International Journal of Applied Engineering Research ISSN 0973-4562 Volume 13, Number 9 (2018) pp.

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Key Issues and Challenges in Circular Supply Chain Management

Implementation- A SystematicReview
Manju Saroha1, Dr. Dixit Garg2, Dr. Sunil Luthra3
1,2
Department of Mechanical Engineering, National Institute of Technology, Kurkushetra, India
3
Department of Mechanical Engineering, State Institute of Engineering & Technology,
Nilokheri, Haryana, India

Abstract: friendly and economically sound supply

Circular supply chain management is recent chain for circularity in Indian context.
innovation for saving resources and
reducing waste in supply chain of any Keywords: Circular Supply Chain
industry. The word ‘circular’ stress upon the Management (CSCM), Challenges,
use of product again and again until it Literature review
consumed completely within the supply
chain. The concept of circular supply chain 1. Introduction
management has become more important In recent years, the circular supply chain
these days due to concern about model concept has been much discussed. It
environment, resource scarcity and increase is a concept of high profit generation in
of waste production. The main aim of the today’s environmentally aware and
study is to find out the key issues and conscious ways. In late 18th century, the
challenges related to adoption of circular linear model is working in which companies
supply chain management in India. Total 19 use raw material for manufacturing products
challenges have been found through the and sold them to customer and at last
systematic literature survey. From these products are disposed of for land filling. Due
challenges 5 challenges are external and 14 to this, raw material is in demand
are internal challenges which affect the continuously. In 2010, approximately 65
circular supply chain management billion tones raw material used by the
implementation in India. The results may industries for production system. This gives
help in establishing the environmental resources scarcity as well as environmental

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impacts, climate change; natural habitat and economy (McDonagh 2002, Frances and
destruction and generation of waste are also Minner 2007).
considerable problems. There is only one A lot of barriers and challenges are also
solution of all these issues that is circular there in implementing the circular supply
model in supply chain in place of linear chain model in organizations. Therefore,
model (Ellen MacArthur Foundation, 2013). there is a need of systemic approach for
In production system, most of the industries utilization of the resources, power and other
have been of interest for resource efficiency resources by reuse, recycling and
such as Just in time, six sigma and lean remanufacturing. On the other side due to
production strategies adoption. These advantages of the circular model, many
strategies have a goal to minimize resource studies are there in literature in different
use and elimination of waste generations. sectors like construction, manufacturing,
Circular supply chain is a model in which supply chain , services and so on (Zhu et.al
complete product is considered as a precious 2010; Tukker 2015; Lieder and Rashid
resource that should be handle with care 2016). But there is some gap in literature on
from cradle to cradle. It should consider not challenges and practices in implementation
only within the supply chain, but also in of circular supply chain management model.
selection of raw material, consumption and By consideration of all, this paper aims to
disposal of product etc. Green and focus on challenges identification in case of
sustainable SCM tries to integrate circular supply chain management
environment into organization for implementation by systematic literature
sustainability by reducing use of material review. The paper has five sections; Section
and environment effect of activity of 2 includes the methodology. Section 3
production (Srivastava 2008, Sarkis 2011, reviews the literature on CSCM and
Dong et.al. 2014). Circular supply chain identifies key issues in its implementation.
model emphasized on the way of Section 4 identifies challenges to CSCM.
transforming the material into product by Section 5 provides discussion on the
keeping view of balance between ecology findings with its implications. Finally, last

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section provides concluding remarks with according to publication year,

future implications of research. methods/techniques used and area of
industry’s geographic context.
2. Methodology
Literature survey plays an important role for For collection of data, various search
publication of papers in journals. Literature engines were used, year wise search of
review has main objectives that are to papers from 2000-2018 has been done by
summarize the existing data and to develop taking related keywords like ‘circular supply
theory process for study. Literature review is chain’, ‘barriers’, ‘challenges’,
nothing but a content analysis. This study ‘Remanufacturing’, ‘reduce’, ‘reuse’ and
adopted a method of literature collection in a ‘recycling’ for gathering publication,
systematic manner (Quarshie et.al. 2016; research in titles, keywords and related area.
Jaegler et al. 2017). A systematic literature 56 papers will be examined for
review is to get objective, quantitative study consideration of the publication year wise,
and systematic analysis of published data. method/ technique used and location of
However, the focus in this study is to industry after reduction of literature from
identify the challenges regarding adoption of selection criteria. The analysis of these
the circular supply chain management. The references clarified the key challenges in
various steps for systematic literature review implementation of CSCM. We found
are:- various challenges, which hinder the
1 Collection of data: - To establish the implementation of circular supply chain
criteria and select the right papers for the management.
study
2 Descriptive Analysis: - To search for 3. Background & Key Issues in
other potential papers and evaluation CSCM
of papers related to the field of The word ‘circular’ in supply chain means
research the circulation of materials and resources for
3 Evaluation of the material: -To reduction in waste which has been noticed
analyze the assembled papers by many researchers (Lacy and Rutqvist

