How Do Managing Operations and Supply Chain?
The dependence of a business on resources is not an unknown fact in context of business management. Research studies as well as literature have provided substantial indications towards the trouble that lies ahead for business organizations in the long run owing to the limited quantity of resource available for business. The consistent expansion of the ecological footprint of the world has led to the profound concerns pertaining to regeneration of the natural resources as well as ensuring sustainability. It can be profoundly noted that the linear framework for consumption and utilization of resources leads to the chances of detrimental risks for businesses as well as societies.
One of the prominent examples that could be cited in context of the utilization of resources is the consistent depletion of precious metals from the earth crust due to the continuous mining that has been ongoing for almost 250 years (Bichou, Bell & Evans, 2013). The limitations of resources, increasing volumes of pollution and waste alongside the formidable growth in population are considered as detrimental aspects for the society. Furthermore, these factors are also responsible for negative impacts from the perspective of business organizations on their competitiveness, sustainability and profits. The concept of circular economy had been introduced several decades back albeit coming into notice recently in major business as well as political agendas (Carter, Rogers & Choi, 2015).
Circular economy poses as a promising alternative to the conventional linear economy through the specific characteristic of effective utilization of natural resources which is also responsible for decoupling the economic growth from scarce resources. The effective utilization of materials is accountable for promising advantages such as safeguarding the environment as well as creation of additional value (Carter, Rogers & Choi, 2015).
The creation of more value for business organizations through effective utilization of natural resources is facilitated through cost savings and the development of new markets as well as expansion of existing markets. Therefore business organizations have apprehended the necessity to assume circular economy as a source for long term competitive advantage, sustainability and security rather than a mere illustration of trust and reputation of the enterprises.
The company that has been selected in this report to describe the practical implications of the circular economy is Dell which is a prominently reputed name in the domain of consumer electronics. The company specializes in the provision of personal computers, laptops, computer accessories and tablet PCs with a wide ranging customer base comprising of general public as well as organizations. The organization was formed in 1984 and has come a long way to become one of the most recognized brand in the domain of computing equipment (Chiu & Choi, 2016).
The organization has been able to face competition from the notable names in the industry of computers with a notable achievement of being among the top three PC manufacturers in the world since 2001. The specific products which characterize Dell’s presence in the international computer industry include laptops which are improvised consistently on the grounds of better customer-device interface. PC models of Dell such as XPS have made a notable impression in the product lines of the company thereby implying the competence of Dell to sustain in the context of the industry of computers. Apart from the PC manufacturing sector, Dell is also recognized for a wide assortment of services such as storage solutions, systems management, OEM solutions and networking solutions which could cater the business management requisites of specific enterprises (Dobrzykowski, et al., 2014).
The services for businesses provided by Dell are complemented with the efforts of expert and certified engineers which lead to provision of application services, re-hosting and support services. Over the years, the reputation of Dell has been primarily attributed to the clientele which comprises of popular names such as Intel, Sapient, AMD, NASCAR, Seagate and Google. Therefore, the significance of circular economy could be evaluated in practical context of the company which would be indicative of the effectiveness of operations and supply chain management of the organization thereby contributing to the prospects of sustainability for the company (Grant, Wong & Trautrims, 2017).
The active involvement of organizations in large numbers directed towards the resolution of issues pertaining to sustainable development has been improving recently. The preferences of organizations to realize sustainable development could be supported by the favourable implications of circular economy which are largely characterized by the effective utilization of resources.
The effective utilization of resources refers to the activities of refurbishing, recycling and repairing of products and materials which could facilitate the option of attracting a sustainable future for the organization (Holweg & Helo, 2014). Prior to the analysis of supply chain and operational changes introduced by the circular economy in case of a real world organization, it is essential to apprehend the concept of a circular economy and the main principles associated with it.
The roots of circular economy could not be precisely apprehended since it cannot be attributed to a particular author or a specific origin date. However, the origins of the term circular economy could be traced back to 1970s owing to the efforts of innovators, academics and business personnel. The limitations of the linear economic model in realizing sustainability could also be associated with the concerns of increasing consumption that leads to substantial issues in the future.
