By effectively handling the return delivery aspect of the supply chain, it can significantly reduce the volume of products destined for landfills. The promotion of recycling and reusing is not just an environmental win; it also makes excellent business sense
In our rapidly changing world, the need for sustainable practices in supply chain management has never been more pressing. As the global e-commerce industry continues to grow at a rapid rate, it's crucial that we find innovative ways to reduce waste.
Circular warehousing is a transformative approach to supply chain management. At its core, it aims to keep products, materials, and resources in circulation for as long as possible, significantly reducing the need for new resource extraction and minimising waste generation.
To adopt a sustainable approach, it is important to understand some key aspects and benefits of circular warehousing and why it's becoming a beacon of hope in the world of supply chain management:
Reverse Logistics:
The global reverse logistics market was estimated at USD 731.30 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 9.4 percent from 2023 to 2030. According to Invest India, the Indian e-commerce sector is expected to reach a gross merchandise value of USD 350 billion annually by 2030, and with that comes an increased frequency of returns and replacement items, necessitating a reverse logistics service.
In a future centred around e-commerce where product returns from customers are rising, retailers face a problem. Managing returns, recycling, and repurposing of products is a fundamental component of circular warehousing. By effectively handling the return delivery aspect of the supply chain, it can significantly reduce the volume of products destined for landfills. The promotion of recycling and reusing is not just an environmental win; it also makes excellent business sense.
Inventory Optimisation:
Over $163bn worth of inventory is discarded each year due to expiry or overproduction, according to the report by Avery Dennison. Inventory optimisation within the framework of circular warehousing involves the meticulous application of advanced inventory management techniques.
The primary goal is to strike a delicate balance between supply and demand, ensuring that companies neither overproduce goods nor maintain excessive inventory levels. By further modifying this equilibrium, businesses can more accurately align their production with actual market demands, thus minimising the risk of overproduction. Furthermore, excessive stockpiling often leads to increased waste due to spoilage, expiration, or simply a lack of demand for outdated products.
The implementation of a sophisticated inventory optimisation strategy leads to an uncluttered and well-managed storage facility that not only streamlines operations but also reduces the overall environmental footprint of the business, requiring less physical space and, consequently, lower energy consumption for storage and maintenance. It aligns more closely with actual market demand, improving resource utilisation and enhancing the overall sustainability of supply chain operations.
Collaboration: What drives circular warehousing?
In the realm of a circular economy, collaboration stands as a cornerstone, and circular warehousing embodies this collaborative essence. It urges fostering a collective effort among manufacturers, retailers, logistics providers, and recycling facilities.
This collaborative endeavour aims to establish what are known as closed-loop systems. Unlike the traditional linear approach, where goods move from production to consumption and often end up as waste, closed-loop systems reintroduce the concept of "waste" into the production cycle.
The harmonious collaboration among these entities is fundamental to the success of circular warehousing. Together, they strive to reshape the traditional supply chain into a more sustainable, efficient, and environmentally friendly system that promotes resource conservation and minimises waste. This collective effort is pivotal in realising the potential of a circular economy and in building a more sustainable future for all.
So, what can we do to make circular warehousing a reality in our businesses?
A shift in mindset is key. We must recognise that a more sustainable future is not just a choice but a necessity. By implementing circular warehousing principles, we can be part of the solution to some of the world's most pressing environmental and resource challenges.
It's a path to a brighter, more sustainable future—one in which waste is minimised, resources are conserved, and businesses thrive. As the winds of change continue to sweep through the supply chain landscape, circular warehousing stands as a beacon of hope and a roadmap to a more sustainable future. It's time to embrace this transformative approach and pave the way for a brighter, more circular tomorrow.
(Sandeep Chanda, Managing Director, India, Panattoni.)