Circular supply chains and rising costs

About half of global paper is made from recycled fiber, making pulp and paper one of the few industries currently achieving some degree of circularity.

However, even this industry is facing supply constraints due to ever-growing paper demand. When demand for recycled fiber increases, either profit margins on recycled paper made from that fiber go down or the price of recycled paper goes up. Both results challenge the circular supply chain.

These dynamics suggest the difficulty of deploying circular supply chains in other industries. Initial promises of lower supply costs can be challenged by increased demand for recycled paper or by coordination costs in organizing the circular supply chain.