TU.1.D || Life Cycle Thinking in Companies and Organizations

Wege, Elena; Salvasohn, Lara

Research about the Circular Economy (CE) is often focusing on environmental indicators and frameworks, but the economic side is less elaborated, especially from a company perspective. Thus, the underlying question of this study is how the economic dimension of CE can be addressed and meaningful decision-making be supported from a managerial-accounting perspective. To answer this question, first of all a literature is conducted, depicting indicators that are currently dealing with CE and identifying the economic specifics of circular business models as well as identifying some blind spots. Based on this analysis, in the second part of the study a framework is presented which guides and structures a profitability analysis in the product development phase. Thereby, first of all the technical feasibility of a potential reuse, remanufacturing or recycling path is assessed and potential changes in design and durability are evaluated. Succeeding, the economic feasibility is addressed with a focus on material and manufacturing costs, taking costs for remanufacturing into account. In contrast to other studies an important focus is on the future development, as circular business models require decision making in advance. This includes especially the incorporation of raw material price developments and criticality where a threshold-value for guidance is given. In a last step, the complete life-cycle is taken into account and identifies cost hot-spots and revenue potentials. The framework is presented along a case-study of a solid-oxide fuel cell which shows that the application of Circular Economy is often not straight-forward and requires some changes in design and manufacturing as well as strategies to deal with uncertainty and future developments. The study also shows that circular business models can indeed be very profitable and offer new business opportunities and customer segments.