Sustainable Production and Consumption 31 (2022) 97–112

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Sustainable Production and Consumption

journal homepage: www.elsevier.com/locate/spc

Research article

Towards circular manufacturing systems implementation: A complex

adaptive systems perspective using modelling and simulation as a
quantitative analysis tool
Malvina Roci a,∗, Niloufar Salehi a, Saman Amir b, Sayyed Shoaib-ul-Hasan a,
Farazee M.A. Asif a, Aleš Mihelič c, Amir Rashid a
a
Department of Production Engineering, KTH Royal Institute of Technology, Brinellvägen 68, Stockholm SE-11428, Sweden
b
Department of Marketing and Strategy and Centre for Sustainability Research, SSE Stockholm School of Economics, Holländargatan 32, Stockholm
SE-11383, Sweden
c
Gorenje Gospodinjski Aparati d.d, Partizanska Cesta 12, Velenje 3320, Slovenia

a r t i c l e i n f o a b s t r a c t

Article history: A transition towards circular manufacturing systems (CMS) has brought awareness of untapped economic
Received 21 September 2021 and environmental benefits for the manufacturing industry. Conventional manufacturing systems already
Revised 30 December 2021
present a high level of complexity in terms of physical flows of materials and products as well as infor-
Accepted 31 January 2022
mation and financial flows linked to them. Closing the loop of materials and products through multiple
Available online 4 February 2022
lifecycles, as proposed in CMS, increases this complexity manifold. To support practitioners in implement-
Editor: Prof. Kuo-Jui Wu ing CMS through enhanced decision-making, this research studies CMS from a complex adaptive systems
(CAS) perspective and proposes to exploit methods and tools used in the study of CAS to characterise,
Keywords:
Circular economy model and analyse CMS. By viewing CMS as CAS composed of autonomous, interacting agents, this re-
Circular manufacturing systems search proposes a multi-method model architecture for modelling and simulating CMS. The different CMS
Complex adaptive systems stakeholders are modelled individually as autonomous agents by integrating agent-based, discrete-event,
Multi-method simulation and/or system dynamics modules within each agent to capture their diverse and heterogeneous nature.
Lifecycle costing The applicability of the proposed multi-method approach is illustrated through a case study of a white
Lifecycle revenues goods manufacturing company implementing CMS in practice. This case study shows the relevance and
feasibility of the proposed multi-method approach as a decision support tool for the systemic exploration
and quantification of CMS. It also shows how a transition towards CMS necessitates a lifecycle approach
in terms of costs, revenues and environmental impacts to identify hotspots and, therefore, design circular
systems that are viable in both economic and environmental terms. In fact, the analyses of the simula-
tion results indicate how decisions in terms of business models, product design, and supply chain might
affect the CMS performance of the case company. For instance, implementing a service-based model led
to a high number of usecycles (on average six usecycles per washing machine), which, in turn, led to
high lifecycle costs and emissions due to more frequent transportation and recovery operations. Similarly,
the deployment of long-lasting washing machines, which is a core principle of CMS, led to high manu-
facturing costs. Due to the high initial costs and a time mismatch between revenues and costs in the
service-based model, it required a longer time for the company to reach the break-even point (approx-
imately 23 months). Overall, the case study shows that multi-method simulation modelling can provide
decision-making support for a successful implementation of CMS.
© 2022 The Author(s). Published by Elsevier Ltd on behalf of Institution of Chemical Engineers.
This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/)

1. Introduction source scarcity, greenhouse gas emissions, and waste generation

(Geissdoerfer et al., 2017; Velenturf and Purnell, 2021). In indus-
The notion of a circular economy (CE) has gained traction trial practices, a transition from linear manufacturing systems to
as an approach to respond to the global challenges of re- circular manufacturing systems (CMS), which are designed by in-
tention to close the loop of materials, components, and prod-
∗
ucts through multiple lifecycles (Asif, 2017), promises several eco-
Corresponding author.
nomic and environmental benefits for the manufacturing industry
E-mail address: roci@kth.se (M. Roci).

