Getting Procurement Ready for the Circular Economy


The concept of the circular economy is garnering increasing traction among business and political leaders. Next week on Feb. 18 at 1 p.m. CST, I’ll be debating the merits of the circular economy – I’m not entirely a believer just yet – during a webinar with TradeShift’s Christian Lanng, a more stalwart proponent of it. (Register for the event here.) As part of the discussion, I’ll plan to share a few thoughts on what the concepts of it may bring to procurement – whether you agree with the concept or not.

In short, we can best describe proponents of the circular economy as lean thinkers that radically aim to eliminate waste at as many points as possible in the transference of goods and services (my definition – not the “textbook”). Of course, this involves reuse and refurbishment (i.e., eliminate as much waste – literally and physical), but it also includes creating as much general leverage between trading partners (and customers) as possible in order to cut down on the creation of new goods and services from raw materials. The circular economy blows up the concept of a linear multi-tier supply chain and instead replaces it with – you guessed it – circles.

So what does this mean for procurement at the end of the day? A few things:

  • We better get used to managing for lifecycle cost rather than unit cost (or even basic total cost)
  • Understanding and accounting for waste at all levels of the supply chain will be critical (as well Six Sigma skill sets)
  • Designing out waste from the start (e.g., demand management, better specification of up-front requirements, etc.) will be critical
  • We must “green-up” on CSR-related initiatives and plan to report a ton of nice metrics to prove we’re circular (even if some of these initiatives, such as the use of hybrid or electric vehicles, are potentially not even greener).
  • And much more!

Join Christian and I next week as we:

• Define the circular economy
• Debate what it is (and isn’t)
• Explore why procurement and supply chain practitioners should care about it
• Argue over which types of companies and procurement organizations are likely to get run over by it
• Delve into the role of technology (new approaches to P2P, supplier management, supply chain and sourcing strategies)
• Explore the role of SaaS/cloud and network/platform solutions
• Help you sound smart: tips and checklists for the rest of your team

No time to listen in on the webinar? Register and get the slides and a link to watch the full webinar at your convenience. Sign up here.

First Voice

  1. dennis tan:

    what is circular economy ?

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