Circular economy in winter road maintenance: Analysis of contract models for deploying a closed-loop supply chain

In winter road maintenance, abrasives are spread on roads to ensure user safety. These abrasives must be swept in the spring and often end up in landfills. To reduce landfilling and the consumption of non-renewable resources, previous work has demonstrated the potential of reusing collected street sweepings for the production of abrasives. However, the current contractual approach of the linear supply chain requires revision to enable the sharing of financial gains between the road authority and the service provider to achieve a win–win situation, primarily considering the uncertainty in the quantity of abrasives spread, which directly impacts the service provider’s profit. This study proposes two closed-loop supply chain structures and analyzes three contract models. Results from a case study in a highway context in Quebec, Canada reveal that transitioning from a linear supply chain to a closed-loop supply chain generates an average systemic financial gain of 9%. Furthermore, a sensitivity analysis on the average quantity of abrasive spread demonstrates that when the road authority buys back reusable sweepings from the service provider at market value, it enables the sharing of a portion of the gain. Consequently, compared to a linear approach, adopting circular economy strategies in the winter road maintenance supply chain mitigates the potential profit loss of the service provider caused by uncertainty.