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2015; Genovese et al. 2017). Supply chain supply chain management operations play
operation is an important element to move an important role in moving towards circular
forward for circular supply chain activities at all levels of 5R’s within supply
management (Genovese et al. 2017). chain. The general characteristics of circular
Researchers have worked on various areas supply chain model proposed as: less
of operations related to supply chain like consumption of energy, less emission of
reuse (Atasu et.al. 2008), remanufacturing pollutants and high rate of efficiency UNEP
(Östlin et.al. 2008), recycling (Papachristos (2006). Hu et al. (2011) emphasized that the
2014) and reversed logistics (Govindan et.al. circular model in supply chain needs to be
2015). Circular supply chain research is less resource utilization.
theoretical and practical knowledge in the Circularity within supply chain operations is
related fields (Nasir et al. 2017; Genovese et considered as a meaningful idea to
al. 2017). enhancing business profits and
Circular supply chain is defined as an environmental issues. CSCM are closely
industrial concept that is regenerative by related to sustainable supply chain (Winter
design (Ellen MacArthur Foundation 2015) and Knemeyer 2013; Ahi and Searcy 2013).
in which the flow of materials, energy, man Reefke and Sundaram (2016) investigated
and information is a closed cycle so that the that circularity is associated with the ideas
economic development and environmental of planning, coordination, execution and
protection are balanced. There are two types collaboration, and related research
of cycles: one is to return back of resource opportunities by the use of renewable
in the biosphere safely called biological resources. Till now, sustainable supply chain
nutrients cycle and second is to circulate management, its theories and applications
through whole life activities until consumed are not acknowledged (Carter and Liane
completely called technical nutrients cycle Easton 2011; Lambert and Cooper 2000;
(Ellen MacArthur Foundation 2012). Reefke and Sundaram 2016; Winter and
‘Reuse, Reduce, Recycle and Recover’ ideas Knemeyer 2013). Operations of supply
are essential content of a circular supply chain need to change from a linear to a
chain model (Murray et.al. 2015). The closed-loop model for increase in circularity.

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Closed-loop supply chain management is a (2) Slow down the cycles that mean
model that aims to redesign, monitoring, and using resources for maximum time
resource utilization to maximize value duration as possible.
creation for whole life cycle of a product (3) Reduction of waste at each and every
with recovery of product value (Guide and step of the product life cycle.
Van Wassenhove 2009). (4) Reuse, Reduce, recycle and recover
Closed-loop supply chain is highly the resources.
important as a revenue approach (Guide and
Van Wassenhove 2009). Jayaraman and 4. Challenges in implementation of
YadongLuo (2007) studied its value chain CSCM
strategies; Guide and Van Wassenhove Various researchers have discussed the
(2009) explored the business perspectives of challenges that are relates to the adoption of
closed-loop supply chains; and Govindan the circular supply chain management.
et.al. (2015) reviewed the reverse logistics Challenges may be situated internally and
systems for closed-loop supply chains. externally in environment to the industries.
Govindan, Soleimani, and Kannan (2015) The challenges are classified according to
investigated a review on reverse logistics placement of barriers in either internal or
and closed-loop supply chain, and found the external environments. The results for
need for more related studies. Summarizing challenges are shown in Table 1. From the
from literature (Hu et al. 2011; Murray et.al. 19 identified challenges, 5 are external and
2015; Ellen MacArthur Foundation 2012, 14 are internal environment related. These
2014, 2015;Nasir et al. 2017; UNEP 2006), are
circular supply chains have some
characteristics, that are: 4.1 Governmental challenges
(1) The internal cycles are more  Lack of vision
important than outer cyclethat means  Lack of laws and policies
reuse and recover comes before  Lack of system standardization
recycling.
4.2 Financial challenges

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 Higher investment cost  Lack of structure for CSCM

 Lack of funding
 High production cost 4.6 Framework challenges
 Ineffective framework and models
4.3 Technological challenges  Lack of avoidance supply chain
 Lack of knowledge
 Lack of follow up of product in 4.7 Social challenges
recycling  Lack of passion towards CSCM
 Lack of information sharing  Negative thinking about
reused/recycled products
4.4 Knowledge and skill challenges
 Lack of awareness 4.8 Market challenges
 Lack of skilled workers  Lack of standardization for
refurbishment products
4.5 Management challenges  Lack of availability of reuse products
 Lack of support of top management

