WEF: How Companies Can Scale Circular Supply Chains

The World Economic Forum (WEF), Bain & Company and the University of Cambridge have produced a guide for businesses on executing their circularity objectives.

Despite circularity emerging as a method for improving sustainability, resilience and profitability, scaling such initiatives has proven difficult.

Circular Transformation of Industries: The Art of Scaling Circular Supply Chains details how businesses can unlock economic value through circularity.

The conversation has moved from why it matters to how it can be implemented at scale. While procurement and supply chain leaders are keen to implement circular models, they face challenges in making it a core operational function.

WEF's survey of 491 executives finds 95% believe circularity will be important for their companies within three years. The report suggests, however, that firms often see it as a sustainability issue – not as a way to build resilience, create revenue and strengthen customer relationships.

Overcoming key scaling challenges

The report identifies key challenges in scaling circular models and offers solutions. A primary hurdle is managing the return of materials, as circularity depends on retrieving products.

Businesses have tested incentive schemes like loyalty points, but low consumer participation is likely if the return process is difficult. The unpredictable quality of returned goods can also make repairs costly.

To address this, some businesses are forming fruitful partnerships. The joint venture between Renault and Suez, The Future is Neutral, recovers end-of-life vehicles to recycle materials.

Another challenge is a lack of consumer demand, as many still prefer new products, despite being aware of environmental benefits. A global survey, cited by the WEF, found that only 29% of people buy second-hand furniture, and 35% buy second-hand clothing.

To build trust in used items, companies are using discounts, warranties or certifications. Patagonia’s Worn Wear resale programme, for example, gained popularity over time, improving its operational efficiency.

"The circular economy is entering a strategic moment," says Thom Almeida, Lead of Circular Economic Systems at WEF.

"Circularity is no longer only about environmental sustainability; it is becoming central to how companies build resilience, stay competitive, and unlock new growth."

Building the right infrastructure

Circularity requires robust reverse logistics and an efficient digital infrastructure to help businesses forecast supply and demand and balance inventory.

Some companies gather data to show consumers the impact of their circular practices. Material Mapper, for instance, tracks the origin and emissions savings of building materials to provide transparency.

Navigating regulatory complexity is another significant issue. Refurbished goods can be subject to different standards and compliance costs, with regulations varying between countries.

To manage this, HP ensures its refurbished products meet the same regulatory requirements as new ones, allowing it to adapt to regional variations.

Designing an efficient circular model

Reinventing the supply chain for circularity can expose skills gaps, which some companies address through partnerships. Hitachi, for instance, builds specialised units to remanufacture screw processors to maintain quality.

Circular supply chains can be integrated with linear operations or exist as separate entities, running either in-house or relying on partners.

According to WEF's survey, 56% of companies use hybrid supply chains, where circular and linear operations are integrated.

However, retaining some separation can offer greater flexibility.

The survey also found most businesses use external partners. For collection and dismantling, 80% of organisations use outsourcing, but effective partnerships require transparency.

"Circularity is becoming a defining factor in business resilience and competitiveness – scaling it requires shared ambition and collaboration across industries," explains Kyriakos Triantafyllidis, Head of Growth and Strategy, Centre for Advanced Manufacturing and Supply Chains at WEF.

While circularity contributes to resilience and revenue growth, companies may need to refocus their priorities.

With tightening resources and rising costs, the need for efficient circularity is growing.

By establishing strong partnerships and understanding regulations, organisations can advance their circularity goals forward.