https://doi.org/10.1016/j.spc.2022.01.033
2352-5509/© 2022 The Author(s). Published by Elsevier Ltd on behalf of Institution of Chemical Engineers. This is an open access article under the CC BY license
(http://creativecommons.org/licenses/by/4.0/)
M. Roci, N. Salehi, S. Amir et al.
Acronyms and nomenclature
Acronyms
CMS: Circular Manufacturing Systems
CE: Circular Economy
CAS: Complex Adaptive Systems
AB: Agent-Based
SD: System Dynamics
DE: Discrete-Event
GIS: Geographical Information System
Variables
LCCi Life cycle cost of washing machine i
LC Ri Lifecycle revenues generated by wash-
ing machine i
LC Ii Life cycle environmental impact of
washing machine i
manu f acturingCosti Manufacturing cost of washing ma-
chine i
manu f acturingCO2i Manufacturing kg CO2 eq of washing
machine i
f orwardT ransportCosti Transportation cost from manufac-
turer to service provider of washing
machine i
f orwardT ransportCO2i Transportation kg CO2 eq from man-
ufacturer to service provider of wash-
ing machine i
instal l ationCosti jk Installation cost of washing machine
i at usecycle j at customer k
instal l ationCO2i jk Installation kg CO2 eq due to trans-
portation of washing machine i at
usecycle j from service provider to
customer k
useP haseCO2i jk Use phase kg CO2 eq of washing ma-
chine i during usecycle j at customer
k approach to business models, product design, and supply chains
repairCosti jk Repair cost of washing machine i at
usecycle j at customer k
repairCO2i jk Repair kg CO2 eq of washing machine
i at usecycle j at customer k
deinstal l ationCosti jk Deinstallation cost of washing ma-
chine i at usecycle j at customer k
deinstal l ationCO2i jk Deinstallation kg CO2 eq due to trans-
portation of washing machine i at use
cycle j from customer k to service
provider
re f urbishCosti jk Refurbish cost of washing machine
i after usecycle j from customer k
re f urbishCO2i jk Refurbish kg CO2 eq of washing ma-
chine i after usecycle j from customer
k and environmental terms.
recyclingCosti Recycling cost of washing machine i
recyclingCO2i Recycling kg CO2 eq of washing ma-
chine i
subscriptionF eek Monthly subscription fee paid by cus-
tomer k
Revenuesi jk Revenues generated by washing ma-
chine i during usecycle j at customer
k CAS are a special category of complex systems composed of in-
useP haseDurationi jk Usecycle duration of washing ma-
chine i during usecycle j at customer
k tive agents (Choi et al., 2001; Holland and Miller, 1991). Simu-
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Sustainable Production and Consumption 31 (2022) 97–112
serviceLi f ei Duration of time for which the wash-
ing machine i is in use/service during
its lifetime
Subscripts
i: Product
j: Usecycle
k: Customer
(Lieder and Rashid, 2016; Pigosso and McAloone, 2021). Despite
this increased interest, the implementation of CMS is still in its in-
fancy. In fact, the remanufacturing intensity in the EU, i.e., the ratio
of remanufacturing to new manufacturing, amounts to only 1.9%
(Parker et al., 2015). Conventional manufacturing systems already
present a high level of complexity in terms of physical flows of
materials and products as well as information and financial flows
associated with them. Closing the loop of materials, components,
and products through multiple lifecycles as proposed in CMS in-
creases the complexity in the system manifold (Amir et al., 2021).
Firstly, in the context of CMS, products and systems need to be
designed intentionally to close the loop (Ellen MacArthur Foun-
dation, 2013) by considering the conservation of materials, value-
added (e.g., labour), and energy as an integral part of the product
design phase with a holistic insight into the entire lifecycle of the
product (Rashid et al., 2013). Thus, effective implementation and
success of CMS require full control of the product throughout all
the stages of the value chain, e.g., design, manufacturing, forward
supply chain, customer use phase, reverse supply chains, recovery
activities, and re-distribution. This holistic lifecycle approach with
a concurrent focus on “value creation, delivery, use, recovery, and
reuse” (Asif, 2017) is characterised by feedback loops due to mate-
rial, information, and financial circular flows. These flows and their
interaction induce complex, non-linear behaviour in the system.
Secondly, CMS advocates for the development of innovative circular
business models (Geissdoerfer et al., 2020) in conjunction with de-
sign for circularity (Bocken et al., 2016) and integration of forward
and reverse supply chains (Geissdoerfer et al., 2018). This systemic
leads to higher complexity in the system as these elements are
characterised by mutual and dynamic interactions (Rashid et al.,
2020). Thus, changes in one area will demand changes in the other
areas, impacting in this way the economic and environmental per-
formance of the system. Finally, circularity needs to be considered
as a property of a system (Konietzko et al., 2020) rather than a
property of an individual stakeholder. Hence, stakeholders’ involve-
ment and collaboration to close the loop of materials and products
through multiple lifecycles are essential. This stakeholders’ involve-
ment leads to the emergence of complex value networks char-
acterised by a multiplicity of interactions and interdependencies
amongst different entities. Thus, the implementation of CMS is a
complex process and therefore there is a need to address this com-
plexity in order to design systems that are viable in both economic
The complex, multifaceted nature of CMS can pose consider-
able challenges for traditional analysis approaches (e.g., analytical
models) to capture their systemic and dynamic nature. The study
of complex adaptive systems (CAS) comprises a set of tools and
techniques for modelling and analysing the complexity emerging
in diverse fields including social science, ecology, economics, and
technology (Holland, 1995; Miller and Page, 2007; Mitchell, 2009).
terconnected agents that exhibit adaptive behaviour to respond to
changes in both the environment and the behaviour of other adap-
lation modelling has become a major tool for investigating CAS
M. Roci, N. Salehi, S. Amir et al.
(Holland, 2012) as it can handle non-linear behaviour, time and
causal dependencies, uncertainty and a large number of param-
eters. The major paradigms in simulation modelling are System
Dynamics (SD), Discrete Event (DE), and Agent-Based (AB). In the
context of CE, there has been growing interest in adopting these
simulation modelling paradigms to support CE analysis in differ-
ent areas. For instance, SD is employed to provide insights into
