The recent circular economy movement has raised awareness and interest about untapped environmental and economic potential in the manufacturing industry. One of the crucial aspects in the implementation of circular or closed-loop manufacturing approach is the design of circular products. While it is obvious that three post-use strategies, i.e., reuse, remanufacturing, and recycling, are highly relevant to achieve loop closure, it is enormously challenging to choose “the right” strategy (if at all) during the early design stage and especially at the single component level. One reason is that economic and environmental impacts of adapting these strategies are not explicit as they vary depending on the chosen business model and associated supply chains. In this scenario, decision support is essential to motivate adaptation of regenerative design strategies. The main purpose of this paper is to provide reliable decision support at the intersection of multiple lifecycle design and business models in the circular economy context to identify effects on cost and CO₂ emissions. The development of this work consists of a systematic method to quantify design effort for different circular design options through a multi-method simulation approach. The simulation model combines an agent-based product architecture and a discrete event closed-loop supply chain model. Feasibility of the model is tested using a case of a washing machine provided by Gorenje d.d. Firstly, design efforts for reuse, remanufacturing, and recycling are quantified. Secondly, cost and emissions of different design options are explored with different business model configurations. Finally, an optimization experiment is run to identify the most cost-effective combination of reused, remanufactured, and recycled components for a business model chosen on the basis of the explorative study results.

This paper introduces an agent-based approach to study customer behavior in terms of their acceptance of new business models in Circular Economy (CE) context. In a CE customers are perceived as integral part of the business and therefore customer acceptance of new business models becomes crucial as it determines the successful implementation of CE. However, tools or methods are missing to capture customer behavior to assess how customers will react if an organization introduces a new business model such as leasing or functional sales. The purpose of this research is to bring forward a quantitative analysis tool for identifying proper marketing and pricing strategies to obtain best fit demand behavior for the chosen new business model. This tool will support decision makers in determining the impact of introducing new (circular) business models. The model has been developed using an agent-based modeling approach which delivers results based on socio-demographic factors of a population and customers’ relative preferences of product attributes price, environmental friendliness and service-orientation. The implementation of the model has been tested using the practical business example of a washing machine. This research presents the first agent-based tool that can assess customer behavior and determine whether introduction of new business models will be accepted or not and how customer acceptance can be influenced to accelerate CE implementation. The tool integrates socio-demographic factors, product utility functions, social network structures and inter-agent communication in order to comprehensively describe behavior on individual customer level. In addition to the tool itself the results of this research indicates the need for systematic marketing strategies which emphasize CE value propositions in order to accelerate customer acceptance and shorten the transition time from linear to circular. Agent-based models are emphasized as highly capable to fill the gap between diffusion-based penetration of information and resulting behavior in the form of purchase decisions.

Circular Economy (CE) promotes trading functions of a product as a service instead of selling the product in conventional ways. For a product like a baby stroller, the function means ensuring mobility with infants without needing to own a stroller. This approach of acquiring functions only when needed opens up the possibility to share the same products with multiple users. For a manufacturer that has built its business on a conventional sales model over the decades, this shift may be too radical. Therefore, for the manufacturers, it is important to understand consumer perceptions of the service-oriented business model before entering this unknown territory. To develop a thorough understanding of consumer perceptions of leasing a stroller instead of buying one, a survey among 200 parents in Stockholm is conducted. The survey brings out quantitative results such as 39% of respondents are open to leasing and identifies key influencing factors such as convenience and environmental image that play a key role for the remaining 61% of respondents to choose leasing. This research concludes that a large number of consumers are open to leasing if a high level of service and environmentally sustainable strollers are offered at a competitive price.