Strategic Sourcing for Circularity

Trend Definition 

What is the essence of this trend? What is its impact? 

• Essence: Strategic Sourcing for Circularity aligns procurement activities with the principles of circular economy by considering multiple lifecycles of a product in sourcing processes 
• Impact: Circular sourcing decreases carbon emissions and waste, moreover, it increases availability since the dependence on goods imported from suppliers around the globe is reduced while requiring higher efforts in the procurement process

Trend Drivers 

Why is this trend emerging now? What’s changing? 

• Ecological Consciousness: Increased stakeholder awareness drives a shift towards sustainable practices, requiring businesses to align with eco-friendly procurement and lifecycles 
• Regulatory Pressure: Government regulations require producers to take responsibility for products going beyond the use phase, moreover, minimum shares of recycled content used in production are introduced by the authorities 
• Cost Efficiency and Resilience: Circular strategies reduce material footprint, driving long-term cost advantages through reduced emissions and lower demand for virgin material

Use Cases 

How to apply this trend? 

• Subscription-based Product Usage: Regularly swap old products with new ones
  Example: On has developed its Cyclon program, here, customers subscribe to the program and can obtain new shoes every six months in exchange for their old ones which are recycled and commercialised again, requiring procurement to only buy the material of shoes lost in the cycle 
• Circularity in the Tech Industry: Sourcing used aluminium 
  Example: Apple sources 59% of its aluminium from recycled materials, some products even contain 100% of recycled material, which requires procurement departments to ensure phasing-out contracts with virgin material suppliers

Procurement Relevance & Response Strategies 

How should Procurement adapt its Processes, Organisation, and Strategy?

• Circular Design Collaboration: Work with product design and engineering teams to ensure that circularity principles are integrated into product design 
• Flexible Contracting and Supply Chain Partners: Procurement teams must have emergency contracts in place in case they fail to ensure sufficient supply from circular sources, moreover, suppliers and partners must ensure certain degrees of circularity