design considerations and their implication to a product’s take
back phase (Franco, 2019), or evaluate CE strategies on the circu-
larity potential of products and materials within a specific value
chain (Saidani et al., 2021); AB modelling is employed to study be-
havioural changes in post-consumer recycling (Tong et al., 2018)
or customer acceptance of circular business models (Lieder et al.,
2017a); whereas DE modelling is used to evaluate the effects of in-
troducing circular activities across a supply chain (Moreno et al.,
2019) or analyse the effect of remanufacturing and mainte-
nance as part of circular economy strategies (Wakiru et al.,
2018).
A multi-method (or hybrid) simulation approach, which com-
bines at least two of the three discussed modelling paradigms,
is considered to be a more suitable approach to simulate com-
plex real-world systems (Brailsford et al., 2019; Swinerd and Mc-
Naught, 2012) as it allows the modeller to attain higher flexibility
at different levels of abstraction by considering the complemen-
tary capabilities and recognizing the limitations of each modelling
approach (Borshchev, 2013). Despite the importance of multi-
method modelling, very few of the published works have com-
bined these modelling approaches in the context of CE. Amongst
these, Lieder et al. (2017b) proposed a multi-method simulation
approach that combines an AB product architecture and a DE
closed-loop supply chain model to quantify design effort for dif-
ferent circular design options. Charnley et al. (2019) employed a
combination of SD and DE approaches to understand the effects
of certainty of product quality on products awaiting remanufac-
turing. Kerdlap et al. (2021) used a hybrid model to simulate the
complex dynamics of waste-processing systems. Moreover, the pro-
posed multi-method models in the literature are very context-
specific, thus, they provide little guidance to practitioners on how
to model and simulate CMS in order to capture their systemic and
dynamic nature for enhanced decision-making prior to their im-
plementation. This clearly shows a research gap that needs to be
addressed.
To address the abovementioned research gap, this study inves-
tigates the following research question: How to model and simu-
late circular manufacturing systems in order to provide a systemic
quantitative analysis tool for enhanced decision-making prior to
their implementation? To address this research question, the au-
thors examine the nature of CMS through the lens of CAS. By view-
ing CMS as CAS composed of autonomous, interacting agents, in
this study a multi-method model architecture is proposed where
the different CMS stakeholders are regarded as autonomous agents
and modelled using SD, DE, and/or AB modules. Given the di-
verse and heterogeneous nature of CMS stakeholders, this inte-
grated hybrid design, where SD, DE, and/or AB modules are in-
tegrated within each agent, allows to model individual stakehold-
ers with rich internal structures as active entities with individ-
ual characteristics. The applicability of the proposed multi-method
simulation modelling approach is illustrated through a case study
of a white goods manufacturing company implementing CMS in
practice within the EU-funded ReCiPSS project (EU, 2018). The re-
sults show that multi-method simulation modelling can provide
decision support through systemic exploration and quantification
of CMS. It also provides insights into lifecycle costs, lifecycle rev-
enues, and lifecycle environmental impacts and therefore facili-
tate decision-making for industrial enterprises aiming to imple-
ment CMS.
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Sustainable Production and Consumption 31 (2022) 97–112
The remainder of this paper is organised as follows. Section
2 provides an overview of relevant concepts and characteristics
of CAS and CMS and then examines the nature of CMS through
the lens of CAS. By viewing CMS as CAS, this examination sug-
gests that tools and techniques used to model and analyse CAS
can effectively be applied to understand and analyse the com-
plex and dynamic nature of CMS for enhanced decision-making
prior to their implementation. In Section 3, the authors propose
a multi-method simulation modelling approach to analyse CMS. In
section 4, the applicability of the proposed multi-method simula-
tion modelling approach is illustrated through a case study and
the results are presented and discussed. Finally, section 5 sum-
marises the main conclusions of the study, limitations, and future
directions.
2. Literature review
2.1. Overview of complex adaptive systems
Complex systems constitute systems containing many hetero-
geneous agents that interact with one another (Simon and Her-
bert, 1996). The term agent is used to refer to the component
or subsystem that populates a complex system. Complex Adap-
tive Systems (CAS) are a special category of complex systems com-
posed of interconnected agents that exhibit adaptive behaviour to
respond to changes in both the environment and the behaviour of
other adaptive agents (Choi et al., 2001; Holland and Miller, 1991).
Various natural systems and man-made systems can be classified
as CAS (Choi et al., 2001; Holland, 1995; Surana et al., 2005) as
they are composed of a multiplicity of interacting agents. These
systems exhibit an aggregate behaviour that arises as a result of
non-linear spatio-temporal interactions amongst interacting agents
(Surana et al., 2005). This aggregate behaviour can be explained
without knowing the detailed behaviour of each individual agent
(Holland and Miller, 1991). Such systems change and reorganise
their agents to adapt themselves in response to internal and exter-
nal events affecting the system (Holland, 1992). Several disciplines
including biology, social science, ecology, economics, and technol-
ogy have adopted the CAS perspective (Holland, 1995; Miller and
Page, 2007; Mitchell, 2009) to obtain insights into important mat-
ters within their field of study (Pathak et al., 2007). Even though
there are no universally accepted theories for describing CAS, mod-
ern CAS theories focus on “the interaction between a system and
its environment and the co-evolution of both the system and the
environment” (Choi et al., 2001). These theories offer the system-
level perspective with a focus on the adaptivity of agents, i.e., dy-
namic learning of individual agents, and the structural complexity
of the system, i.e., the interconnectedness of agents (Pathak et al.,
2007).
When examining CAS, the following characteristics are relevant
