For the last few years, the industry has been talking about supply circles. In 2012, McKinsey released a study that explored the idea of circular economies and supply circles. As raw material prices increase and the volatility of the commodities market combine, businesses need to explore new, lower cost ways to obtain raw materials and recycle returned goods. You are most likely hearing buzz words like environmental sustainability, social environment, and the best way to increase profits when discussions of supply circle come up. For many reasons like these, businesses including 3PLs, are moving to supply circles.
What is Supply Chain?
Supply chain is the linear movement of the processes involved in bringing a product from production to distribution. It involves the physical flow of the product; this flow encompasses transformation, movement, and storage of both goods and materials. This is visible. The supply chain also includes information flows, which is especially critical to a successful supply chain. This includes all the supply-chain partners, as well as the day-to-day movement of the supply chain, and the coordination of long-term plans.
All superior 3PLs use supply chain to manage processes for clients and provide high visibility. A big part of that visibility is in applying the best tech. Electronic tracking, data collection, and data analysis are all vital elements of guaranteeing supply chain is as defect-free and cost-efficient as possible. That’s why applying supply chain efficiently results in reduced costs, reduction in risk, and higher customer satisfaction.
What is Supply Circle?
Supply circle factors in the entire reverse logistics process, which can be described as the forward and backward movement of the supply chain. This considers sustainability concerns in a world of ever-shrinking resources and energy, which can cause dwindling profit margins. The issue of supply and demand and how it can affect the global economic market is one of the reasons the federal government is pushing more towards supply circles. As the government creates regulations on reclaimed materials and constricts access to raw materials, supply circles (which include elements like material recovering and recycling) are becoming a much more seductive option when managing the product lifecycle.
Which Is Better For My Business?
As supply is threatened, supply circles become a more and more likely supply management option. If your business uses any amount of sustainable, recycled, or reclaimed materials in production, supply circles may be a good fit. Unlike supply chain, it better illustrated the flow back of these materials after client delivery (which is where linear supply chain usually ends). Also, as conservation and eco-friendly methodology are increasingly encouraged, supply circle seems to emerge as the champion over the supply chain.
Many trusted brands and companies are already singing the praises of supply circle. Apple, Dell, and Caterpillar are leading the charge toward supply circle, and with champions such as these, the tech needed to fully employ supply circle will surely follow. The question is, will you join them?