A recent report reveals that while a significant majority of manufacturing executives acknowledge the importance of circularity in driving profitable growth, many face substantial challenges in implementing effective circular supply chains. The study, conducted by Bain & Company, the World Economic Forum, and the University of Cambridge, surveyed 491 executives from ten manufacturing-centric industries, highlighting a disconnect between the recognition of circularity’s value and the ability to execute it at scale.
According to the report published on November 12, 2025, 79% of respondents view circularity as crucial for their businesses today. Yet, only 20% believe their circular supply chain capabilities are adequate. This gap underscores the urgency for companies to close the divide and develop operational strategies that enhance growth, resilience, and profitability.
The findings show a strong consensus among executives about the future of circularity. A notable 95% indicated that circularity will be important to their organizations within the next three years, with over two-thirds categorizing it as “very important.” Additionally, 80% of respondents expect revenue growth from circular initiatives to surpass company averages, while 70% anticipate better margin growth from circular activities compared to traditional linear models.
“The question is no longer whether circularity matters but how it can be implemented at scale,” stated Xavier Houot, partner in the Sustainability & Responsibility practice at Bain & Company. He emphasized the need for business leaders to move beyond incremental changes and embed circularity into the core of their strategies, operations, and customer engagement.
Barriers to Scaling Circular Supply Chains
The report identifies five primary categories of challenges that hinder the scaling of circular supply chains:
1. **Operations and Logistics**: Companies face difficulties due to low availability of secondary materials, inconsistent return quality, and costly reverse logistics.
2. **Business Opportunity and Profitability**: High initial costs, uncertain demand, and insufficient revenue can make achieving profitability challenging.
3. **Technology, Data, and Infrastructure**: Weak reverse logistics networks and inadequate data systems limit transparency and efficiency.
4. **Organization**: Internal resistance, skill gaps, and challenges in incentivizing partners can stall progress.
5. **Regulation**: Conflicting product and waste standards, along with cross-border restrictions, contribute to costly bottlenecks.
Strategic Steps Towards Circular Supply Chains
To address these challenges, the report suggests three strategic steps that leading companies can adopt:
1. **Setting Clear Priorities**: Focus on products with higher residual value and predictable return flows while targeting customer segments that are receptive to circular offerings.
2. **Designing Hybrid Supply Chains**: Companies should create integrated supply chains that incorporate both linear and circular flows. The survey revealed that 56% of companies reported mostly integrated supply chains, but only 5% operate entirely independent ones.
3. **Activating Key Enablers**: The report highlights four catalysts essential for scaling circularity:
– **Technology and Data**: Utilize digital tracking, IoT, and AI to enhance management of unpredictable flows.
– **People and Culture**: Incorporate circularity into governance structures, skill development, and reward systems.
– **Finance and Investments**: Secure funding for initial costs and support medium-term returns.
– **Policy and Regulation**: Advocate for consistent frameworks and market incentives to facilitate circular initiatives.
“Businesses increasingly see the economic potential of circularity, but scaling their supply chains remains complex. Those that set clear priorities and build the right design can turn circularity into a source of growth and resilience,” concluded Hernán Sáenz, senior partner and chairman of Bain’s Performance Improvement practice.
The report from Bain & Company underscores the critical importance of circularity as a driver of competitive advantage, particularly as companies navigate the evolving landscape of resource challenges and customer expectations. By addressing the execution gap, manufacturing leaders can harness the benefits of circular operations and contribute to a more sustainable future.
