Circular Value Chains
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Circular Economy

Circular value chain collaboration

To achieve the transition to a circular economy, companies need each other. A circular economy depends on more than just a product designed for circularity. In a circular economy, products are repeatedly used, well-maintained, and repaired when necessary. If a product is no longer viable, the goal is to achieve the highest possible recycling. To accomplish this, various links in the chain must collaborate.

Collaborating on a circular supply chain

When it comes to the collaboration of different parties in circular activities, the term “circular supply chain collaboration” is often used. This is a form of collaboration between companies with different roles in the supply chain. The supply chain consists of all the steps necessary to create a product, use it, and process it after disposal. Circular chain collaboration aims to jointly perform activities that directly or indirectly lead to reduced consumption of (new) raw materials and the prevention of waste. These actions reduce the environmental impact of the supply chain and limit risks.

Every supply chain is different: different rules apply, there is a different market dynamic, and there are different trends. Therefore, supply chain collaboration is always tailored. However, there are factors common to all supply chains. Knowing each other and developing mutual trust play a significant role, as does defining (and documenting) the various roles of the parties involved.

Condition for success: Reciprocity

Collaboration succeeds only when parties engage in a meaningful process that takes into account everyone’s interests. Therefore, the various interests within the value chain should not be ignored; instead, parties should empathize with each other’s interests and come up with solutions that benefit all parties, with respect and sincerity. When value chain partners are interdependent, this encourages reciprocity (Jordans, 2016).

Condition for success: Trust

In any partnership, there is the possibility of failure and opportunistic behavior, where one partner takes advantage of the weaknesses that other partners may have. To minimize the chance of failure and opportunistic behavior, partners must build “assurances.”

We can distinguish two types of assurances. The first type is based on formal agreements, often called “contracts,” while the second type of assurances is based on trust. Trust increases when parties communicate, interact with each other, and share past experiences, allowing them to get to know each other better (Jordans, 2016).

Collaboration agreement

What agreements are needed? How do we ensure mutual trust? Which working method is suitable? These were the questions posed by Clothes the Circle, a network of independent entrepreneurs working together on a functional business case for circular textiles. Together with a legal expert, the method of conscious collaboration (also known as positive contracting or conscious contracts) was used to reach good agreements. The step-by-step plan of this approach is shown in the adjacent diagram.

Download ‘Stappenplan Commerciele samenwerkingsafspraken MVO NL’ (pdf, 911 kB)


Condition for success: Transparency

The word “transparency” means “openness” or “willingness to share information” in this context. Transparency and sharing information are two sides of the same coin, but there is a slight difference. Unlike sharing information, which is an active process, transparency can also be seen as a passive component embedded in the organizational culture.

Transparency allows for the exchange of information and is vital for the overall functioning of a circular value chain. Transparency and sharing information build trust because they show that partners have nothing to hide, and one party does not know more about an issue than the other (Jordans, 2016).

Supply chain or ecosystem?

In the circular economy, a closed loop within the existing chain can be established, but increasingly, secondary streams are seen being purchased or disposed of in other chains. These can also be chains that are far from one’s own industry, an example being the use of lignin from the paper industry for asphalt in road construction.