Why Circular Economy?

Circularity in Supply Chain

Circular approach is trying to connect the end loop of a linear supply chain and maximizing the source material value by bringing it to the beginning of the product cycle itself. Turning the end-product that already became waste into new source material, is one of the ways. There would be many recovery alternative to explore as the supply chain will have its stakeholders on each production stage (material producers, manufacturers, distribution channels, and users) as shown below:

Circular Objectives

The above circular supply chain diagram shown predicted to achieve certain circularity objectives, 

 

  • Saving the planet by shifting the production approach

 

By carrying the ideal plan of a world without trash, circular economy has all the potential to minimize waste production in a systematic and integrated framework. Circular economy harnesses all the biodiversity capacity on earth to replace the finite natural sources. It didn’t stop at using more renewable energy, it should be extended into an innovation in biobased materials. Not only using electricity for the automotive industry, but it has also been discovered that nanocellulose is able to be utilized as an automobile material since it’s five times stronger than steels.  

 

  • Growing sustainable business value

 

Business currently being encouraged to make more environmentally friendly innovation i.e packaging and use more circular input as the market transforms towards those directions. It also can be  interpreted as a mitigation strategy. 28% of businesses worldwide considered implementing a circular business model due to its risk management strategy

Current market trends already demonstrated a shifting consumer preference into more environmentally conscious. In 2015, more than half of global consumers willing to pay more for sustainable brands, 73% of them are millennials. In the country’s proportion, consumers in developing regions possessed higher sustainable awareness as the climate challenge and social issues could be more relatable to their surrounding communities. The awareness would be most likely cascading rapidly after five years to developing countries like Indonesia, with its abundant challenge in waste management.

 

  • Make product from people, for people

 

When the supply chain reformed, there would be a prevalent number of new job opportunities to fill the existing supply chain stage i.e low skilled worker in open and closed loop recycling process, engineers for remanufacturing process, scientists to innovate more bio-refined materials, and product designers for designing reusable products. It will widen up the job inclusivity as it provides work opportunity in all skill levels. 

 

Learn more about circular concept and its adaptation in developing countries here:

Circular Economy as a Concept

Maria A. K. SarwendahResearch Assistant in Center for World Trade Studies UGM As novel as it sounds, the circular economy should not be perceived as a mere passing trend. The circular economy has long manifested itself as a solution to the prevailing linear economy system. Since the latter has been widely adopted to meet the...
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To Globalise Circular Economy, Engage Local Initiatives in Indonesia

Rizky Alif AlvianResearcher in Center for World Trade Studies UGM As the idea of circular economy travels from the Global North to the Global South, it is important to assess the extent to which the concept is deemed legitimate by stakeholders in developing countries. This examination is valuable as it would reveal the prospect of...
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