Toward a circular supply chain: The enabling role of information and financial flows in open and closed loop designs

Abstract

Paramount to the transition to the circular economy is the transformation of existing supply chains. We build on the theory of the supply chain to study circular design features and the enabling role of information and financial flows needed for circularity. We study five exemplars for environmental leadership to illuminate how material flows are enabled by information and financial flows to leverage cross-industry waste flows (i.e., open loops) and customer returns (i.e., closed loops). While both open and closed loop designs can lead to a bottom-up transition towards the circular economy, there are differences in the enabling role played by outward and inward information flows. Further, we unpack the supporting role of inward and outward financial flows toward customers, suppliers and non-supply chain stakeholders for creating a viable supply and demand circular market and a wider community in which circular supply chain can be embedded.