The production model developed in context of linear economy has been associated with limitations pertaining to sustainability due to the worldwide accumulation of waste as well as the escalating demand for raw materials. Some of the profound schools of thought that are used for describing the generic concept of circular economy refer to blue economy, performance economy, regenerative design, industrial economy and natural capitalism (Ho, et al., 2015). The key principles which could be associated profoundly with circular economy refer to renewable energy, thinking in cascades, development of resilience through diversity and designing out waste. Developing diversity could enable organizations to ensure varying approaches to utilize resources thereby improving the resilience of the organization to uncertain circumstances.
The particular initiatives of organizations to find out the possible sources of waste generation and the amount of waste generated could be addressed through designing out waste. This would lead to the establishment of precise guidelines and controls for waste management thereby leading to the production of minimal volumes of waste. The requirement for dealing with the considerable depletion of finite resources could be addressed through the development of a new economic framework that could create value, facilitate profits alongside interconnecting the responsibilities intended for people, economy and the planet. The consistent surge in the activity of business managers and leaders in context of the development of collaborations and novel agendas that could address sustainable growth serves as an appropriate platform for the promotion of circular economy. Contemporary organizations face the considerable necessity to opt for a resource efficient economy in order to ensure sustainable profitability in the future (Kauppi, 2013).
The concerns of organizations could be complicated further due to the issues such as volatility of raw materials and future prices as well as complex customer demands and competitive disadvantage. The definition of circular economy has been widely discussed in literature and research studies pertaining to the same with varying perspectives. On a generic basis the circular economy can be characterized by engagement of stakeholders across a wide assortment of industries that contributes to the stimulation of supply chains that can ensure maximum utilization of resources as well as value throughout the lifecycles of the resources. It is also essential to observe the environmental, social and economic costs of goods and services since they are integral elements of circular economy.
The different aspects of circular economy are supported by the utilization of renewable resources, effective utilization of energy in production and delivery of goods and services, prevent negative impacts on water resources, safeguarding natural capital and minimizing the risks that arise in context of finite raw materials (Khajavi, Partanen & Holmström, 2014). These aspects are responsible for stimulating innovation as well as creating prospects for sustainability in long term growth.
The saturation that could be observed in linear consumption is liable for creating the need to form a novel economic framework. Furthermore, the strategic as well as operational benefits that are associated with circular economy create the need to reflect on the limitations of linear economy. Contradicting between the two types of economy could be apprehended as a profound element noticed in varying research studies and literature. The linear model of resource consumption as compared to a circular economy could be observed as a profound characteristic of industrial economy which has not changed considerably in the course of many years after varying levels of diversification and evolution.
Linear economy is associated with the implications of enterprises dealing with applications such as harvesting and extraction of materials that can be used for manufacturing specific products. The product is sold to a consumer and is then discarded after fulfilling its purpose (Krajewski, Ritzman & Malhotra, 2013). The expected figures pertaining to the investment of raw materials in the economic system by 2020 are estimated to be approximately 82 billion tonnes which is considerably higher than that of 2010 when almost 65 billion tonnes of raw materials were invested in the economic system. Supply disruptions and higher pricing of resources are the prominent risks for business organizations that have been identified in context of a linear economic system. The limited predictability of prices as well as the fluctuating increments in resource pricing has served as major pitfalls for business organizations alongside the stagnation of demand in particular sectors alongside the higher competitive intensity.
The contemporary economic scenario on a global scale can be characterised with the higher price volatility levels in particular segments such as food, metal and non-edible agricultural produce which was profoundly noted in the initial decade of the 21st century. Some other trends that can be noticed in context of linear economy could also validate the prominent implications for business organizations to prefer circular economy practices (Mafakheri & Nasiri, 2014).
The other indicators of inefficiency in the linear economic model refer to slower growth in agricultural productivity, risk to supply security and prominent issues pertaining to acquisition of valid opportunities to compete in certain local resource markets. Therefore, the concept of circular economy arises from the need perceived by managers in context of the pitfalls posed by linear economy (Markman & Krause, 2016). The prominent limitations of linear economy are catered by the circular economy through decoupling the revenues from material input. Furthermore, it is also imperative to observe the distinct benefits rendered by a circular economy especially in context of economy, environment and society which differentiate it as a promising alternative to the linear economy.