Table 1: Challenges identified in implementation of CSCM

S. CHALLENGES SUB CHALLENGES Internal/ REFERENCES
NO. External
1 Governmental challenges Lack of vision E Pan et.al.(2015)
Lack of laws and policies E Su et.al.(2013)
Lack of system standardization I Su et.al.(2013)
2 Financial challenges Higher investment cost I Lieder and Rashid
(2016)
Lack of funding E Su et.al.(2013)
High production cost I Shahbazi et.al.(2016)
3 Technological challenges Lack of knowledge I Genovese et.al. (2015)
Lack of follow up I Genovese et.al. (2015)
Lack of information sharing I Su et.al.(2013)
4 Knowledge and skill Lack of awareness I Lieder and Rashid
challenges (2016)
Lack of skilled workers I Liu and Bai (2014)
5 Management challenges Lack of support of top management I Liu and Bai (2014)

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Lack of structure for CSCM I Liu and Bai (2014)

6 Framework challenges Ineffective framework and models E Lewandowski (2016)
Lack of avoidance supply chain E Bartl (2015)
7 Social challenges Lack of passion towards CSCM I Liu and Bai (2014)
Negative thinking about I Genovese et.al. (2015)
reused/recycled products
8 Market challenges lack of standardization for I Weelden et.al.(2016)
refurbishment products
Lack of availability of reuse products. I Weelden et.al.(2016)

5. Discussion of Findings as only recycling cannot implement

From the study, there are many challenges effective circular supply chain management
for industries to adopt a circular supply as export and import process play an
chain management. These are mainly important role in implementation of CSCM.
governmental, financial, technological, Secondly, Lack of standardization for
knowledge, social, management, framework refurbishment products has limited
and market based challenges. Lack of awareness in the today’s market. Lack of
Government unwillingness to take initiatives technical abilities and skilled worker are
and lack of vision for circular supply chain knowledge and skill challenges (Liu and Bai
managementare considered as most 2014).
important challenges (Pan et. al. 2015). Lack of technical abilities of worker and
Government and financial support is lacking quality of product create difficulties in
that are banks schemes, tax reductions and development of smooth functioning for
incentives which creates problem in refurbishment. These facts are not
adoption of circular supply chain considered as important as others among
management (Su et al. 2013). Higher authors, consumers and industries in the
investment cost is also plays an important refurbishment process. Industries fail to
challenge for implementation of circular acknowledge the value of refurbishment in
supply chain management (Lieder and implementation of circular supply chain
Rashid 2016). Outsourcing of the product by management (Weelden, Mugge, and Bakker
developed nation from developing countries 2016). Technology requires thatproducts
also helps in outsourcing the waste. Firstly, should be such that which we can easily to

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be recycled or remanufactured that means refurbishment products. Lack of knowledge

complex design should be avoided. On the on refurbishment products makes it an
other hand, requirement of the customers important barrier which makes consumer’s
force the manufacturers for unique and will to buy refurbishment products is main
specific product (Kang and Hong 2010). The objective in successful implementation of
study reveals that only 16.70% of the society circular supply chain management
had heard of the circular supply chain (Genovese et.al. 2015). Out of total 19
management that means there is still a need challenges, 5 challenges are external and 14
for awareness, training program to educate challenges are internal challenges. All of the
the society about the circular supply chain challenges categorized in 8 main challenges
management(Lieder and Rashid 2016; Su et category that are governmental, financial,
al. 2013). technical, knowledge, management,
There is a need of awareness among society framework and model, social and market
by strategies, framework and new ideas to challenges.
change the opinion about refurbished
products as they have negative thinking 5.1 Managerial implications of
about these products (Genovese et.al.2015; research
Khor and Hazen 2017). Lack of support of The study contributes to the research in area
top management and lack of structure for of circular economy development and
CSCM are the challenges come under implementation of circular supply
management challenges (Liu and Bai 2014). chainpractices. Study proposed an initial
Lack of passion towards CSCM is another framework to understand thechallenges in
social challengein which passion for circular implementation of circular supply chain
activities is limited among customers and management. We developed a set of
society (Liu and Bai 2014). challenges and sub challenges to researchers
Literature result shows that due to a higher that may help further research. This research
sensitivity of risk and a lower sensitivity of is also relatedto industry practices by
quality for refurbishment products, overcoming the challenges encountered by
consumers show a lower WTP for the organization in adopting circular supply

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chain management. To implement CSCM, it outcomes and their relationships with the
is necessary to identify CSCM challenges. identified challenges may also be revealed
In this study we have identified 19 For future studies, the hierarchical
keychallenges, which hinder the relationships and casual interactions among
performance of CSCM. The practitioner identified challenges by using Interpretive
needs to concentrate on these challenges Structural Modeling (ISM), Decision
more cautiously during implementation of Making Trial and Evaluation Laboratory
CSCM in their organizations. Model (DEMATEL), Interpretive Ranking
Process (IRP) or other Multi-Criteria
6. Conclusion, Limitation and Decision Making (MCDM) methods like
Further Research Potential Fuzzy-Analytic Hierarchy Process (AHP),
This research provides a quick review for Technique for Order of Preference by
challenges related to CSCM. From Similarity to Ideal Solution (TOPSIS)and
reviewing a random sample of the available others may be analyzed.
literature review, this research provides key
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