Sustainability and Logistics - On Circular Economy and Resilience

Disclaimer and tip: Since resilience is often equated with a variety of different characteristics, I've decided to divide this blog post into two parts:

1. Fundamentals (this post): Explanations, definitions, and distinctions
2. The Circular Economy as a resilience factor

This first part addresses the question of why resilience plays such a central role in economic systems, supply chains, and organizations at all – and why the dominant efficiency thinking of the linear economy systematically undermines this resilience. The aim is to categorize resilience conceptually, distinguish it from related concepts, and make its tension with efficiency visible. The second part will then get more concrete. There I'll show how the Circular Economy not only offers ecological and economic benefits, but works quite practically as a resilience strategy – and why circular value creation is a crucial lever for more resilient systems in uncertain times.

If you'd like to refresh your knowledge about the Circular Economy, I recommend my previous blog posts:

• The Circular Economy
• Logistics as the Engine of the Circular Economy?!
• The Circular Economy and Reverse Logistics

So let's start – as is my custom – with definitions and explanations and distinctions of terms. (Possibly) counterintuitively, we'll start with the question of why resilience is so important before we deal with the question of what resilience actually is.

So: Why Resilience? Or: When the Linear System Gets the Hiccups

We all know them by now, the famous supply chain and system shocks.

#1 A ship is stuck sideways. The world stands still.

A single container ship parks itself in the Suez Canal in 2021. Sideways. Not symbolically, but physically. The result: Global trade looks on awkwardly. Just-in-time supply chains, finely balanced down to the minute, discover that they unfortunately have no plan B or C. When everything runs on a single route, one ship is enough for collective frowning.

#2 A part is missing. Everything breaks down.

A component. Tiny. Unspectacular. A chip. No. Not Funny Frisch. A computer chip. Manufactured in a single country. Comparative advantage, you know (see paragraph below). Now let's imagine that this country is now militarily occupied, and the – in this case – aggressor changes the rules (I'm just realizing this could be read cynically; the seriousness of the situation regarding such a scenario has never been greater than today – early 2026). The international result: Cars without electronics, machines without controls, production halls with plenty of room for reflection. The linear system loves specialty parts from exactly one factory in exactly one country that must be delivered exactly now. If this part fails – for whatever reason – then a large part of the economy is paralyzed.

By the way: Comparative advantage describes in economic theory that trade between two parties is worthwhile when each specializes in the production of the good for which it has the lowest opportunity costs – i.e., has to give up less of another good than the other party. This leads to efficiency gains and welfare benefits for all parties involved, even if one country could produce all goods more expensively in absolute terms.

And in this context:

#3 Energy is suddenly… not always available…

…because another, different aggressor attacks a country and the cheap oil and cheap gas from his country must now be forcibly sanctioned. Thus, an economy and accordingly the government, which was previously dependent on the fossil fuels of the war criminal, is now searching for alternative energy suppliers. The consequence: Energy prices explode and deliveries are uncertain. Industries that have relied on "cheap and constant" for years are starting to struggle. Does that sound familiar? The linear system never planned to save energy or use it multiple times. It planned to simply burn it. Resilience wasn't in the budget.

We know these examples. They happen. Again and again. And increasingly more often. And we know because of this: Dependencies are cheap (economies of scale), but stupid. THE insight from the recent crises of our time. In the corporate boardrooms, glocalization instead of globalization was propagated as the answer to these shocks. Or reshoring (returning business activities that were previously outsourced abroad to the country from which they were originally relocated) and nearshoring (outsourcing business processes to neighboring countries, often sharing a common border):

Source: Own illustration

In summary: The linear system works excellently under the assumption that nothing goes wrong, nobody coughs, no ship gets stuck sideways, no raw material becomes scarce, no border closes, and nobody comes up with the idea of changing the rules of the game. Since experience shows that these assumptions are rarely met, every supply chain shock reveals the same problem:

A system that depends on constant inflow breaks down as soon as the inflow falters. And this is exactly where resilience unfolds its power.

And: What Is Resilience Now?

To understand and categorize resilience, we need to look at several terms that are often thrown into the same pot as resilience. It's mainly about distinguishing between

• Adaptability (quickly switching),
• Resistance (=robustness / withstanding disruptions and shocks) and
• Recovery capacity (coming back after disruptions and shocks)