to better understand their complex and dynamic nature:
Emergence and self-organisation: One of the key characteristics
of CAS is the concept of emergence; the latter refers to the ag-
gregate (or collective) behaviour that arises from the multiple and
manifold interaction between the agents in the system (De Wolf
and Holvoet, 2005; Rand, 2013; Surana et al., 2005). Increasing
the number of interactions triggers feedback loops, giving in this
way rise to an aggregate behaviour (Fontana and Ballati, 1999).
Thus, this aggregate behaviour is caused not by a single agent but
rather it emerges as a result of “simultaneous and parallel actions”
of interacting agents (Choi et al., 2001). As a result, CAS are self-
organizing and the macro-level patterns, which arise from interact-
ing agents, are not externally imposed on the system (Choi et al.,
20 01; Surana et al., 20 05). In CAS models, complex outcomes arise
from simple schemata (i.e., a set of rules) and are determined by
how agents are interconnected (Anderson, 1999). Such outcomes
M. Roci, N. Salehi, S. Amir et al.
evolve from the effort of agents to achieve higher performance
over time (Holland and Miller, 1991). Thus, such systems self-
organise in a way that the whole is more than the sum of its
parts, where the “more” refers to properties deriving from the in-
teractions amongst agents (Fontana and Ballati, 1999) and feedback
loops (Anderson, 1999).
Adaptation and co-evolution: The ability of agents to adapt or
learn to a changing environment is the main characteristic of CAS
(Holland, 1992); in fact, agents in a CAS are capable of changing
themselves to adapt to changes in the environment and the be-
haviour of other adaptive agents (Choi et al., 2001; Holland, 1995;
Surana et al., 2005). As other adaptive agents constitute a ma-
jor portion of the environment, agents co-evolve with one an-
other (Anderson, 1999) in their attempts to adapt to other adap-
tive agents (Holland, 1995). Agents adapt to their environment
by striving to increase their performance over time (Holland and
Miller, 1991). These adaptive processes are complex because they
involve a large number of agents whose individual behaviour is
influenced by the behaviour of other agents; thus, each agent’s
adaptive environment is constantly shifting. CAS are constituted
of many distributed, interacting agents without a central control
(Holland, 1992). Thus, there is no single governing rule that con-
trols the CAS; instead, each agent is governed by its own rules that
may influence an outcome or the behaviour of other agents. This
resulting “rule-based structure” becomes important for the evolu-
tionary process that enables the system to adapt to its environ-
ment (Holland, 1995).
Evolution and anticipation: A dynamic environment surrounds
CAS that evolve to improve their performance or fitness
(Choi et al., 2001). CAS evolve over time through the entry, exits,
and transformation of agents (Anderson, 1999). Moreover, the link-
ages between agents may evolve over time due to changes in the
type of connections, the strength of connections, and their func-
tional form (Anderson, 1999). Moreover, new rules (i.e., schema)
may be imposed by the environment; thus, as these schemas are
changed, the performance measures may also change (Choi et al.,
2001). Because each agent in a CAS is continually revising its rules
for interaction, agents are embedded in a perpetually novel en-
vironment (Choi et al., 2001), i.e., the changing behaviour of the
other agents. As a result, the aggregate behaviour of the system
usually operates far from optimal (Holland, 1992). The system con-
tinues to evolve, and steadily exhibit new forms of emergent be-
haviour. Therefore, optima and steady states are short-lived in
such contexts. In the attempt to adapt to changing environment,
the agents develop rules that anticipate the outcomes of certain
actions (Holland, 1992). This anticipation is another feature that
makes these systems more complex (Holland, 1992). Even for sim-
ple conditioning, the resulting effects may be quite complex as
many agents are being conditioned in different ways. These various
conditionings depend upon the interactions between agents. CAS
form and use internal models basing current actions on expected
outcomes to anticipate the future. It is this attribute of anticipa-
tion that makes it difficult to understand the emergent behaviour
of CAS.
Connectivity and non-linearity: CAS constitute an aggregate of
interconnected agents that interact simultaneously; thus, CAS con-
tain many active elements that are diverse in both “form and ca-
pability” (Holland, 1995) and have different degrees of connec-
tivity through which they exchange information and resources
(Choi et al., 2001). Because agents in CAS are interconnected to
one another by feedback loops (Anderson, 1999), the system be-
haves in a non-linear manner (Choi et al., 2001; Holland, 1995). In
non-linear relationships, changes in the input to the system do not
result in direct proportion to changes in the output. Thus, in non-
linear systems, large changes in input can bring small changes in
output whereas small changes in input can bring major changes in
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Sustainable Production and Consumption 31 (2022) 97–112
output. As a result, CAS can be very sensitive to small changes in
the environment.
2.2. Circular manufacturing systems
Circular Manufacturing Systems (CMS) refer to “systems
that are designed intentionally to close the loop of prod-
ucts/components, preferably in their original form, through mul-
tiple lifecycles” (Asif, 2017). A transition towards CMS necessitates
rethinking value propositions in order to incorporate the environ-
mental and social value in addition to the conventional economic
value (Galvão et al., 2020; Manninen et al., 2018; Stubbs and Cock-
lin, 2008). In conventional linear systems, the value model is fo-
cused on “the rationale of how an organisation creates, delivers,
and captures value” (Osterwalder and Pigneur, 2010). In the con-
text of CMS, this value model is extended to incorporate the phases
of value recovery and value reuse in order to allow for value recap-
ture across successive product lifecycles (Asif, 2017). Thus, an ef-
fective implementation and success of CMS require a holistic value
management approach that encompasses the phases of “value cre-
ation, delivery, use, recovery, and reuse” in a systemic manner
(Asif, 2017). This holistic value management approach can be re-
ferred to as the circular value model illustrated in Fig. 1.
2.2.1. Value creation
