Journal of Social Science and Humanities
Vol 02. No 01. (2026)

Development of a Circular Supply Chain Model in the Retail Industry to Minimize Waste and Maximize Resource Recovery

Hedi Pandowo (State Polytechnic of Madiun)



Article Info

Publish Date
28 Feb 2026

Abstract

The Indonesian retail industry generates approximately 69.9 million tons of waste per year with a recycling rate of merely 6.5–10%, exposing deep inefficiencies in the prevailing linear "take-make-dispose" supply chain model. This study develops and validates a comprehensive Circular Supply Chain (CSC) model specifically designed for the retail sector, with the dual objectives of minimizing waste and maximizing resource recovery. Employing a sequential mixed-methods design that combines qualitative case studies across 15 retail companies with Mixed-Integer Linear Programming (MILP) optimization and Multi-Criteria Decision Making (Fuzzy DEMATEL-ANP-TOPSIS) analysis, the study systematically constructs and evaluates a five-component model encompassing a reverse logistics network, a product life extension strategy, a material recovery system, a supplier collaboration framework, and an integrated digital platform. A 12-month pilot implementation at three retail locations achieved a 45% reduction in total waste (from 6,900 to 3,795 tons/year), an increase in the resource recovery rate from 18% to 71%, and a decrease in waste-to-landfill from 82% to 23%. Financial analysis confirms strong economic viability, with a Net Present Value (NPV) of IDR 24.6 billion, an Internal Rate of Return (IRR) of 28%, and a payback period of 2.8 years. Life Cycle Assessment (LCA) using the ReCiPe 2016 method indicates a 48% reduction in carbon footprint and a 3.2-fold improvement in eco-efficiency. The model is robust to demand variations of ±20% and yields significant economies of scale, contributing measurably to Sustainable Development Goals 8, 12, and 13.   

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Journal Info

Abbrev

JSSH

Publisher

Subject

Arts Humanities Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Environmental Science Law, Crime, Criminology & Criminal Justice Social Sciences

Description

Journal of Social Science and Humanities The interdisciplinary research edition covering scientific areas: - Social Science - Business Management - Accounting - Economics - Finance - Humanities - Decision Sciences - Art - Psychology Taking into account the interdisciplinary character of the journal, ...