The considerable emphasis on the recycling and reuse of end of use materials and products has been the keyword for business enterprises in the recent years leading to the formidable presence of circular economy. A circular economy enables organizations to revise their supply chain and operations management frameworks alongside providing additional dimensions in the supply chain. Circular economy has become a promising opportunity for ensuring business organizations are suitable for the competition and sustainability concerns in the long term (McCormack & Johnson, 2016).
The considerable initiatives from major brands such as Nike and Renault in different industries for development of circular products and services are a notable indicator of the changes in supply chain and operations of the enterprises. The understanding of the revision in global supply chain networks owing to the inclusion of circular economy practices has been observed as a major theme of research studies and literature. Supply chain operations are characterized by the elements of costs and throughputs which are furthermore associated with the concerns of two way interactions in the downstream as well as upstream. The implications of circular economy on the supply chain management could be perceived explicitly in the adoption of lean supply chain practices which is itself a notable deviation from the conventional practices of circular economy.
Lean supply chain practices are characterized by systematic phases which enable the recognition of sources of waste and eliminate all forms of waste and can be applied in context of varying industries, organizations or supply chains (Qrunfleh & Tarafdar, 2014). However, the efficiency of lean supply chain practices is limited on the grounds of the factors such as disruption of global markets and price volatility which has to be addressed through flexible methods that can be capable of addressing the impact of consistent disturbance.
One of the profound aspects involved in the transition of conventional supply chain management to circular supply chain is associated with the extension of the time for which the material or product is used. Some of the examples of practices that could be observed in context of supply chain and operational management in a circular economy refer to the improvements in durability of products, production through assembling different parts of a product which can be reused later and increasing the consecutive cycles of repairing, recycling and refurbishing (Ross, 2015).
The apprehension of the distinct impacts rendered by circular economy in environmental, social and economic contexts could be complemented by the support of the driving forces for the circular economy. The notable driving forces for circular economy have been identified in the possible opportunities for growth facilitated by the same.
A circular economy is preferred on the grounds of beneficial outcomes such as reduction of waste, delivering higher competitiveness in the national economy, reduction of environmental impacts as well as the opportunities to address the concerns of resource scarcity. The characteristic identity of circular economy could be perceived in the particular aspects of circular design, core competences, circular design and factors for promoting cross-sector performance as well as cross-cycle performance and innovative business models. First of all, it would be essential to determine the economic opportunities facilitated by circular economy since it facilitates exploration of new and uncharted territories.
The reduction of waste involved in industrial chain could be accomplished through reusing materials to the maximum possible limits that contribute substantially to the reduction of costs alongside limiting the dependence of organizations on resources (Schaltegger & Burritt, 2014). Organizations could perceive that the benefits of circular economy are not limited to operational applications but also provide a strategic perspective which is aligned with the benefits of customers as well as the industry. Economic benefits are drawn primarily from the substantial net material savings, promotion of job creation and innovation opportunities, long term resilience in the economy, enhanced soil health and productivity of land and the depreciation in supply risks and volatility.
The estimates pertaining to the circular opportunities in product segments such as FMCG cite the prolific aspects of circular opportunities leading to approximately $700 billion of savings in net materials annually. The residence of more than half of the global population in urban locations is a profound indicator of the opportunities that circular economy can provide to the social aspect (Schaltegger & Burritt, 2014). The increasing urbanization is responsible for benefits for the costs of collection and treatment of end-of-use material and the asset sharing services. Apart from the social contribution in terms of job creation, circular economy is also characterized with opportunities for prominent impacts on environment as well. The particular emphasis on use of renewable resources, sustainable energy and the recycling of the materials could be assumed as a feasible indication of the reduction of ecological footprint of the organizations in a circular economy (Schönsleben, 2016).
The growth of the population on a global scale is indicative of a considerable rise in the share of middle class as well as the large scale reforms in consumption behaviour. The stance of Dell on the prospects of circular economy is clear as it has emphasized on the fact that every material holds significant value and the measures for designing out waste from the system. Furthermore, the organization is committed to ensure that the transition to a circular economy is characterized with flexibility alongside impinging on the aspects of productivity and effectiveness for customers (Simchi-Levi, Schmidt & Wei, 2014). The commitment of Dell to customers and the planet could be explicitly perceived in the culture of Dell and can be assumed as a core dimension of its business operations. Furthermore, it is essential to observe that Dell has leveraged its technical expertise and resources to contribute maximum benefits for the society, environment as well as economy.
