Circular economy
The circular economy eliminates waste by keeping products and materials in continuous use through reuse, repair, remanufacturing, and recycling. It fundamentally changes how procurement approaches material sourcing compared to the linear take-make-dispose model.
Examples
Remanufactured components: Rather than purchasing new hydraulic cylinders, a heavy equipment manufacturer sources remanufactured units at 60% of new cost with equivalent warranty, extending component life cycles.
Take-back programs: Procurement negotiates contracts with end-of-life take-back clauses, where suppliers reclaim products for refurbishment or material recovery.
Recycled content specifications: A packaging buyer revises specs to require minimum 30% recycled content in plastic components, creating demand pull for recycled materials while maintaining performance through supplier collaboration.
Definition
The circular economy challenges procurement's traditional focus on acquiring new materials at lowest cost. It introduces additional value streams—recovered materials, refurbished products, extended lifespans—that procurement must learn to source and evaluate.
For procurement professionals, circular principles expand sourcing options beyond "buy new": remanufactured goods, recycled content, design for disassembly, and reverse logistics for end-of-life products.
Commercial models also shift. Instead of owning assets, organizations may purchase outcomes where suppliers retain ownership and responsibility for maintenance and end-of-life management.
Regulatory pressure is accelerating circular procurement. Extended producer responsibility, recycled content mandates, and carbon pricing create financial incentives to shift from linear to circular supply chains.
Related Terms
Previous
*GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and COOL VENDORS is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.