Maximizing circular economy benefits for manufacturing companies: A simulation tool for defining and implementing a circular product strategy

Abstract

Achieving a balance between reducing environmental impact and ensuring economic viability is essential for Originals Equipment Manufacturers adopting circular product strategies. A critical aspect of this process is determining the optimal time to take a product out of operation to facilitate the implementing of an appropriate circular strategy. However, decision-makers often lack the tools and methods to effectively answer this question, making it difficult to define and implement a strategy that is both ecologically sound and economically viable. This article presents a methodology that uses the State of Health of a product as a key indicator to identify the most advantageous year for taking back the product and applying a specific circular process (i.e., reuse, remanufacturing or recycling). Based on the State-of-Health, the environmental impact and total cost of the product are calculated annually over its lifetime using defined parameters. A circular strategy is proposed for each take-back year, determined by State of Health thresholds for various circular processes. To determine the optimum take-back year, an algorithm is applied, using a weighted sum as the objective function. This methodology is implemented within a dynamic circular strategy simulation tool to support decision-making for stakeholders. The approach is demonstrated using a case study on a circuit breaker in Genset and hospital applications. The results show environmental and economic benefits of up to 7 % and 18 %, respectively, highlighting the potential value of using this circular strategy simulation tool.