Circular economy as an enabler of improved resilience and material availability in supply chains

The simultaneous worldwide disruptions in the 2020s have shown how vulnerable global supply chains can be. The disruptions have negatively affected companies that have been dependent on global suppliers in particular. Simultaneously, there has been a trend towards a green transition to fight climate change. One recognised and widely studied way towards a green transition is the circular economy (CE). The main principles of the CE include using the products as long as possible, repairing them, remanufacturing them to be like new, and using materials from used products to make new ones. The CE has already been studied, but it is not yet totally mature model and contains various economic and environmental challenges. Therefore, it is important to understand what are the current limitations of the CE and for what types of products the CE is applicable.

In this dissertation, the opportunities of the CE to develop local material flows and supply chain resilience (SCRES) are explored. SCRES refers to a supply chain’s ability to tolerate disruptions and recover from them to a functional state. The dissertation shows that, with the CE, local material availability and SCRES can be improved for some products. These products include, for example, heavy vehicle components manufactured in relatively small production batches. Another example is an electric vehicle battery (EVB), which can be repurposed after the original use for other applications such as energy storage. According to the study, the CE is applicable for expensive and highly specialised products with high residual value, and for products with limited availability of materials.