Manufacturing, selling, using and, ultimately, the disposal of products: this linear model is increasingly reaching its limits. In a circular economy, products and materials should instead remain in the economic cycle for as long as possible. Reuse, repair, refurbishment, and recycling play a central role in this. The European Environment Agency (EEA) emphasises that longer product lifespans can reduce the demand for new products and the associated environmental impacts.
However, for this principle to become a viable business model, more is needed than simply durable or repairable products. The key lies in a logistics system that manages not only the journey to the customer but also the journey back.
Repair and refurbishment are often initially viewed primarily as an additional cost factor – for example, for return transport, testing, spare parts, refurbishment, and redistribution. At the same time, a longer product lifespan can mean that customers buy new products less frequently. From an economic perspective, however, new opportunities arise: repair and refurbishment services can create additional sources of revenue, foster longer-term customer loyalty to manufacturers and brands, and make better use of the residual value of products. Refurbished products also open new customer groups and price segments and enable the development of attractive secondary markets.
Furthermore, effective take-back systems enable companies to keep valuable components and materials within their own cycle. This reduces dependence on raw materials and allows parts, components or entire devices to be reused economically. Circularity thus becomes not merely a matter of sustainability or regulation but can develop into a service and business model in its own right, provided that take-back, inspection, repair, refurbishment, and remarketing are efficiently integrated.
Thinking about reverse logistics from the outset
In traditional supply chains, the focus is primarily on a single direction: from the manufacturer via retailers or logistics service providers to the customer. Circular economy models expand on this logic. After use, products must be returned, inspected and, depending on their condition, channelled into the appropriate next process.
This reverse logistics process should therefore not only begin when the first returns or take-backs arrive. Circularity begins right at the product design stage: even during the development phase, it is possible to influence how easily a product can later be repaired, dismantled, reused or recycled. Building on this, when designing a circular business model, it is essential to define how products will be returned, where they will be inspected and what criteria will be used to decide on their further use.
This is because not every returned product follows the same path. Whilst one device may be ready for immediate reuse following an inspection, another may require cleaning, repair or technical refurbishment. Only when further use is no longer a viable option does material recovery come into play. This is also in line with the European waste hierarchy, in which waste prevention and preparation for reuse take precedence over recycling and disposal.
Inspect, refurbish and route appropriately
The goods-in department thus becomes a key interface in the circular economy. The first step here is to establish: Which product has been returned? Is it complete? What is its visual and technical condition?
Based on defined criteria, a decision can be made on what to do with the product. Depending on the business model, it can, for example, be reused, repaired, refurbished, used as a source of spare parts, or sent for recycling.
These processes are particularly relevant because extending the lifespan of products can make a significant contribution to the circular economy. The EEA cites reuse, repair and sharing, amongst other things, as strategies for extending product lifespans.
Transparent data instead of a black box
Information must therefore flow alongside the physical flow of goods. Serial numbers, product status, reasons for returns, tests carried out, repairs and the product’s subsequent use can all be important data points. The more accurately this information is documented, the better processes can be managed and decisions traced.
The importance of such product information is also growing from a regulatory perspective. The EU Ecodesign Regulation for Sustainable Products (ESPR) establishes the framework for a digital product passport. Depending on the product group, this is intended to provide access to information on, amongst other things, durability, reparability, the proportion of recycled content, and the availability of spare parts.
For businesses, this means that circular logistics is not just a matter of transport and storage. IT systems, product data, and clearly defined status information are just as much a part of the process.
Scalability is key to success
What can still be managed manually with a small number of returns can quickly become complex when dealing with larger volumes. Different countries, product groups, return routes, and condition classes increase the number of possible process variations.
That is why standardised processes and clearly defined decision-making criteria are important. Automated status updates, documented inspection processes, and clear rules for the forwarding of products help to ensure that circular economy models remain manageable even as volumes grow.
European figures show that there is still a need for action in this area: in 2024, only 12.2 per cent of the materials used in the EU came from recycled sources. At the same time, the European Environment Agency sees a significant need for scaling up, particularly in business models that enable longer product lifespans and greater reuse.
The circular economy needs functioning cycles
Those who factor return processes into their planning from the outset and combine logistics with transparent data and clear decision-making processes create a key prerequisite for keeping products in the cycle for longer, thereby turning the circular economy from a concept into reality.
Would you like to put the circular economy into practice?
Together, we can develop suitable processes for take-back, reprocessing, and reuse.