3.2 Value creation, delivery, and capture in circular models

Circular business models revolutionize value creation, delivery, and capture. They focus on sustainable solutions, resource efficiency, and waste reduction throughout product lifecycles. This approach transforms traditional linear processes into closed-loop systems, maximizing resource utilization and minimizing environmental impact.

Value delivery in circular models emphasizes product-as-service offerings and sharing platforms. These strategies promote access over ownership, facilitating efficient resource use. Revenue streams combine multiple models, like subscriptions and pay-per-use, to maximize value capture while fostering long-term customer relationships and brand loyalty.

Value Creation and Delivery

Circular Value Proposition and Creation

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• Value proposition in circular models focuses on delivering sustainable solutions that minimize waste and maximize resource utilization
• Value creation involves designing products and services with longevity, repairability, and recyclability in mind
• Circular value chain encompasses the entire lifecycle of products, from sourcing sustainable materials to end-of-life management
• Resource efficiency optimizes the use of materials, energy, and water throughout the production and consumption processes
  • Implements lean manufacturing techniques
  • Utilizes renewable energy sources (solar, wind)
  • Employs water recycling systems in production facilities
• Waste valorization transforms waste materials into valuable resources or products
  • Converts food waste into compost or biogas
  • Repurposes plastic waste into new packaging materials
  • Upcycles textile scraps into fashion accessories

Value Delivery in Circular Business Models

• Value delivery in circular models emphasizes product-as-a-service offerings and sharing economy platforms
• Product-as-a-service models provide access to products without ownership, promoting efficient resource use
  • Leasing high-end electronics instead of selling them outright
  • Offering car-sharing services in urban areas
• Sharing economy platforms facilitate peer-to-peer exchanges of goods and services
  • Enables tool libraries for community use
  • Promotes clothing swap events to extend garment lifecycles
• Reverse logistics play a crucial role in value delivery by facilitating product returns, refurbishment, and recycling
  • Implements take-back programs for electronics
  • Establishes collection points for used packaging materials

Value Capture and Revenue Models

Circular Revenue Streams and Customer Engagement

• Value capture in circular models involves monetizing sustainable practices and resource efficiency
• Revenue models in circular businesses often combine multiple streams to maximize value capture
  • Subscription-based services for regular product maintenance and updates
  • Pay-per-use models for infrequently used items (power tools, formal wear)
  • Resale of refurbished products in secondary markets
• Customer engagement strategies focus on building long-term relationships and fostering brand loyalty
  • Implements loyalty programs rewarding sustainable choices
  • Organizes community events promoting circular lifestyle practices
  • Provides educational resources on product care and repair
• Performance-based pricing aligns company profits with customer and environmental benefits
  • Energy service companies charging based on energy savings achieved
  • Waste management firms pricing services on reduction in landfill waste

Cost Structure Optimization in Circular Models

• Cost structure optimization in circular businesses emphasizes long-term value over short-term gains
• Invests in durable, high-quality materials to reduce replacement and repair costs over time
• Implements predictive maintenance systems to prevent costly breakdowns and extend product lifespans
• Utilizes modular design principles to facilitate easy repairs and upgrades
  • Allows for component-level replacements in electronics
  • Enables customization of furniture pieces to adapt to changing needs
• Collaborates with suppliers and partners to create closed-loop systems, reducing waste management costs
  • Establishes material recovery partnerships with recycling facilities
  • Develops shared logistics networks for efficient reverse supply chains
• Leverages digital technologies to optimize resource allocation and reduce operational costs
  • Employs IoT sensors for real-time monitoring of equipment performance
  • Utilizes AI-powered demand forecasting to minimize overproduction and inventory costs