Towards Circular Supply Chains: An Integrated Performance Measurement Framework for Supporting the Transition

Roxana Zimmermann
Sep 5, 2025
#Sustainability standards

Introduction

The Circular Economy (CE) concept has emerged as a key framework within sustainability discussions, and has recently been incorporated into EU legislation, such as the Eco-Design for Sustainable Products Regulation (ESPR) and the Corporate Sustainability Reporting Directive (CSRD). Businesses are now expected to report on their material resource and waste management as well as increasingly integrate circular principles into their operations and products.

Despite the recognized importance of implementing CE practices at the organizational level (Ünal et al., 2019; Urbinati et al., 2021), little attention has been paid to their integration into supply chain management. Critical questions remain about how managers can evaluate circular performance in a holistic way and incentivize the transition towards more circular supply chains (CSC). There is a need for improved frameworks that accurately assess sustainability and circularity from an integrated perspective (Allen et al., 2021). Furthermore, a focus on industry-specific adaptability and comprehensive coverage of different sustainability dimensions (e.g. social, ecological, economic) is essential, especially given the lack of consensus on key performance indicators (KPIs) for CSCs (Calzolari et al., 2022).

This article draws from the paper by Pelzeter et al. (2025). It aims to contribute to the ongoing debate by presenting an integrated framework of CE criteria and indicators that are currently discussed in the academic literature as well as documents from the practical and legal realm. Furthermore, the current state and comprehensiveness of the included metrics were evaluated.

Circular Economy and Circular Supply Chains

CE is described as an economic system that focuses on minimizing waste and preserving resources by keeping products and materials in use for as long as possible (Kirchherr et al., 2017). Key strategies include reducing, reusing, recycling, and recovering resources throughout a product’s lifecycle. In the course of academic and practical debate, these so-called R-strategies have been organized into a hierarchical framework (Cramer, 2017). The ‘10R-imperatives’ prioritize strategies that aim towards a reduction of resource use and waste generation right from the beginning, either by refusing unnecessary products, intensifying product use or reducing the material intensity of production (see Figure 1). In this context, the importance of innovative business models and informed consumers is underlined (Bressanelli et al., 2019).

Supply chains are seen as key enablers of the CE transition (Lahane et al., 2020). As resources flow across supply chains, CSCs aim to close, slow, and narrow resource loops within their operations, as well as their surrounding industrial and natural ecosystems (Farooque et al., 2019). This can be achieved by recycling measures (closing the loop between post-use and production), increasing product lifespans (slowing down resource circulation by designing products with a longer life period), and improving resource efficiency (using fewer resources per product) (Bocken et al., 2016).

In both political as well as entrepreneurial praxis, setting targets is a common way to steer the transition to a state of enhanced sustainability. Accordingly, indicators are used to evaluate and monitor the progress of the transition (e.g. to a CE). With CE indicators for supply chains stemming from different academic threads, the literature on CSC indicators is still very fragmented. For example, while indicators from the industrial ecology literature aim towards an increased interchange of resource and waste streams within firm clusters, closed-loop supply chain management scholars focus more on take-back streams of products from customer to manufacturer to recover added-value (Calzolari et al, 2022). Clearly, a standard way of assessing and managing the circularity of supply chains has not yet been defined. Additionally, existing circularity targets often only cover a limited range of CE solutions (e.g. recycling or efficiency improvement) and there is a need to investigate alternative and advisable CE targets that have not yet been put into practice (Morseletto, 2020). This is particularly evident for targets and indicators pertaining to more transformational facets of the CE transition, such as the implementation of principles of social justice and alternative business models that extend beyond mere technical fixes and a narrow focus on ecological aspects (Denter & Heinz, 2023; Purvis & Genovese, 2023).

 

Figure 1: 10R-Strategies, adapted from Kirchherr et al., 2017

Source: Adapted from Kirchherr et al., 2017

An integrated framework for assessing the circularity of supply chains

Methodology

The development of this framework followed a three-step process: First, relevant documents were collected and selected. This included four legal regulations, two practical, and six currently published academic frameworks. Second, these documents were analyzed to extract CE criteria and indicators. Third, an integrated framework was synthesized, encompassing dimensions, categories, criteria, and indicators for assessing and enhancing the circularity of supply chains. Each criterion defines targets within broader thematic categories, while indicators provide measurable information. Additional analyses assessed the comprehensiveness and specificity of the included metrics.

Results

The resulting framework includes 29 categories, 73 criteria, and 408 potential indicators across four sustainability dimensions: Environmental (228 indicators), economic (89), governance (49), and social (42). The environmental dimension focuses on material resources and waste reduction, while the economic dimension addresses costs, revenues, and efficiency. Governance considers sustainable management and external engagement, and the social dimension covers health, safety, and community contributions. The analysis revealed a strong focus of the current literature on environmental metrics, with comparatively little emphasis on social factors (see Table 1 below). Especially indicators covering wider areas of social concern such as social justice or living conditions of local communities seem so far to be neglected.

Comparatively, the degree of attention given to each sustainability dimension variates across the three types of sources. Frameworks from academic documents yield the most comprehensive frameworks, while legal and practical approaches fall short, particularly in the economic and social dimension. Additionally, significant gaps have been identified with regard to higher-order R-strategies, such as Refusing and Rethinking.

