Circular Supply Chain Management (CSCM)

Geissdoerfer et al. [60] (p. 714) define “the configuration and coordination of the organizational functions marketing, sales, R&D, production, logistics, IT, finance, and customer service within and across business units and organizations to improve operative effectiveness and efficiency of the system and generate competitive advantages.” Circular supply chain management (CSCM) offers a compelling perspective that includes the vision of a zero-waste economy and the restorative and regenerative cycles designed based on circular thinking.

For this restoration and regeneration of materials to achieve the vision of zero waste, business model and supply chain designs must be adapted with the participation of a wide range of stakeholders [27]. For them, distributors must be considered from a broader perspective, since they are no longer considered only as the company's suppliers—closed-loop—but also as others in the same sector—open-loop, same sector—and even in other sectors—open-loop, cross sector [61]. Decision making in supply chain management should be done with the estimation of different types of costs. This estimation generally depends on several factors that make up the supply chain [62], which will be analyzed from the main theoretical perspectives in strategic management literatures.

Theoretical Perspectives in Strategic Management Literature

The resource-based view (RBV) [63–65] contributes to a better understanding of how the company as a whole works, as well as the resources and competencies fundamental for the company to redesign its operations in response to a change in competitive conditions. "Companies need certain dynamic capabilities and organizational routines to deal with the increased complexity of managing innovation from a sustainable perspective" [66] (p.225). The capacities, routines, and resources included in the business model must allow, on the one hand, the detection of opportunities with the objective of obtaining valuable knowledge about the business habitat [67], and on the other hand, seizure through organizational capacities to take advantage of recognized opportunities and create value from them [68]. Both must achieve the implementation of new products, services, or processes [66]. Therefore, “RBV is considered as an adequate theoretical framework to understand whether specific resources applied to the CE by businesses are relevant for closing production loops without affecting the level of competitiveness” [69] (p. 3).

Industrial ecology (IE) can be defined as a policy with the aim of reducing the amount of waste creation by examining the flows of materials and energy in industrial systems as closing the material flow loop efficiently [70,71]. “The IE enables understanding how the industrial system works, how it is regulated, and what interactions it presents, to restructure it in order to make it similar to natural systems” [72] (p. 2). For all that, circular supply chain incorporates concepts and ideas from IE.

The agency theory will also condition how it operates, since the company (who act as principal) must ensure that the different primary stakeholders (customers or suppliers) will behave in accordance with the contractual terms established. These terms should enable the achievement of business objectives related both to the provision of sustainable services and to the sale and recovery of products at the end of their useful life [31,73]. It must therefore consider temporal aspects that would be related to the technical life of the product and the duration of the cycle of use of the same one [72]. The value chains can be mapped to visualize the linkages and interactions between the different stages and chain actors to understand the complexities of such multi-actor systems and make informed decisions regarding the coordination and balance among stakeholders of a supply chain [74,75]. For this reason, [45] consider that greater intensity is required in the relationships established in the supply chain and with customers. It implies a change of focus, focusing on the life cycle of the product and not on the quantity of the product produced.

Strategic networks are stable inter-organizational links which are of importance to the company and which express these links through various forms, such as strategic alliances or long-term buyer-supplier partnerships [76]. The network perspective is of great relevance for understanding value creation in the circular economy due to the importance of the networks that are formed between companies, their suppliers, their customers, and other relevant partners [60].

The configuration of the network in terms of density and centrality [77] and the importance of governance mechanisms such as trust. Other sources of value in strategic networks include shortened time to market [78], enhanced transaction efficiency, reduced asymmetries of information, and improved coordination between the firms involved in an alliance [76]. It seeks “to change organizational mindsets to facilitate collaborative knowledge development and sharing, the creation of shared visions, and collaborative value propositions” [79] (p. 23).

In the context of institutional theory, companies incorporate social legitimacy through adopting the norms and social traditions predominant in their environment [23]. Powerful institutions have an option of implementing policies which boost organizations and the population to adopt a practice [80]. The environment of the circular economy is governed by new rules and customs that revolutionize social, cultural, and political models.

From the main theoretical perspectives of strategic management literature, we propose four main dimensions that would allow us to classify the main factors found in the literature review (Figure 3). In the following sections we will carry out a detailed analysis of these dimensions and their variables, to finally propose a conceptual model to support the design and implementation of circular supply chains.

Conceptual model for circular supply chains

The current competitive environment requires companies to be innovative in their production systems and to rethink the current use of resources and waste management. Circular productive systems must produce higher yields by using fewer resources, but also entail fewer emissions [106]. This circularity also extends to companies' supply chains, because of the key role it plays in their performance. Therefore, the adaptation of supply chains to the paradigm of the circular economy is attracting the interest of researchers.

This entry is adapted from the peer-reviewed paper 10.3390/su12062459