From linear to circular manufacturing business models

Jose Arturo Garza-Reyes (Centre for Supply Chain Improvement, University of Derby, Derby, UK)
Vikas Kumar (Bristol Business School, University of the West of England Bristol, Bristol, UK)
Luciano Batista (Aston Business School, Aston University, Birmingham, UK)
Anass Cherrafi (ENSAM – Meknes, University of Moulay Ismail, Meknes, Morocco)
Luis Rocha-Lona (ESCA Santo Tomás, Instituto Politécnico Nacional of Mexico, Mexico City, Mexico)

Journal of Manufacturing Technology Management

ISSN: 1741-038X

Article publication date: 3 April 2019

Issue publication date: 3 April 2019

4921

Citation

Garza-Reyes, J.A., Kumar, V., Batista, L., Cherrafi, A. and Rocha-Lona, L. (2019), "From linear to circular manufacturing business models", Journal of Manufacturing Technology Management, Vol. 30 No. 3, pp. 554-560. https://doi.org/10.1108/JMTM-04-2019-356

Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited


1. From linear to circular manufacturing business models

1.1 Background and motivation

Since the industrial revolution, manufacturing organisations have been developing better business models and strategies to enhance what it has traditionally been considered their primary objectives of increasing economic profit and resources throughput. However, the last two decades have seen a rise in the awareness of the impact that current manufacturing models have on the environment and society in general (Garbie, 2014). Thus, the traditional manufacturing paradigm, which has been dominated by a linear business model, has now been increasingly challenged by governments and societies. In this linear model, raw materials are extracted, transported to manufacturing sites and processed into a diverse range of products. These products are then shipped to retailers, sold to customers, used, and ultimately discharged and replaced by other products. This business model, however, represents an unsustainable approach to manufacturing and consumption of goods as it is argued it treats nature as an industry, which leads to global negative impacts such as CO2 emissions, global warming, scarcity of and permanent damage of natural and non-renewable resources, pollution of soil and water, etc. (Geissdoerfer et al., 2017). These negative environmental effects, derived from the linearity of current manufacturing business models, have made organisations in this industry to face pressures related not only to the compliance with environmental regulations but also to challenges of price volatility and supply risks due to increasing resource scarcity (Lieder and Rashid, 2016).

To address the environmental, and other social and economic challenges posed by linear manufacturing business models, the concept of circular economy (CE) has been gaining importance and increasingly drawing attention worldwide (Ghisellini et al., 2016). CE, as opposed to linear models, advocates a closed loop, i.e. circular, flow of materials, raw materials and energy in the entire economic system (Masi et al., 2018; Geng and Doberstein, 2008; Yuan et al., 2006). In this line, Stahel (2010) argues that circular-based models can potentially minimise material, energy and environmental deterioration without restricting economic, social and technical progress. Within the context of manufacturing activities, circular business models (CBMs) are based on keeping resources in the economy for as long as possible. This is possible through the prolonged use of products as well as through restorative processes that take products, by-products and waste materials back into the economy through reusing, remanufacturing and recycling processes (Lacy and Rutqvist, 2015; Lovins and Braungart, 2014). CE therefore advocates manufacturing business models that are restorative by intention, purpose and design, and that shift production value chains from linear to circular manufacturing business models.

However, despite the fact that CE business models are considered as a potential and viable solution for harmonising ambitions for economic growth and environmental protection (Lieder and Rashid, 2016), research in this field has been mainly concentrated at a national, regional and industrial levels, whereas very little attention has been paid to the operationalisation of CE principles and practices at manufacturing systems and processes levels. Therefore, the circular capability of manufacturing systems, processes and operations in general has not yet been comprehensively understood in the light of CE principles. Rigorous research was, for this reason, needed to investigate the operationalisation of CE principles and practices within the context of manufacturing systems, operations and processes. This needed research included, but was not limited to, the investigation of the following research questions:

RQ1.

What characterises a circular manufacturing business model?

RQ2.

Which core capabilities are required in manufacturing processes, systems, supply chains, services, managerial practices and/or technologies to enable a transition from linear to circular manufacturing business models and how can these be developed?

RQ3.

