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Circular economy: slowing and closing the loop through reverse logistics
Companies transitioning from linear economy into circular economy poses challenges particularly in the attempt of slowing the loop and closing the loop. The former is preserving product value that can be done through direct reuse, repair, refurbish or remanufacture of post-consumers products meanwhile the latter is capturing value through recycling. Companies can gain competitive advantage and moving toward circularity by incorporating reverse logistics to its product life cycle. Nevertheless, the take up of reverse logistics is rather slow considering more investment is required, especially for voluntary initiative without obligation under producer responsibility scheme. This paper analyses how various reverse logistics arrangement and product recovery management can support circular economy including its challenges and benefits. Drawing from Finnish system on reverse logistics under compulsory producer responsibilities, three reverse logistics arrangement for different products are analysed including self-handling by producer, outsourcing to producer organisation and establishing producer organisation with other producers. Collection rate and recycling rate are investigated as indicators in slowing and closing the loop. This study thus provide a clarity and lesson learned on how to implement reverse logistic scheme and the importance of supply chain management to shift toward circular economy. Furthermore, it can lead to more future study on circular economy.