Table 1: Number of categories, criteria and potential indicators included in framework (own analysis), from Pelzeter et al. (2025)

Source: Pelzeter et al. (2025)

Circularity potentials in supply chains of the German medical device industry

The German healthcare sector consumes annually approx. 107 million tonnes of raw material, accounting for around 5% of total consumption in Germany (Ostertag et al. 2021). Roughly, one-third comes from domestic raw material extraction and two-thirds from imports (ibid.). Medical devices represent 6% of the healthcare sector’s total raw material consumption. The product range is very heterogeneous and extends from disposable items such as gloves and needles to complex diagnostic devices and implants. These products may contain various plastics, rare earth elements, metals, and conflict raw materials such as cobalt, tantalum, and gold. Therefore, the four sustainability dimensions addressed by this framework are relevant to the manufacture and commercialization of medical devices.

Given the high value of many medical devices, implementing CSCs offers significant potential for improved resource efficiency and cost savings in the healthcare sector (Ubaldi, 2019). In some product segments, such as large medical devices (e.g. X-ray equipment and magnetic resonance spectroscopes), refurbishment and service contracts are already established business models between manufacturers and their clients (Hermann & Vetter, 2021). This reduces the necessity for healthcare facilities to buy new equipment by enhancing the life span of entire products or their components. However, this potential remains largely untapped in other product categories.  For smaller medical devices requiring sterilization (e.g. surgical instruments), there are hardly any incentives for manufacturers to bring them onto the market as reusable products. Manufacturers of reusable medical devices must prove that the product can be reprocessed while ensuring sterility. These requirements do not apply to single-use products. Also, single-use products are profitable from a manufacturer’s perspective and easier to handle by healthcare staff in compliance with high hygiene standards. As a result, around 22 million chrome steel items, such as tweezers and scissors, are disposed in Germany every year (Schröder, 2020), accounting for roughly 8,800 tonnes of avoidable waste. This represents a significant loss of chromium, an increasingly rare resource and listed critical raw material by the EU. This is consistent with examples across a variety of other countries where waste generated from single-use devices of operating theatres has been found to contribute significantly to the carbon footprint of hospitals (Eckelmann et al, 2018; Malik et al., 2018; Eckelmann et al., 2020; Rizan et al., 2020).

While some initiatives in the medical device industry have started to integrate circularity aspects into business operations, so far innovations mostly focus on resource efficiency or recycling (e.g. BIORPO 2022). Although these initiatives aim to improve the environmental dimension of sustainability, they do not systematically address the social and economic dimensions.

To foster greater circularity of healthcare systems, healthcare facilities also have a significant responsibility to develop more resource-efficient purchasing strategies. To do so, tenders could assess not only the financial but also the environmental and social costs of a product or service. For example, the National Health Service (NHS) in the UK integrates sustainability criteria into its procurement processes through its reporting tool “Evergreen Sustainable Supplier Assessment.” This tool evaluates suppliers’ performance regarding carbon neutrality and social responsibility. A minimum of 10% weighting on net zero carbon and social value criteria is applied to evaluate bids for NHS contracts (NHS England, 2023). In the German context, legal frameworks, such as the Directive 2014/24/EU, the German Act against Restraints of Competition (GWB), and the Public Procurement Ordinance (VGV), support but do not mandate the inclusion of sustainability criteria in tenders. This could change as integrating shadow prices associated with planetary boundaries is expected to emerge as a methodological innovation in Health Economic Evaluation (Rogowski, 2024).

Additionally, the introduction of Digital Product Passports (DPP) at the EU level aims to enhance transparency and sustainability of products’ lifecycles across a wide range of product groups. While medical devices are not (yet) exempted from this regulation, its impact on the sector cannot be foreseen at this moment. In future, sustainability labels that address resource consumption (e.g. Blue Angel) could also become relevant for medical devices.

Discussion and Conclusion

A holistic approach to CE and corresponding indicators are essential for guiding decision-makers in the transition towards more circular supply chains. The presented framework offers a comprehensive set of criteria and indicators stemming from academic, legal and practical sources, to support the integration of circularity principles at supply chain level. While important gaps remain, particularly in the social dimension and advancing in higher-order R-strategies, the framework provides a foundation for developing industry-specific performance measurement and management strategies.

Implementing such a broad framework poses practical challenges. These could be addressed by adapting it to real-world conditions through participatory research approaches. In the long term, integrating this framework into supply chain management practice implies changes in areas like product design and cross-industry collaboration, paving the way towards greater circularity and sustainability. Furthermore, the consideration of social aspects such as impacts on workers’ or community rights in the wake of a CE transition merits more attention in the future.

The example of the German medical device industry shows that embracing CE principles has the potential to reduce supply chains’ environmental impact as well as realize operational efficiencies and foster innovation. Before implementing circularity measures, an examination of different product groups with regard to their potential for increasing resource efficiency is needed. The measures (e.g. reuse, recycling or the use of “resource-lighter” materials) should be evaluated according to medical, ecological and economic criteria. Higher R-strategies such as extending product life (refurbishment) or intensifying product use through sharing and operator models should also be explored.

Integrating these practices requires a holistic approach to supply chain management, aligning all stakeholders across the healthcare system towards the common goal of reducing resource use while maintaining high standards for product safety and functionality. Metrics are needed to raise awareness among decision-makers in the respective organizations in order to motivate them to implement concrete steps and measure the progress of transitioning to more circular supply chains.
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