Supply chain circularity composite index: Measuring the closed-loopedness of material flows

The transition from linear to circular economic models presents a critical challenge for sustainable industrial development, particularly in the context of complex, multi-tiered manufacturing supply chains. Despite the rise of circularity indicators, many existing metrics suffer from excessive data requirements, poor harmonization, and a lack of system-level applicability. This paper addresses these gaps by proposing the Supply Chain Circularity Composite Index, a novel performance metric designed to quantify the closed-loopedness of material flows using a Material Flow Analysis-based approach. The index aggregates three key sub-indicators - Material Efficiency, Secondary Material Usage, and Effectiveness of Recovery - into a composite score using the geometric mean to reflect proportional sensitivity and interdependency among supply chain actors. The index was developed through a systematic literature review of 59 foundational circularity metrics and validated through case studies in two manufacturing companies operating in distinct industrial sectors, the plastics and the gas engine manufacturing industry. Results demonstrate variation in circularity performance revealing distinct circularity profiles across the cases: The plastics manufacturer, with moderate values across all dimensions, achieved an overall circularity score of 0.35, whereas the gas engine firm showed the significantly higher level of secondary material usage (0.56) but was limited by a low recovery effectiveness of just 0.06, resulting in an overall circularity score of 0.30. These outcomes illustrate the index's diagnostic power to pinpoint specific strengths and deficiencies across the material loop. The index thus provides a scalable and operationally feasible indicator for companies aiming to improve material circularity across supply chain boundaries, and serves as a strategic instrument for aligning business practices with emerging regulatory and sustainability frameworks.