Product-service systems business models for circular supply chains

Abstract

Shifting supply chains from linear to closed-loop models is an important step towards circular economy. This paper investigates business model innovation for circular supply chains, and proposes that productservice systems (PSS) business models can enhance the circularity of supply chains through value creation in inner circles, circling long and cascading use circles. It adopts an exploratory case study method of a large Chinese manufacturing firm operating a traditional product-based business model and three types of PSS business models (i.e. product-, use-and result-oriented PSSs). The supply chain operations of the four distinct business models are analysed and their associated circularities are discussed. The findings show that business models akin to result-oriented PSS, have tighter and more efficient cycles of supply chain operations; which means, the repair, reuse and remanufacturing system is faster and the rate is higher. This research contributes to a better understanding of the relationship between business model innovation and supply chain circularity.

Designing business models in circular economy: A systematic literature review and research agenda

“…In addition, and always based on the shift towards a new way of proposing value for customers—that is, delivering functionality rather than ownership—the PSS research also offers the opportunity to reflect on the transition to more sustainable business models (Nasiri, Rantala, Saunila, Ukko, & Rantanen, ; Yang, Smart, Kumar, Jolly, & Evans, ), which provides the basis for companies to better contribute to a circular economy (Khan, Mittal, West, & Wuest, ). In particular, PSSs tackle the issue of changing the traditional (linear) industrial paradigm by reducing the environmental consumption and by contributing to a more efficient use of resources.…”

Main Dimensions in the Building of the Circular Supply Chain: A Literature Review

“…Some studies propose some business models that favor the implementation of circular supply chains. For example, [29,95,99,100] confirm that product service systems (PSS) business models have the potential to trigger and enhance the circularity features of supply chains, which can be complemented by other tools, such as the sustainable value analysis tool, to assist practitioners.…”

Product-service system business model archetypes and sustainability

“…In general, PSS enables the discovery of new market opportunities (Baines et al, 2007;Tan et al, 2010), creates strategic (Chase and Erikson, 1988;Mathieu, 2001) and economic benefits (Wise and Baumgartner, 1999), improves environmental performance (Tukker, 2015) and decreases negative social impact (UNEP, 2009). In recent years, PSS are regarded as the pioneering business models to shift the production and consumption from the linear model towards circular economy (Yang et al, 2018;Spring and Araujo, 2017).…”

“…If manufacturers are the owners or even users (in result-oriented PSS) of products, they are incentivised to use products as efficiently as possible in terms of materials and energy in order to reduce costs. Increased recycling, remanufacturing and reuse (Yang et al, 2018;Guidat et al, 2014;Ijomah et al, 2006;Sundin et al, 2009;Sundin and Bras, 2005) Use-and result-oriented PSSs have the potential to increase the reuse of products at their end of life by recycling, reconditioning and remanufacturing. They increase customers' acceptance of remanufactured products since customers do not own the products and care less about how new the products are.…”