7.03 Transformative supply chains for circular and resilient transition of furniture sector

These last years have been challenging for the furniture Italian companies, since they have faced many critical issues and complexities, which have threatened their competitiveness. Intensifying global competition coming from emerging countries, increasing demand for low-cost items, unexpected economic and political uncertainties have determined an increase of raw material, labor, and energy costs, as well as a reduction of international market shares. Furthermore, great difficulties in the procurement of raw materials (e.g., woods, leather, fabrics, glass, polymers, and the highest-quality metals), also due to the congestions of logistics channels and international ports, have put pressure on their supply chains and their ability to maintain effective and efficient operations.

Recent studies have also shown that the Italian furniture industry is still late in the adoption of circular economy (CE) strategies (Barbaritano et al. 2019), even though this is considered as one of major competitive success features. Furniture wastes represent a huge economic and environmental problem. In 2017, 10.78 million tons of wastes were discarded in EU Member States, the majority of which (80-90%) is destined for either landfill or incineration, with a recycling rate lower than 10%, according to the Report 2017 on the Circular Economy Opportunities in the Furniture Sector, published by the European Environment Bureau (EEB, 2017). However, which barriers and obstacles companies are encountering for the circular transition of their supply chains is still not clear.

To address all these challenges, companies in the furniture sector should be able to develop and improve the transformative capabilities of their supply chains, evolve towards more open and dynamic states, to govern multiple sources of complexity, and to adopt structures, business models, management approaches, and AI digital tools, properly designed to increase circular and resilient performance. This project focuses on these issues.
In particular, the project will consists of the following 5 work-packages that will be collaboratively carried out by project partners:

• WP1. Transformative supply chain capabilities for circularity and resilience, aimed at developing an innovative conceptual framework, based on the dynamic capability theory, which identifies the micro-foundations of transformative capabilities to improve supply chain resilient and circular economy performance.
• WP2. Innovative circular business models for the furniture sector, aimed at designing innovative and effective circular business models for supporting the circular transition of the furniture sector. Innovation and changes of business models will be also studied in the light of dynamic capabilities.
• WP3. Management of complexity of circular supply chains in the furniture sector, aimed at identifying the main sources of complexity of circular supply chains, their effect on economic, environmental, circular, and resilient performances as well as the competitive, collaborative, and coopetitive mechanisms suitable to govern them.
• WP4. Decision support systems for outcome-oriented supply chains based on conversational Artificial Intelligence, aimed at investigating the role of digital technologies in enabling outcome-oriented supply chain management practices and processes using the conversational AI technology to integrate the back-end of the system with the front-end.
• WP5. Predictive, multi-method simulation models for supply chain Digital Twins, aimed at developing a simulation-based Digital Twin, comprising different approaches (System Dynamics, Discrete-event and agent-based), of a typical furniture supply chain for improving its resilient and sustainable performance.