Simulation Modelling of a Shift to Service-Based Offerings : Resource efficiency and operational implications in the context of the circular economy

Abstract: The unsustainable levels of resource use and emissions of our economies and their threat to future generations are core issues of our time. The circular economy (CE) conceptualises a different type of economy that is restorative and regenerative by design and aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles.The novelty of the CE requires the development of new analytical tools and methods as well as ways of thinking to understand its consequences. This research summarises four years of research on the topic of systems analysis and simulation modelling in the domain of the CE. Three topics were of major interest: First, what are the resource efficiency implications of a shift toward a CE? Second, what are the operational implications of a shift to a CE? And finally, how can systemic changes towards a CE be understood and planned? Four studies were conducted addressing the three research questions. The first study applies material flow analysis to a washing machine manufacturer case and looks at how different business models affect the resource flows of critical resources. It finds that service-based offerings lead to higher overall resource efficiency. The second study focuses on the implications of CE initiatives on the maintenance activities of a heat-as-a-service provider. It shows that the shift to service-based offerings requires service providers to face worse-before-better situations where long-term benefits offset short-term disadvantages. The third study is a simulation-based case study of laundry practices in Sweden. It compares a sharing economy scenario where a population shares washing machines with a scenario where the majority of people own the washing machines they are using. The results indicate that in Sweden and Europe in general, sharing has significant resource savings potential in the domestic laundry sector. The fourth study is a conceptualisation of design fixation to higher levels of analysis. It identifies examples of fixations on the organisational and institutional level. In addition, it argues that in order to design sustainable sociotechnical systems, aspects like governmental policies and business models need to be considered design parameters.A shift to a CE needs to happen on many levels of society. This research presents simulation models that can support corporate and political decision makers in the shift to a CE. It shows that in order to understand the CE, the analysis has to be, on the one hand, able to simulate system dynamics, and on the other hand connect the multiple levels of society.

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