LETTERS: Previously, our industrial supply chains were conventional and linear. They followed the usual logistics procedures for product movement (supplier-manufacturer-distributor-customer) in which the products were used to the maximum extent and thrown away as waste.
This produces billions of tonnes of waste. To stop this, effective integration of standard supply chain and reverse logistics is done to create a closed-loop functionality.
In this, a product will be used to its full potential and later retrieved from the consumers and sent for recycling, refurbishing and reuse.
Nowadays, customers' purchasing perceptions are gradually changing, and they are becoming more environmentally conscious, wanting to buy environmentally friendly products.
For example, the consumer electrical and electronics giant Phillips has adopted the Product as a Service (PaaS) strategy in Southeast Asia.
The main idea behind PaaS is to allow users to enjoy their products for a period and then retrieve the items for recycling and reuse.
Other retail giants, like H&M, have adopted this strategy as well and invested heavily in recycling plants. Tesla is doing wonders in the circular economy by recycling 90 per cent of its products.
Meanwhile, Dell is using 50 million pounds of recycled materials and recovering two billion pounds worth of e-waste.
This method of value generation allows a definitive and more impactful branding and sales in the retail market, where products are labelled "Eco-friendly".
The closed-loop supply chain works as per the circular economy (CE).
CE allows firms to increase their business performance, reduce waste, widen public perception and develop new government policies, and enhance customer loyalty. Nevertheless, CE is just a micromodel and does not capture the macro world.
A new economic model that is known as the Doughnut Economy has recently evolved and elevated the circular economy by considering the necessities of a complex society and other planetary boundaries.
This new philosophy was first coined by English economist Professor Kate Raworth. She argues that a better economic model should consider not only revenue generation but also human wellbeing.
The Doughnut Economy assumes a balance of resources and life-sustaining systems. Given the state of the world's resources, it would be fantastic if this economic model was incorporated into government programmes.
This economic paradigm is largely concerned with preserving natural resources by reducing human consumption and generating opportunities to rethink and redesign how we produce and consume.
Its principal goal is to prevent climate change, ozone depletion, ocean acidification, toxic waste and land loss.
According to this theory, the challenge for humanity in the 21st century is to meet everyone's needs while operating within the limits of the planet's resources.
In other words, we must ensure that no one goes without the necessities of life (food, shelter, technology, healthcare and democratic influence), while not collectively overburdening Earth's life-supporting systems, on which we rely so heavily — such as a stable climate, fertile soils and a protective ozone layer.
This value-driven Doughnut Economy Model with social and planetary boundaries serves as a compass for human progress in the 21st century.
Dr Ahmed Zainul Abideen
Doctoral Associate, Institute of Business Excellence, Universiti Teknologi Mara (UiTM)
Professor Dr Jaafar Pyeman
Director, Institute of Business Excellence (IBE), UiTM
Professor Dr Veera Pandiyan Kaliani Sundram
Faculty of Business and Management, UiTM; president of Malaysia Logistics and Supply Chain Association
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times