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Powered by reverse logistics, circularity is redefining supply chain strategies by changing how companies design products, manage material flows, engage customers and comply with evolving government regulations.
A circular model keeps products, components and other materials in use longer by emphasizing reuse, repair, refurbishment, recycling and recovery. The result is a system that reduces waste, mitigates supply risk, lowers costs and aligns business growth with sustainability goals.
As global supply chains face ongoing disruption, material shortages, increasing costs and tightening environmental rules, circularity offers companies a practical framework to build resilience while meeting rising stakeholder expectations.
Circularity’s goal is to preserve the economic and functional value embedded in products and materials. A well-designed circular strategy reduces dependence on virgin resources, extends product lifespans and creates closed-loop systems where materials flow continuously back into production rather than being discarded.
Environmentally, circularity directly addresses climate change, waste generation and biodiversity loss by reducing emissions and minimizing extraction.
From a regulatory perspective, governments around the world are increasingly codifying circular principles into law, making proactive adoption a matter of risk management as well as opportunity. The EU has passed several directives and regulations that mandate circular-economy elements — including extended producer responsibility, packaging-waste regulation, single-use plastics bans and ecodesign requirements.
Japan’s Home Appliance Recycling Law requires consumers to pay fees for the recycling of air conditioners, television sets, refrigerators, and washing machines. Retailers are responsible for collecting the used appliances and manufacturers are responsible for recycling them. And California’s Responsible Textile Recovery Act (S.B. 707) requires clothing and textile producers to fund and manage programs for the collection, repair and recycling of their products
One important part of circularity strategies is improving product design. Products designed for circularity are easier to repair, disassemble and recycle. This could involve modular components, standardized materials, fewer mixed-material assemblies and durable construction. Designing with end-of-life considerations in mind enables companies to capture value later through refurbishment, resale or recycling rather than incurring disposal costs.
Another dimension of circularity involves using recycled or recovered materials to make new products. Incorporating post-consumer or post-industrial materials helps reduce reliance on virgin resources. For manufacturers, this can also hedge raw material price volatility and supply disruptions. Over time, companies that invest in material recovery and closed-loop sourcing often gain greater control over their inputs.
For its Fall 2025 collection, for example, 24% of Patagonia’s cotton fabrics by weight were made with recycled cotton. The company says making clothes with recycled cotton uses “fewer environmental resources than what’s needed to grow virgin cotton.”
Equally important is the collection and recovery of used products. “Reverse logistics is what closes the loop, making it circular,” Sustainable Electronics Recycling International CEO Corey Dehmey said during his presentation to the National Retail Federation’s Electronics Returns and Reverse Logistics Working Group in November.
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Indeed, circular strategies depend on efficient reverse logistics to bring goods back into the supply chain after use through returns, trade-in programs, repair loops, refurbishment operations, donation pathways and/or responsible recycling.
Levi Strauss & Co.’s circularity strategy puts the focus on optimizing resource use and minimizing excess inventory. The objective is to keep materials in use, the company says, “either as a product or, when that can no longer be used, as components or raw materials so nothing becomes waste and the intrinsic value of products and materials is retained.”
Taken together, these elements illustrate that circularity is not a single solution but an ecosystem of practices that must work in coordination.
Companies are increasingly recognizing that circular models can lower operating costs, reduce waste-related expenses and unlock new revenue streams.
Using recovered or recycled materials can reduce material costs, particularly as prices for metals, plastics, electronics components and rare earth elements continue to fluctuate. Refurbishing products or components is less expensive than manufacturing new ones from scratch. Extending the life of IT equipment, industrial machinery or consumer electronics can dramatically reduce capital expenditures.
Circularity also helps companies reduce, if not avoid, disposal and landfill fees, which are rising in many regions due to environmental taxes and stricter waste regulations.
By redirecting products away from end-of-life disposal and toward reuse or recycling channels, organizations convert what was once a cost center into a value-generating activity.
Additionally, circular strategies can improve inventory efficiency. Excess, obsolete or returned goods no longer must be written off entirely; instead, they can be redeployed, resold, donated or harvested for parts. Over time, this improves asset utilization and strengthens balance sheets, particularly for asset-intensive industries.
Beyond cost savings, circularity creates new and meaningful opportunities to engage customers. Today’s consumers and business buyers increasingly expect brands to demonstrate environmental responsibility — not just through marketing claims, but through tangible actions.
Circular programs such as take-back initiatives, repair services, trade-in offers and resale platforms encourage ongoing interaction between companies and customers beyond the initial sale. This extended engagement builds loyalty and trust while providing companies with valuable insights into product performance, usage patterns and lifecycle challenges.
Since 1995, for example, Nike has accepted end-of-life shoes and apparel through its take-back program, transforming them into usable new materials through its “Nike Grind” platform.
Repairability and durability can also enhance the customer experience. Products that last longer perform better over time and can be easily fixed rather than replaced, delivering greater value to customers.
In business-to-business markets, circular offerings such as equipment refurbishment, redeployment and lifecycle management services help customers reduce costs and meet their sustainability goals.
Transparency around circular practices further strengthens brand credibility. Clear communication about materials, product lifespan and end-of-life options allows customers to feel confident that their purchasing decisions align with their values.
In many cases, circularity becomes a differentiator in crowded markets where price and quality alone are no longer sufficient to stand out.
Ultimately, circularity requires a shared responsibility between businesses and consumers. Businesses must design products and systems that enable and make circular behavior convenient. Consumers, in turn, must be willing to participate by returning products, choosing refurbished options or supporting brands that prioritize sustainability.
Circularity represents a fundamental rethinking of how value is created and preserved. In an era marked by economic volatility, environmental urgency and expanding regulation, it provides a practical pathway to resilience and responsible growth.
Learn more about the connections between reverse logistics and circularity Jan. 11-12, 2026, at NRF Rev in New York City.
