Accelerating the transition from linear to circular systems through a subscription-based approach

Adopting a Subscription-Based Business Model (SBBM) can facilitate the transition from linear to circular systems by encouraging actions that reduce resource consumption, reuse assets linked to SBBM, and support the recovery and recycling of depleted resources. However, implementing circular economy initiatives can increase the operational complexities and costs associated with SBBMs, necessitating further investigation to optimise profitability. Accordingly, this study presents a Closed Jackson Network (CJN) for an SBBM model to maximise profit in a network involving an asset supplier, a subscription company, asset screening centres, and a recycling centre. Moreover, this study compares the performance of a circular SBBM with the performance of a linear system. Our results reveal that, although the circular economy (CE) introduces new and atypical practices that lead to additional operations and costs, the closed-loop system offsets these increasing SBBM costs by setting optimal subscription fees, revenue from recycled materials, and conducting inventory level optimisation over the circular system. Furthermore, the SBBM is found to perform better in implementing CE practices, especially in cases where linear systems are characterised by low customer enthusiasm for participating in recycling activities and/or reusing programmes.