Ekonomi sirkular menjadi konsep yang potensial untuk diimplementasikan oleh UMKM di Indonesia karena lebih dekat dengan pengguna akhir yang berpotensi menghasilkan limbah. Penelitian ini bertujuan untuk menganalisis pengaruh sustainable supply chain management terhadap kapabilitas ekonomi sirkular UMKM pada dua industri prioritas, yaitu fesyen dan kosmetik. Sustainable supply chain management berfokus pada konsep green supply chain management, supply chain relationship management, serta sustainable supply chain design. Penelitian dilakukan kepada 72 UMKM di Pulau Jawa dan Bali yang telah menerapkan setidaknya satu dari tiga konsep 3R (reduce, reuse, recycle). Pemrosesan data pada penelitian ini dilakukan dengan menggunakan PLS-SEM. Hasil penelitian menunjukkan bahwa green supply chain management dan sustainable supply chain design secara langsung berpengaruh terhadap kapabilitas ekonomi sirkular sementara supply chain relationship management berpengaruh secara tidak langsung melalui sustainable supply chain design terhadap kapabilitas ekonom sirkular.

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The circular economy can potentially be implemented by MSMEs in Indonesia because MSMEs are closer to end users who have the potential to generate waste. This study aims to determine the impact of sustainable supply chain management towards the circular economy capability in fashion and cosmetic industries. Sustainable supply chain management in this study focuses on green supply chain management, supply chain relationship management, and sustainable supply chain design. The study was conducted on 72 MSMEs in Java and Bali, Indonesia, which have implemented at least one of the reduce, reuse, recycle concept. This research uses PLS-SEM to analyze the data. The results show that green supply chain management and sustainable supply chain design directly affect the circular economy capability while supply chain relationships have an indirect effect through sustainable supply chain design on the circular economy capabilities.