How can digital technologies and logistics and supply chain systems contribute to enabling the circular capability of manufacturing processes and systems?

RQ4.

How can the degree of circularity and/or circularity readiness of manufacturing business models and/or practices be measured?

RQ5.

What are the key benefits, challenges, opportunities and trade-offs for manufacturing organisations to initiate a transition from linear to more CBMs?

RQ6.

What are the main experiences, outcomes and lessons learnt from manufacturing organisations which have implemented or transformed the linearity of their manufacturing business models into those with circular characteristics?

RQ7.

How can industrial symbiosis configurations connecting organisations from diverse sectors into cascading and feedback loop processes enable the circular capabilities in the manufacturing industry? How can these wider organisational linkages be identified and/or developed?

2. Features and areas of the special issue contributions

This special issue of the Journal of Manufacturing Technology Management intends to explore how manufacturing organisations can design, redesign or adapt linear manufacturing processes, systems, supply chains, services, managerial practices and technologies with principles and functionalities that align with the sustainability imperatives of the CE. In a broader context, this special issue aimed at instigating a critical and constructive discussion regarding the role that CE can play on helping manufacturing companies to go beyond the consideration of only economic imperatives to also consider and act upon the effect and impact that their manufacturing operations may have on the environment and society in general. Real-world applications and business models including company case studies dealing with the application of circular manufacturing business models were welcome. Theoretical papers, review papers and methodological papers were also encouraged if CE was explored within the context of manufacturing organisations and their operations. In particular, practical, novel and original contributions investigating the development, application or potential implementation of CBMs in the manufacturing industry were sought, with particular interest on articles that addressed the following research themes:

  • restorative manufacturing systems and processes;

  • life cycle analysis for CE decision making;

  • identification of intra- and inter-connections and feedback loops within the manufacturing industry and their supply chains and production systems;

  • traceability of resource streams;

  • issues in the segregation of waste streams and its value;

  • manufacturing systems improvements as enablers of circularity;

  • innovations in technology and resource management practices to enable a transition towards more circular manufacturing business models;

  • case studies within the manufacturing sector based on the application of CE models and principles;

  • assessment of CE models with focus on investigating their potential, barriers, challenges and trade-offs in the manufacturing sector;

  • definition of benchmarking models to support comparative analysis, assessment and simulation of circular capabilities in manufacturing systems and processes;

  • definition of suitable measures for manufacturing organisations to assess their level of progress towards more circular operations or to evaluate their readiness to embark on such transition; and

  • integration and relationship of the CE approach with other approaches such as industrial sustainability, sustainable/green manufacturing, industrial symbiosis, cleaner production, green lean, etc., within the context of the manufacturing sector.

From the submissions of papers considered for this special issue, four articles that characterise excellent and state-of-the-art research work that spans from a variety of leading edge research in the area of CE, with particular application in the design, management and improvement of manufacturing operations, processes and technology were selected. These papers are summarised in the following section.

3. Contributing articles to the special issue on from linear to circular manufacturing business models

The articles selected for publication in this special issue echo the increasing and contemporary relevance of the special issue themes for academics and practitioners. The articles thus offer a broad multiplicity of research lines, research methods and valuable practical and theoretical insights in the field of manufacturing technology management. Research methods were not limited in scope in order to achieve an overall and complete profile of the latest research perspectives in the field. Therefore, the nominated papers mainly included the development of methodologies, frameworks, models and/or tools that, in some cases, were later applied in real industrial cases, and exploratory researches. Particularly, the selected papers included.

3.1 Managerial practices for designing circular economy business models: the case of an Italian SME in the office supply industry

This paper investigates the managerial practices that companies can implement in order to design a CE business model and how companies can create and capture value from a CE business model. Ünal, Urbinati and Chiaroni adopt a single case study methodology with semi-structured interviews and company, supplier and manufacturing site visits. The visits were conducted in a small- to medium-sized Italian company operating in the office supply industry. With this, the theoretical setting maps a set of managerial practices for a CE business model and sets the research gaps and question in a research framework designed along three main dimensions, namely: value network, customer value proposition and interface, and managerial commitment. The empirical analysis conducted by the authors revealed that the proposed dimensions are interdependent and reinforce each other. Additionally, the managerial commitment as moderating factor between the value network and the customer value proposition and interface dimensions is identified as essential for reaching the intended goals of CE business models. The authors comment that the defined set of relevant managerial practices for CE business models can be used by managers who have the will to embrace in practice CE principles to support the design, change or upgrade of the business model of companies within which they operate.

