Product-service systems business models for circular supply chains

Abstract

Shifting supply chain architectures from ‘linear’ to ‘circular’ structures is imperative as businesses strive towards a circular economy ideal. Such a transformation requires innovation in the business models with impacts on value propositions, operations and revenue streams. This paper investigates the phenomenon of ‘circularity’ in supply chain operations, and proposes that product-service systems (PSS) business models can enhance restorative and regenerative effects of inner circles, circling long and cascading use circles. It adopts an exploratory case study method of a large Chinese manufacturing firm operating a traditional product-based business model and three variants of PSS (i.e. product-, use- and result-oriented PSSs) within its sub-architectures. The supply chain operations of the four distinct business models are analysed and their associated circularities are discussed. The findings show that business model akin to result-oriented PSS, have tighter and more efficient circularity of supply chain operations. This research contributes to a better understanding of the relationship between supply chain circularity and business model innovation in the context of a circular economy ideal.