In this phase, products are designed and manufactured through
an optimal combination and efficient use of materials, energy, and
workforce with a focus on multiple lifecycles. In this context, value
creation considers the conservation of materials, value-added (e.g.,
labour), and energy as an integral part of the product design phase
with a holistic insight into the entire lifecycle of the product
(Rashid et al., 2013). Thus, product design plays a crucial role in
implementing different mechanisms that aim at keeping the value
of materials and products over time with respect to both economic
and environmental terms (Bocken et al., 2016; Moreno et al., 2016).
This value retention can be achieved either by looping the prod-
ucts back into the system for reuse or by extending their lifetime
(den Hollander et al., 2017). Design characteristics considered in
this stage may be numerous, including design for long life and easy
disassembly in order to allow for multiple lifecycles.
2.2.2. Value delivery
Besides designing and manufacturing products for multiple life-
cycles, well-designed circular supply chains are essential as a
means to deliver and handle the dynamics of multiple lifecycle
products for value use, recovery and reuse. Hence, value chain in-
tegration (i.e., integration of forward and reverse flows) is critical
for a successful implementation of CMS as multiple lifecycle prod-
ucts are required to come back and forth several times (Asif et al.,
2012; Rashid et al., 2013).
2.2.3. Value use, value recovery, and value reuse
These phases strongly advocate for the development of inno-
vative business models that “enable economically viable ways to
continually reuse products and materials” (Bocken et al., 2016;
Geissdoerfer et al., 2020) through new value propositions. A tran-
sition from product-oriented to service-oriented business models
that focus on access or performance rather than ownership, is con-
sidered as an effective instrument to close the loop (Bocken et al.,
2016; Tukker, 2015). While in product-oriented business models,
the value proposition is mainly geared towards the sales of prod-
ucts, in service-based business models the value proposition is
centred on the delivering the service, i.e., access or performance.
Therefore, the ownership remains with the provider, which is also
responsible for maintenance, repair, and related activities that are
needed to deploy the service. In this context, the role of users
M. Roci, N. Salehi, S. Amir et al.
Fig. 1. Circular value model – a complex circular value network approach. Depending on the scale of analysis, the term agent may represent a product, a business unit, or
an entire organisation.
becomes vital (Rashid et al., 2013) as they act as suppliers of
raw materials for value recovery operations (i.e., reuse, remanu-
facture, recycle). Thus, these phases focus on evaluating the use
of products at different stages of their lifecycles to recover their
functional state to original or better performance and continue
their use. In the context of multiple lifecycle products, this prod-
uct regeneration process can continue as long as it is viable from
both an economic and environmental perspective (Asif et al., 2021;
Rashid et al., 2013); hence, the total number of product lifecycles
is constrained by the economic and environmental viability.
It is important to note that all these five value-phases are core
features of CMS and need to be considered simultaneously rather
than sequentially by taking a systemic approach to business mod-
els, product design, and supply chains (Rashid et al., 2020, 2013).
This systemic approach leads to minimised uncertainties of prod-
uct returns in terms of quantity, quality, and timing, which are
considered as a prerequisite for a successful implementation of
CMS (Rashid et al., 2013).
Moreover, this holistic value management approach extends the
traditional views of a value chain and value system introduced by
Porter (1985), which assume a linear value flow from raw material
providers to manufacturers to distributors to the end customers.
According to these traditional views, every actor occupies a spe-
cific position in the value flow: upstream suppliers provide inputs
to manufacturing companies, which then add value to these inputs
before sending them as output to downstream actors in the value
system (Basole and Rouse, 2008; Normann and Ramírez, 1993;
Peppard and Rylander, 2006). In the context of CMS, a concur-
rent approach to all the value-phases is essential for achieving sys-
tems circularity. This concurrent approach increases the complexity
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Sustainable Production and Consumption 31 (2022) 97–112
significantly due to numerous interdependencies, stronger interac-
tions and feedback loops. Therefore, successful implementation of
CMS requires collaborations with internal and external partners to
jointly create, deliver, use, recover and reuse value. As a result, a
complex value network of stakeholders emerges from the partner-
ships a stakeholder engages at every stage of the circular value
model. In fact, circularity has to be considered as a property of a
system (Konietzko et al., 2020) rather than a property of an indi-
vidual stakeholder. The transition towards circular systems results
from stakeholders involvement and their capacity to engage in
appropriate collaboration and exchange patterns (Ghisellini et al.,
2016). Therefore, a stakeholder network, which relies on collabo-
rative relationships between stakeholders who have objectives of
environmental and social value in addition to the economic value
(Stubbs and Cocklin, 2008), is an appropriate structure to achieve
systems circularity. In the given context, information and commu-
nication technology (ICT) plays a role of a system enabler by han-
dling the complexity of physical, financial, and information flows
throughout the value network. In this context, having accurate and
timely information, which can be accessed by the relevant stake-
holders of the circular value network, becomes essential for the
successful integration of all the CMS stakeholders. ICT is a key en-
abler to meet such requirements for CMS implementation as it has
the potential to set up dynamic information exchange networks.
2.3. Circular manufacturing systems as complex adaptive systems
Following the overview of relevant elements and characteristics
of CAS and CMS, in this section, CMS is examined through the lens
of CAS. The key illustrative elements are summarised in Table 1.
M. Roci, N. Salehi, S. Amir et al. Sustainable Production and Consumption 31 (2022) 97–112

