Modelling and analysis of cost based economic performance for implementing Circular Economy approach in an industrial production system

Sammanfattning: The concept of Circular Economy has been around since the seventies but the principles described by it are ancient. For centuries people mended and re-mended their belongings keeping the use of virgin resources at a minimum. Then came the industrial revolution and the linear take-make-use-dispose philosophy was born. Circular Economy aims at closing the material loop, retrieving and conserving our natural resources. The benefits of this transition are being widely discussed but still few are measuring the economic performance of these closed loop systems. This thesis goal was to examine the cost based economic performance of a manufacturing system where Circular Economy is implemented. The second objective was to identify high level Key Performance Indicators to measure other aspects of performance. The first step was to scout the body of knowledge of the field, consulting both scientific reports and collecting qualitative information through interviews with business experts. A model was then developed based on the gathered knowledge. By modelling the product life cycle cost for three predefined scenarios a series of cost data could be studied. The results of the analysis showed that the economic performance of a closed loop system could improve when compared to a linear one, if the system was designed with the principles of Circular Economy taken into consideration. To fulfill the second objective, economic performance, environmental impact and resource conservation was defined as three high level indicators of performance. Based on the results it was concluded that the performance of Circular Economy can and should be measured.