Understanding the Circular Economy: What? Why? and How?

A circular economy is a system in which resources are kept in use for as long as possible, through reusing, repairing, refurbishing, and recycling products and materials.

In this way, the goal is to minimise waste and optimise the use of natural resources.

In a traditional linear economy, goods are produced, used, and then disposed of as waste. This model is not sustainable in the long run, as it relies on the constant extraction and consumption of finite natural resources.

A circular economy, on the other hand, aims to keep resources in use for as long as possible, reducing the need for constant resource extraction and diminishing waste production.

Procurement, defined at its most basic level as the process of acquiring goods and services, inevitably plays a critical role in realising a circular economy.

There are several ways in which procurement can contribute to the transition to a circular economy:

1. Prioritising the purchase of durable and repairable products

Procurement teams can choose to purchase products that are built to last, and that can be easily repaired or refurbished when they do break down. This can help to extend the lifetime of products, reducing the need to constantly replace them.

2. Seeking out suppliers that have circular business models

Procurement teams can partner with suppliers that have circular business models, such as companies that offer repair or refurbishment services, or that take back products at the end of their useful life for recycling.

3. Encouraging the use of recycled materials

Procurement teams can specify that certain products be made from recycled materials, or that suppliers use recycled materials in their manufacturing processes. This can help to create demand for recycled materials and reduce the use of virgin resources.

4. Developing partnerships with waste management and recycling companies

Procurement teams can work with waste management and recycling companies to develop systems for the collection, separation, and recycling of materials. This can help to close the loop and keep resources in use.

5. Establishing take-back programs

Procurement teams can establish take-back programs for products that are no longer needed, to ensure that they are properly disassembled and recycled.

By implementing these strategies, procurement teams can play a key role in helping their organisations transition to circular economies and minimise waste.

Procurement’s central role in bringing about a circular economy

As stated, Procurement plays a crucial role in the transition to a circular economy, as it involves the acquisition of goods and services that an organisation uses. By prioritising the purchase of durable and repairable products, procurement teams can help to extend the lifetime of products and reduce the need for constant replacement.

This can lead to significant cost savings for the organisation, as well as reducing the environmental impact of production and disposal.

The importance of circular suppliers

In addition to purchasing durable products, procurement teams can also seek out suppliers that have circular business models. For example, a supplier that offers repair or refurbishment services can help to extend the lifetime of products and reduce waste.

Similarly, a supplier that takes back products at the end of their useful life for recycling can help to close the loop and keep resources in use.

Purchasing decisions for a circular economy

Procurement teams can also encourage the use of recycled materials in their purchasing decisions. By specifying that certain products be made from recycled materials, or that suppliers use recycled materials in their manufacturing processes, procurement teams can create demand for recycled materials and reduce the use of virgin resources.

Waste management and recycling companies

Developing partnerships with waste management and recycling companies can also be beneficial for achieving circular economies. Procurement teams can work with these companies to develop systems for the collection, separation, and recycling of materials, helping to keep resources in use and minimise waste.

Take-Back Programs

Finally, establishing take-back programs for products that are no longer needed can be an effective way for procurement teams to ensure that these products are properly disassembled and recycled. This can help to close the loop and keep resources in circulation.

Overall, by implementing these strategies, procurement teams can play a crucial role in helping their organisations transition to circular economies and minimise waste. This can lead to significant cost savings, as well as environmental and social benefits.