Table 1
Framing circular manufacturing systems (CMS) as complex adaptive systems (CAS).

Key features of CAS Description of CAS CMS illustrations

Connectivity and non-linearity (Choi et al.,
2001; Pathak et al., 2007; Surana et al., 2005)
Evolution and anticipation (Anderson, 1999;
Choi et al., 2001; Holland, 1992)
Adaptation and co-evolution (Anderson, 1999;
Choi et al., 2001; Holland, 1995, 1992;
Pathak et al., 2007)
Emergence and self-organisation
(Anderson, 1999; Choi et al., 2001; De Wolf
and Holvoet, 2005; Holland, 1995;
Surana et al., 2005)
Non-linear dynamics involving interrelated
spatial and temporal effects of interconnected
agents.
CAS evolve over time through the entry, exits,
and transformation of agents. In seeking to
adapt, agents develop rules that anticipate the
consequences of certain actions.
Agents in a CAS are capable to adapt or learn
to a changing environment or changing
behaviours of the other agents; thus, agents
co-evolve with one another.
Structures, patterns, and properties emerge
through simultaneous and parallel actions of
a multiplicity of agents. Some agents may
have a major impact on the system, but no
agent can control it entirely.
CMS is a multilateral construct, with a multiplicity of
relationships (multilateral dependencies) amongst the
different stakeholders in the circular value network.
Feedback loops due to physical, information and financial
circular flows induce complex non-linear behaviour in
the system.
A dynamic environment surrounds CMS, which
necessitates the adaptation of the involved stakeholders.
Both exogenous factors (e.g., resource scarcity, regulatory
frameworks) and endogenous factors (e.g., the
introduction of innovative circular business models)
shape how CMS evolves over time.
CMS consist of an interconnected network of a large
number of stakeholders that may adapt their behaviour
in response to changes in both the environment and the
behaviour of other stakeholders. Over time, the
stakeholders of the CMS co-evolve their capabilities and
roles to achieve circularity as a collective outcome.
CMS constitute circular value networks that emerge and
develop as a result of stakeholders’ involvement and
collaboration at every stage of the circular value model
with no one stakeholder deliberately managing or
controlling it.