A comprehensive review of the circular economy practices of Dell could be a viable opportunity to ascertain the economic, social and environmental benefits drawn by Dell alongside a promising impression of the circular supply chain of the organization. The core values of Dell have enabled the firm to maintain the emphasis on the complete lifecycle while designing products. The organization considers the distinct stages of product lifecycle such as reuse, recyclability and repairing in its product design to obtain the outcomes of flexible recycling options and smart material choices for customers. The closed-loop recycling of plastics is considered as a profound example of the organization’s initiatives to realize the circular economy activities in its operational framework (Snyder, et al., 2016).
The distinct stages of the closed loop recycling initiative of Dell include collection and recycling, sorting and shredding, mould and manufacture, assembly and shipment and the purchase and use. The closed loop recycling refers to the circular supply chain operations and the particular aspects of the recycling could be reviewed to obtain an impression of the environmental, social and economic footprint rendered by the organization. The closed loop recycling involves collection of plastic that has been recovered from technology which could be utilized again to improve the longevity of the plastics, reduction of costs and limit the carbon footprint. Furthermore, it can be perceived that Dell follows industry benchmarks and precedents to obtain certification of its circular supply chain practices and is one of the leaders in inducing circular economy practices (Swink, et al., 2014).
The analysis of the net benefits earned from the closed loop approach exhibit potential indications towards the comparatively superior benefits of moulded plastic rather than the virgin plastics (Yinan, Tang & Zhang, 2014). On the other hand, Dell has also extended the scope of circular economy beyond material choices and has implemented cloud services that are based on the principle of delivering technology to customers with the minimal use of resources. The concerns of access over ownership based business model which is prominently noted in circular economy could be observed in the applications of virtualization that enable customers to access newer technology without any requirement of ownership of new resources. Dell has been able to capitalize on technological features such as Internet of Things (IoT) successfully to obtain comprehensive integration of networking, cloud services, analytics, sensors and Big Data which could drive novel insights into the deployment of resources (Touboulic, Chicksand & Walker, 2014).
Some of the prominent examples of the initiatives of Dell to implement technology in realizing a circular economy could be observed in the smart grid technologies and The Pecan Street Project which are intended to communicate the intricacies of home energy usage in detail. The collaboration of Dell with Intel to set up the Internet of Things lab is a promising initiative for realizing circular economy practices that is characterized with the opportunities for customers to experiment with new ideas, solutions, product and software.
The initiatives for embracing circular economy followed by Dell are characterized with potential benefits for the enterprise, customers as well as the surrounding context of the organization. It is inevitable to consider that the circular supply chain followed by Dell in its production process is likely to generate profound benefits for the environment. The environmental impacts of disposing plastic waste generated from computers could be mitigated to a large extent due to the recovery and reuse initiatives followed in the circular economy practices. It has been estimated that the total volume of electronic waste generated in the year 2014 amounted to approximately 42 million tons and the predictions for the year 2017 are anticipated to be approximately 50 million tons.
The reduction of toxic chemical exposure and improvement in soil health could be held accountable as major environmental benefits of circular economy for Dell (Vos & Levering, 2016). On the economic front, the company could be able to obtain feasible reductions in costs of production alongside inducing opportunities for better product quality for customers. The improvement of product quality alongside ensuring minimal usage of resources is accountable for notable prospects in the economic aspect of Dell’s operations. The provision of the 2020 Legacy of Good Plan of Dell is considered responsible for the indications towards utilization of substantial volumes of recycled material as well as recovery of electronic waste (Yahaya, et al., 2017).
The prospects of job creation that are associated with the circular supply chain of Dell involve the employment opportunities in the recycling, recovery and re-fabrication concerns of the supply chain. Furthermore, Dell’s circular economy initiatives are also inclined towards promoting innovation in terms of technology from the perspective of industry as well as customers which is a viable social benefit (Yang & Wei, 2013).
Apart from the promising aspects that are noted in circular economy for enterprises across a wide range of industries, it is also imperative to apprehend the path of transitioning into a circular economy involving recovery operations, reuse processing, controls and data security. The report highlighted a theoretical perspective related to the concept of circular economy and described the practical implications of the same in context of a real world organization i.e. Dell. The report emphasized specifically on the circular supply chain and its impact on the environmental, social and economic contexts of an organization which expand the scope of understanding for the reader.
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