3.2 Investigating “circular business models” in the manufacturing and service sectors

In this paper, the authors investigate the role of the different CBMs in the manufacturing and service sectors, and apply this in the context of the food industry. Upadhyay, Akter, Adams, Kumar and Varma followed a systematic literature review approach, where the relevant CBMs were explored in the context of the manufacturing and service sectors. By following this research method, the authors shortlisted 40 articles. The shortlisted papers revealed that CE is better than linear economy both in the context of the manufacturing and service sectors. Circular business operations generate value at various stages, starting from raw material sourcing to the disposal of the final goods. The research also found that CBMs promote eco-friendly business and insignificantly contribute to innovation in this environment. The authors argue that the findings derived from the research are relevant and applicable to the food industry.

3.3 Exploring Industry 4.0 technologies to enable circular economy practices in a manufacturing context: a business model proposal

In this paper, Nascimento, Alencastro, Quelhas, Caiado, Garza-Reyes, Rocha-Lona and Tortorella explore how rising Industry 4.0 technologies can be integrated with CE practices to establish a business model that reuses and recycles wasted material such as scrap metal or e-waste. To carry out the research, the authors follow a qualitative research based on three stages. Stage 1 consisted of a literature review on concepts, success factors and barriers related to the transition towards a CE along with sustainable supply chain management, smart production systems and additive manufacturing. Stage 2 comprised the development of a conceptual framework to integrate and evaluate the synergistic potential among these concepts. Finally, stage 3 validated the proposed model by collecting rich qualitative data based on semi-structured interviews with managers, researchers and professors of operations management. The research outcome consists in the provision of a circular model to reuse scrap electronic devices, integrating web technologies, reverse logistics and additive manufacturing to support CE practices. Results also suggest a positive influence from improving business sustainability by reinserting waste into the supply chain to manufacture products on demand. The proposed model can help industrialists to make their operations and processes more sustainable.

3.4 Analysis of network design for a circular production system using multi-objective mixed integer linear programming model

In this paper, KEK, Rajak and Kandasamy propose a mathematical model for the design of a circular production system for an Indian manufacturing organisation participating in a symbiotic network. To do this, the authors used a multi-objective mixed integer linear programming to model the network for quantifying the economic benefits and then they employed the GAMS optimisation package to simulate the model. As a result, the model is able to compute the economic benefit achieved through circular operations in the case organisation and obtain the flow of different items through the network. KEK, Rajak and Kandasamy suggest that the article can contribute in better understanding the role of sustainable supply chains in a CE model, especially in energy and materials intensive industries.

The guest editors would like to explicit their thankfulness to all those who participated and contributed to this special issue. These included the anonymous reviewers; without their expert guidance, advice and constructive feedback for the improvement of articles, the guest editors would have not been able to complete this special issue successfully. Likewise, the guest editors would like to sincerely thank the Editor-in-Chief of the Journal of Manufacturing Technology Management, Professor Harm-Jan Steenhuis, the editorial office and Emerald Group Publishing for their continuous support and dedication for this endeavour. Finally, the guest editors would also like to acknowledge the effort of all the authors who considered this special issue as a relevant platform to disseminate their research work. The authors and the editorial office of the Journal of Manufacturing Technology Management hope that this special issue will make a good reference material and be of great interest and use to the academic and industrial communities that wish to better understand how CE can intervene, support and contribute to deliver more economic, social and environmentally sustainable manufacturing operations and processes, and this way help to address some of the most critical challenges the authors are currently confronting as humankind, i.e. environmental degradation and scarcity of natural resources.

References

Garbie, I.H. (2014), “An analytical technique to model and assess sustainable development index in manufacturing enterprises”, International Journal of Production Research, Vol. 52 No. 16, pp. 4876-4915.