Circular manufacturing systems, as defined in this study, consti-
tute complex value networks that emerge and develop as a result
of stakeholders’ involvement and collaboration to close the loop of
materials and products through multiple lifecycles. Therefore, a set
of stakeholders – suppliers, producers, service providers, distribu-
tors, customers, competitors, and other stakeholders – cooperate to
achieve circularity as a collective outcome (Konietzko et al., 2020).
The system is thus inherently multilateral; this implies the pres-
ence of a large number of stakeholders as well as a set of relation-
ships that goes beyond bilateral interactions (Adner, 2017). These
interactions constitute the dynamic aspects of relationships that
comprise exchange processes (i.e., physical, financial, and informa-
tion exchanges) and adaptation processes (i.e., means by which
firms adjust products, processes, and routines) (Axelsson and Eas-
ton, 2016). Thus, the CMS is a complex, interconnecting network
of direct and indirect linkages amongst different stakeholders that
work together to achieve systems circularity as an overall outcome.
The collective system performance is bound to the performance
of the entire network of stakeholders (Iansiti and Levien, 2004).
For instance, certainty in terms of quality, quantity, and timing of
return flows are essential for CMS implementation (Rashid et al.,
2013). However, ensuring certainty of return flows requires coor-
dination and collaboration amongst all CMS stakeholders as return
flows are a result of a multiplicity of decisions made by many in-
dividual stakeholders every moment. Hence, CMS is characterised
by interdependencies, feedback loops (i.e., due to physical, finan-
cial, and information flows), and strong interactions amongst the
elements of the system that lead to complex non-linear behaviour.
In the context of CMS, while the system refers to the network
of stakeholders that aim at closing the loops of products and com-
ponents through multiple lifecycles, the environment consists of
the connected economic systems the CMS stakeholders operate in
and the larger institutional and cultural systems that confines the
CMS. Frequently, a dynamic environment surrounds CMS, which,
in turn, necessitates a constant adaptation of the involved stake-
holders. These changes in the environment can be due to varia-
tions in market conditions, user demands, technological advance-
ments, and regulatory frameworks. For instance, governments may
pursue circular economy strategies, e.g., China Circular Economy
Promotion Law (Su et al., 2013), by introducing regulatory frame-
works or economic incentives, which, in turn, will urge the stake-
holders to adapt to such changes. Thus, the way networks evolve
over time is determined by both exogenous and endogenous fac-
tors (Gulati et al., 20 0 0). In addition, anticipating the changes and
setting the pace of change is crucial to surviving in a competitive
environment (Brown and Eisenhardt, 1998). Therefore, the value
network changes as a result of the inclusion or exclusion of a cer-
tain stakeholder and by altering or eliminating interconnections
amongst stakeholders, changing in this way the underlying pattern
of interrelations in the network.
The adaptivity of stakeholders and the complexity of their inter-
actions are often inherent in value networks (Pathak et al., 2007).
In fact, the performance of a stakeholder is a function of its own
capabilities and position to its competitors, customers, partners,
and suppliers and the performance of the entire network of other
stakeholders and their dynamic interactions as a whole (Iansiti and
Levien, 2004). Over time, stakeholders co-evolve their capabilities
by looking for mutually supportive roles to achieve a shared out-
come (Moore, 1996). For instance, the power-by-the-hour business
strategy adopted by the aero-engine manufacturer Rolls Royce is
a typical example of a co-evolution process between the engine
manufacturers and the engine operators (Smith, 2013). However, to
enable the adaptability of the stakeholders, their capabilities need
to be dynamic (Eisenhardt and Galunic, 20 0 0). Thus, each indi-
vidual stakeholder continually observes what arises from a value
network and adjusts its objectives and capabilities accordingly. The
stakeholders of the system usually co-evolve mutual dependencies
that work to their benefit (Iansiti and Levien, 2004). Therefore, no
stakeholder’s actions can be considered in isolation from its sur-
rounding environment, but in harmony with it (Chertow, 2007).
CMS emerge and develop as a result of numerous stake-
holders engaging in the different stages of the circular value
model due to economic, environmental, social, or regulatory forces
(Chertow, 2007) to achieve circularity as a collective outcome
(Konietzko et al., 2020). The structure of the CMS emerges with no
one stakeholder deliberately orchestrating the exact shaping; thus,
the actual structure of the CMS will depend on relationships es-
tablished at each stage of the circular value model. From the CAS
perspective, the emergence and development of value networks in
the CMS is a self-organizing process that builds from kernels of co-
operation and exchange (Chertow, 2007) as value created through
stakeholder partnership is larger than the value created by a sin-

