For sure, that’s definitely a tricky question. It shows that creating a sustainable circular business model depends on many factors, e. g. regulations, secondary markets in used products, or active markets in commodity components. These factors will also determine how much value manufacturers can extract from a circular model.
♻️ In general, the greater the value locked into a product – whether in terms of its brand valuation, resources used making the product in the first place, or the price customers are willing to pay – the greater the potential for creating a circular business model around.
💡 But, first things first. A circularity strategy should be aligned with the company’s capabilities and resources – and address the constraints on its operations. To do so, companies should answer two very fundamental questions to derive strategic options for creating a circular business model:
Access: How easy is it to get my product back?
e. g.: Is reverse logistics infrastructure in place? Can products be moved?
Process: How easy is it to recover value from my product?
e. g.: Is product designed for remanufacture? Is recycling technology in place?
👉 Interested in more insights on circularity strategies from manufacturers across the world, check this article from Harvard Business Review.