Geissdoerfer, M., Savaget, P., Bocken, N.M.P. and Hultink, E.J. (2017), “The circular economy – a new sustainability paradigm?”, Journal of Cleaner Production, Vol. 143 No. 1, pp. 757-768.

Geng, Y. and Doberstein, B. (2008), “Developing the circular economy in China: challenges and opportunities for achieving ‘leapfrog development’”, International Journal of Sustainable Development and World Ecology, Vol. 15 No. 3, pp. 231-239.

Ghisellini, P., Cialani, C. and Ulgiati, S. (2016), “A review on circular economy: the expected transition to a balanced interplay of environmental and economic systems”, Journal of Cleaner Production, Vol. 114 No. 2016, pp. 11-32.

Lacy, P. and Rutqvist, J. (2015), Waste to Wealth: The Circular Economy Advantage, Palgrave Macmillan, Basingstoke.

Lieder, M. and Rashid, A. (2016), “Towards circular economy implementation: a comprehensive review in context of manufacturing industry”, Journal of Cleaner Production, Vol. 115, pp. 36-51.

Lovins, A. and Braungart, M. (2014), A New Dynamic – Effective Business in a Circular Economy, 2nd ed., Ellen MacArthur Foundation Publishing, Cowes.

Masi, D., Kumar, V., Garza-Reyes, J.A. and Godsell, J. (2018), “Towards a circular economy: an investigation into the awareness, practices, and barriers at a firm level”, Production Planning & Control: The Management of Operations, Vol. 29 No. 6, pp. 539-550.

Stahel, W.R. (2010), The Performance Economy, 2nd ed., Palgrave-MacMillan, London.

Yuan, Z., Bi, J. and Moriguichi, Y. (2006), “The circular economy: a new development strategy in China”, Journal of Industrial Ecology, Vol. 10 Nos 1-2, pp. 4-8.

About the authors

Jose Arturo Garza-Reyes is Professor of Operations Management and Head of the Centre for Supply Chain Improvement at the University of Derby, UK. He is actively involved in industrial projects, where he combines his knowledge, expertise and industrial experience in operations management to help organisations achieve excellence in their internal functions and supply chains. As a leading academic, he has led and managed international research projects funded by the European Commission, British Academy, British Council and Mexico’s National Council of Science and Technology (CONACYT). He has published extensively in leading scientific journals, including the International Journal of Production Research, International Journal of Production Economics, Journal of Cleaner Production, Production Planning & Control, Supply Chain Management: An International Journal, TQM & Business Excellence, Journal of Manufacturing Technology Management, etc., and a number of international conferences. Professor Garza-Reyes has also published four books in the areas of operations management and innovation, manufacturing performance measurement and quality management systems. He is Co-founder and current Editor of the International Journal of Supply Chain and Operations Resilience (Inderscience), Associate Editor of the International Journal of Production and Operations Management, Associate Editor of the Journal of Manufacturing Technology Management and Editor-in-Chief of the International Journal of Industrial Engineering and Operations Management. Professor Garza-Reyes has also led and guest edited special issues for Supply Chain Management: An International Journal, International Journal of Lean Six Sigma, International Journal of Lean Enterprise Research, International Journal of Engineering Management and Economics and International Journal of Engineering and Technology Innovation. Areas of expertise and interest for Professor Garza-Reyes include general aspects of operations and manufacturing management, business excellence, quality improvement and performance measurement. He is a Chartered Engineer (CEng), a certified Six Sigma-Green Belt and has over eight years of industrial experience working as Production Manager, Production Engineer and Operations Manager for several international and local companies in both the UK and Mexico. He is also a fellow member of the Higher Education Academy (FHEA) and a member of the Institution of Engineering Technology (MIET).

Vikas Kumar is Professor of Operations and Supply Chain Management and Head of the Innovation Operations Management & Supply (IOMS) research group at Bristol Business School, University of the West of England (UWE). He has been actively involved in several international research projects focusing on sustainability, food supply chains, circular economy and operational excellence with specific focus on South Asia and South America. His projects have been funded by major research funding agencies such as British Academy, British Council, Newton Fund, EPSRC and Innovate UK. He has published more than 170 articles in leading international journals and international conferences including the International Journal of Production Research, International Journal of Production Economics, Supply Chain Management: An International Journal, Expert System with Applications, Computers & Industrial Engineering and Production Planning & Control. He serves on the editorial board of a number of international journals including International Journal of Services, Economics and Management, International Journal of Manufacturing Systems, International Journal of Lean Enterprise Research and International Journal of Industrial Engineering and Operations Management. His current research interests include sustainability, food supply chains, circular economy, operational excellence and digital supply chains.

