular approach that is “make use and return”.

A digital supply chain business model sees the convergence of the circular and sharing economies and demonstrates the sustainable business model of the future.

What Is The Need For A Circular Supply Chain?

Our supply chains today do the opposite, they consume the resources from the earth and create greenhouse gas emissions. We use over a hundred billion tons of material each year, and only about 8.5 percent is re-used.

At this rate, we need nearly two planets to support everything we consume. We are at the point where we should stop using the resources from within the planets and use the resources we already have.

What if instead of today’s linear technique with supply chain, we use a circular supply chain. Supply chains are a series of inputs, outputs, and processes. Circular supply chains use inputs that have already been used or are renewable.

A circular supply chain generates value as outputs. Today’s waste streams are first reduced and then sold to another supply chain as an input to their process, hence, waste becomes valuable.

Circular supply chains reduce the consumption of products on how much they need, making our supply chains shorter and more local. They make the most out of everything.

How Digitization Of The Supply Chain Can Improve Circular Economy?

With the continuous evolution of technology over the last few years, especially the increasing proliferation of the internet, it’ll not be possible to imagine a circular economy without digitization. Following are the ways digitization of the supply chain will boost the circular economy.

1) Digitization Enables Sustainable Decisions

One of the biggest benefits of digitization is that the flow of information of the products becomes fast, accurate, and at the same time.

This enables the companies to monitor and analyze the data and the consumption patterns. By providing accurate insights in real-time the businesses will be able to make sustainable decisions regarding the number of costs to be spent, determining the length of the delivery cycle, measuring the consumption of greenhouse gas emissions (GHG), etc.

2) Digitization Enables In Building Of Value In The Supply Chain

In the supply chain, there are multiple partners involved in the various steps at the various stages in the transportation of shipment regularly.

In order to have better communication and unlock the value chain between partners and consumers, digitization can be used.

Digitization enables a particular supplier of some part to get the stocking information of the particular manufacturer of that part, to validate if the part is about to run out of stock or not.

This makes the business more efficient and effective, as this process reduces the amount of waste and emissions.

Digitization Of The Supply Chain Also Needs Cybersecurity

Undoubtedly, the digital supply chain will boost the speed of the workflow and increase the overall efficiency, but it will also increase the number of APIs.

The more the APIs, the more the organization is at risk of cyberattacks. To ensure safety and security, businesses must also implement good cyber security software.


To sum up, a circular supply chain is the need of the hour, as the liner approach will only increase the number of damages to the planet.

Also, with the digitization of the supply chain, work processes will be more efficient, effective, and productive.

The digital supply chain is capable of simplifying the complexities involved in the supply chain and logistics industry.

Many organizations have already implemented digitization and are reaping the benefits from it. So, if you want to excel too in your supply chain business, then start the implementation of digitization today.

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