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Circular Business Models

A circular economy is an alternative to the traditional linear economy which is based on a take-make-consume model that relies on large quantities of resources. In a circular economy, resources are kept in use for as long as possible through reuse, sharing, repairing and recycling. When products reach the end of their life, their materials are kept within the economy. Circular business models focus on reducing resource use and waste by designing products to last longer, closing resource loops through recycling, and using less material per product. Different circular business models include coordinating circular value chains through data, circular product design, reuse and repair of durable goods, collection and reverse logistics, and sorting and preprocessing of resources.

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83 views23 pages

Circular Business Models

A circular economy is an alternative to the traditional linear economy which is based on a take-make-consume model that relies on large quantities of resources. In a circular economy, resources are kept in use for as long as possible through reuse, sharing, repairing and recycling. When products reach the end of their life, their materials are kept within the economy. Circular business models focus on reducing resource use and waste by designing products to last longer, closing resource loops through recycling, and using less material per product. Different circular business models include coordinating circular value chains through data, circular product design, reuse and repair of durable goods, collection and reverse logistics, and sorting and preprocessing of resources.

Uploaded by

T Nithya Sri ms21a067
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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First let us understand Circular Economy..

A circular economy is a model of production and consumption, which


involves sharing, leasing, reusing, repairing, refurbishing and recycling
existing materials and products as long as possible.
In practice, it implies reducing waste to a minimum. When a product
reaches the end of its life, its materials are kept within the economy
wherever possible. These can be productively used again and again,
thereby creating further value.
This is a departure from the traditional, linear economic model,
which is based on a take-make-consume-throw away pattern. This
model relies on large quantities of cheap, easily accessible materials
and energy.
Linear Economy

An inefficient system to manage resources

1. Dependent on high turnover of products and fast-paced consumption


2. Suffering from decreasing product lifetimes and high levels of waste
3. Leading to a loss of value embedded in products and materials
 Circular business models serve to reduce the extraction and use of natural resources and the generation of
industrial and consumer wastes. They represent the key activities required to transition to a more resource-
efficient and circular economy.
 Circular business models use already existing materials and products as inputs and therefore their
environmental footprint tends to be considerably smaller than that for traditional business models
Circular Economy
Recycling
(at material level
Minimising resource e.g., primary,
use per product secondary)
(e.g., efficiencies in
manufacturing, light
weighting products)

Extending the
useful life of
products
(including avoiding
overconsumption)

Source: Bocken, N.M.P., de Pauw, I., van der Grinten, B., Bakker, C. 2016. Product design and business
model strategies for a circular economy. J. Industrial & Production Engineering, 32 (1), 67-81.
Circular business models

Current linear economy Circular economy

Achterberg, Elisa, Jeroen Hinfelaar, and Nancy MP Bocken. 2016.


"Master Circular Business with the Value Hill." White paper
Circular Business Models

• Circular business models focus on delivering superior customer value


propositions while slowing resource loops by providing products that
last longer (e.g. through premium pricing, services), closing resource
loops, by recycling materials post-multiple consumer (re)uses, and
narrowing the loop by using less material per product and in
manufacturing processes
Different types of circular business models
• 1. Coordinating circular value chains through data: Creating products,
from recycle to reuse.
• 2. Circular product design: Creating products, from recycle to reuse.
• 3. Use, reuse, share, and repair: Creating durable goods from recycled and
reused parts can be inputs for downstream circular business models.
• 4. Collection & reverse logistics: Close the material life-cycle loop by
creating products that can be upcycled, repurposed, and re-sold.
• 5. Sorting & preprocessing: Finding alternative value in the parts that make
a product whole.

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