Dr Luciano Batista is Senior Lecturer of Operations Management in the Operations and Information Management Department at Aston Business School, Aston University. He is also Chartered Member of the Chartered Institute of Logistics and Transport UK, Member of the European Operations Management Association (EurOMA) and Fellow of the Higher Education Academy UK. He has been acting as Editorial Board member of the International Journal of Supply Chain and Operations Resilience (Inderscience) and Editorial Board Member of Revista de Administracao of the University of Sao Paulo (RAUSP), a leading academic journal in Brazil. His academic degrees comprise a BSc (Hons) in Computer Science (UFPB), MSc in Management (UFPB) and PhD in Management (Manchester University). After graduating in Computer Science, he worked in the Brazilian ICT industry for 11 years before moving into the academia. Luciano has published extensively in leading academic journals such as the International Journal of Production Economics, Journal of Strategic Marketing, International Journal of Production Research, Production Planning & Control, Supply Chain Management: An International Journal and others. He also has published several conference papers in a number of international conferences. Since his PhD, Luciano has been developing research on key areas of the value chain such as CRM, operations and supply chain management (SCM). At Aston Business School, Luciano teaches Operations Strategy, International Operations and Research Methods for undergraduates and postgraduates. His research at Aston University focuses mainly on sustainability aspects of operations, logistics and supply chains, with particular emphasis on exploring the interface between the circular economy and the digital economy.

Dr Anass Cherrafi is Assistant Professor of Industrial Engineering at ENSAM – Meknes, the University of Moulay Ismail, Morocco. He received the PhD Degree in Industrial Engineering from Cadi Ayyad University, Morocco. He has published a number of articles in leading international journals and conferences, including International Journal of Production Economics, International Journal of Production Research, Production, Planning & Control, Journal of Cleaner Production and among others. He serves on the editorial board of Academy of Entrepreneurship Journal. His research interests include general aspects of operations and manufacturing management, green and sustainable supply chain management, business excellence and quality improvement.

Dr Luis Rocha-Lona is Senior Lecturer of Operations Management at Instituto Politécnico Nacional de México (IPN). He has led international research projects sponsored by the Mexican Government through the National Council of Science and Technology, the British Council and the British Academy. He was awarded with the UK-Mexico Visiting Chair in 2016 at University of Nottingham and the University of Manchester in the UK. He currently was awarded with a grant by the British Academy to investigate on the use and implementation of green technologies and sustainability standards in emerging economies: the case of Mexico for three years. Luis is currently collaborating with researchers other leading international universities such as University of Derby, University of West of England, Heriot Watt University, Tec de Monterrey and Universidad Iberoamericana at Campus Santa Fe and other international universities. He has published papers in journals such as the International Journal of Engineering and Technology Innovation, International Journal of Business, Management and Social Sciences, Journal of Manufacturing Technology Management, Total Quality Management & Business Excellence, International Journal of Productivity and Quality Management and International Journal of Lean Six Sigma. Dr Rocha-Lona has also published two books entitled Business Excellence Models and Strategic Planning: The Road Map to Business Excellence (2012), Lambert Academic Publishing, and Building Quality Management Methods (2013) CRC Press, Taylor and Francis Group. He has delivered conferences and published in more than 20 international conferences such as FAIM, IEOM, ISEOR, APMS, ICRCE and others. Dr Rocha-Lona is also active reviewer for international conferences and journals such as the International Journal of Supply Chain and Operations Resilience (Inderscience), International Journal of Organizational Analysis (Emerald), International Journal of Cleaner Production and Journal of Manufacturing Technology Management. He is member of the Editorial board of the International Journal of Supply Chain and Operations Resilience (Inderscience). Dr Luis Rocha is also a member of the National System of Researchers (SNI) in Mexico, Level 1.

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