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inloop | Digital | Organization | Logistics | Circular Economy

Circular Economy opens up new business areas in logistics

Logistics has traditionally been geared towards the linear economy. However, to survive in the long term, logistics service providers must adapt to the circular economy. Today, the focus is on delivery, waste disposal, returns and, often, recycling. Tomorrow, these linear flows will be replaced by circular flows of goods. This means that materials and a wide variety of components will be fed into a recurring cycle. 

Future business fields in logistics

The circular economy will decouple future economic growth from resource consumption. Manufacturing companies are working on new product designs to use sustainable raw materials, as well as to easily replace components and separate the individual parts. Value chains will be extended through collection, inspection, repair and remanufacturing. 

Circularity creates new demands on logistics. After use, a product is reprocessed or returned to the cycle after being broken down into its individual parts at other points in the supply chain. Markets are emerging for pay-per-use models (e.g. presses, printing and milling machines in industry) or for spare parts. The original demands for raw materials and their procurement channels are reduced, while at the same time the circularity of goods is multiplied:  

  • Local and regional transport increases due to the commodity cycle 
  • Different product conditions require individual logistics services 
  • Bundling concepts of logistics providers can open up new customer groups 
  • Additional business areas in disassembly, reprocessing or repair arise in addition to storage and transport  

The complexity of logistics services in terms of transport and storage as well as value-adds (e.g. collection or sorting points, processing facilities or workshops) is increasing. Information exchange is therefore becoming the linchpin for logistics. The corresponding digitalisation is a necessity in order to bundle the data streams of the many process participants and generate the necessary information. Legal framework conditions, such as the Packaging Ordinance or the Supply Chain Sourcing Obligations Act, must also be taken into account.  

Circular economy influences the entire supply chain from the extraction of raw materials to the collection and return of goods.

How the transformation of logistics succeeds

For the transformation to succeed, it requires a rethinking of the supply chain and transparency within the flow of goods. Real-time information must be guaranteed between the interface partners. Unhindered, transparent and legally secure data transfer is becoming the basis of logistics. Smart contracts based on blockchain technology contribute to the management of interfaces due to the multitude of actors. The Circular Economy holds great potential for profitable, and at the same time, sustainable growth in logistics. 

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