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M. Roci, N. Salehi, S. Amir et al.
gle stakeholder (Suominen et al., 2019). On the other hand, un-
desirable emergent phenomena such as rebound effects could also
arise in such systems. Thus, rebound effects may occur when im-
provements in production or consumption efficiency are offset by
increased production or consumption levels (Zink and Geyer, 2017).
Adapted user behaviour is a typical example of rebound effects; for
instance, offering products at a lower price, which is usually the
case for shared, reused, or recycled products (Kjaer et al., 2019), in-
centivises users to consume more. In fact, price setting is a typical
case of a self-organizing process as it depends on the interaction
between the supply and demand (Anzola et al., 2017).
Recognizing CMS as CAS leads to novel and effective ways to
understand and analyse their complex and dynamic nature for bet-
ter decision-making prior to implementation. To the extent that
the comparison of CMS to CAS is a valid one, it highlights the im-
portance of using appropriate tools and techniques used to model
and analyse CMS.
2.4. The role of modelling and simulation in analysing complex
adaptive systems
Analytical models, which aim at capturing the system behaviour
through mathematical techniques, show limitations when it comes
to capturing the dynamics and complexity of real-world systems
(Ghosh, 2002). Given the inherent complexity of today’s systems,
which are characterised by a large number of variables and pa-
rameters and a high diversity in their behaviours, the outcomes
of the analytical efforts have been restrictive (Ghosh, 2002). For
complex systems featuring non-linear behaviour, time and causal
dependencies, uncertainty and a large number of parameters, sim-
ulation modelling is a better approach (Borshchev, 2013). Sim-
ulation models have become a major tool for investigating CAS
(Holland, 2012) because they can handle if/then conditional in-
teractions (Holland, 2006). Such interactions pose difficulties for
traditional analytical models because, in mathematical terms, they
are non-linear (i.e., non-additive) (Holland, 2012). Moreover, a key
challenge in analysing complex systems is the difficulty in under-
standing how the collective behaviour of the system emerges as a
result of a multiplicity of agents interacting with one another. Be-
cause of this difficulty in understanding the collective behaviour,
simulation models have been proven effective to design and anal-
yse CAS (Surana et al., 2005). Moreover, simulation models play
a crucial role in situations where decisions are well-separated in
space and time from their consequences (Surana et al., 2005). Thus,
modelling and simulation may be the most logical approach to
study CAS objectively (Ghosh, 2002; Law and Kelton, 20 0 0) as sim-
ulation provides quantitative and qualitative insights into the ac-
tual behaviour of the system (Ghosh, 2002).
System dynamics (SD), discrete-event (DE), and agent-based
(AB) are the main simulation modelling paradigms that are used
to model and simulate a wide range of large-scale systems
(Borshchev, 2013).
SD dates back to the mid-1950s, and it is largely used to analyse
the dynamics of a system by adopting a higher system-level per-
spective (Forrester, 1961; Sterman, 2001). Therefore, SD is mainly
used in long-term, strategic modelling and assumes a high level
of aggregation of objects being modelled. It is a continuous mod-
elling technique that takes elements from feedback control systems
theory to model and analyse dynamic systems (Forrester, 1961). In
SD models, the real-world processes are considered as stocks (e.g.,
material, parts, money), and flows between these stocks. These
models facilitate tracing the pattern of behaviour of a dynamic sys-
tem to its feedback structure (Scholl, 2001). In SD models, the ob-
ject being modelled (e.g., people, products, or other discrete items)
are passive entities that are represented by their quantities. There-
fore, they lose any individual properties, histories or dynamics.
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Sustainable Production and Consumption 31 (2022) 97–112
DE modelling is almost as old as system dynamics. It is a
process-centric approach where the system is modelled as a pro-
cess, i.e., “a sequence of operations that are performed across en-
tities” (Borshchev, 2013). This approach focuses on the tactical
and operational dimensions, supporting in this way a medium-
low abstraction level (Borshchev, 2013). DE models are built in the
form of process flowcharts that define sequences of operations per-
formed over entities. In DE models, service times and entity ar-
rival times are usually stochastic, taken from a probability distri-
bution (Borshchev, 2013). While in SD modelling individual objects
are aggregated and the dynamic of their quantities are described,
in DE modelling objects keep their individuality, i.e., entities and
resources can have attributes and can differ from each other. How-
ever, both entities and resource units are passive, i.e., they have
no behaviour on their own, they just carry their data, while their
behaviour is defined by the process flowchart.
AB modelling is a relatively new simulation approach developed
for understanding how the dynamics of complex systems emerge
from the characteristics and behaviours of the agents making up
these systems (Railsback and Grimm, 2011). This simulation tech-
nique has its historical origins in the study of complex adaptive
systems (Holland, 2012; North and Macal, 2007; Taylor, 2014) and
it is based on the notion that “the whole is more than the sum of
its constituent parts” (North and Macal, 2007). In AB models, a sys-
tem is modelled as “a collection of autonomous decision-making
entities” called agents, their individual behaviour rules, and their
direct and indirect interaction within a dynamic environment
(Bonabeau, 2002). In contrast to SD and DE modelling, where the
modelled objects are passive entities, in AB modelling the object
being modelled are active entities that have autonomous individual
behaviour. Thus, these models have the capability to capture emer-
gent phenomena (Bonabeau, 2002; Scholl, 2001), which is a result
of interactions amongst individual agents. Moreover, AB modelling
can bring significant benefits when agents exhibit complex be-
haviour, including learning and adaptation (Bonabeau, 2002). Thus,
this approach is particularly applicable if adaptation and emer-
gence phenomena are relevant (MacAl and North, 2010).
The choice of the simulation method depends on the purpose of
the model and the questions the model is intended to answer. To
model and simulate complex systems, it is often useful to combine
one or more modelling approaches by considering the complemen-
tary capabilities and recognizing the limitations of each modelling
approach (Borshchev, 2013). Therefore, the resulting multi-method
approach has the flexibility to handle the dynamics of complex
systems as each of these modelling approaches serve a particu-
lar range of abstraction levels. Moreover, they cover different be-
haviours in terms of simulation time and change of state of the
modelled system: SD is a continuous-time simulation approach,
i.e., the model state changes steadily with time, whereas DE and
AB are discrete-time simulation approaches, i.e., state changes oc-
cur at discrete points in time due to a specific event.
3. Methods
Complex systems modelling and simulation can be employed
to understand and analyse the dynamic and systemic nature of
CMS for enhanced-decision making prior to implementation. A
multi-method modelling approach combining agent-based, discrete
event, and system dynamics is considered as an appropriate ap-
proach to model and simulate CMS as different ranges of abstrac-
tion levels are needed to best capture the interactions amongst the
elements of the system (Amir et al., 2021). Many different multi-
method model architectures can be built by combining the dif-
ferent modelling approaches (e.g., agents interacting with an SD
stock and flow model or DE process model, a DE process model
linked to an SD stock and flow model). By viewing CMS as CAS
M. Roci, N. Salehi, S. Amir et al.
Fig. 2. A multi-method model architecture for modelling and simulation of circular manufacturing systems. The term agent represents a stakeholder in the circular value
network. Agents are placed in a geographical information system (GIS).
composed of autonomous, interacting agents, this study proposes
a multi-method model architecture where the different CMS stake-
holders are modelled individually as autonomous agents using AB,
DE, and/or SD modules. Aiming at systems behaviour, AB modelling
seems most appropriate as it allows to model individual stakehold-
ers as active entities with individual characteristics. In addition, to
best capture the diverse and heterogeneous behaviour of the dif-
ferent stakeholders engaged in the CMS, an integrated hybrid de-
sign is employed where AB, DE, and/or SD modules are integrated
within each agent. This integrated hybrid design allows to model
individual stakeholders with rich internal structures by exploiting
the complementary capabilities and recognizing the limitations of
each modelling approach. The proposed multi-method model ar-
chitecture for CMS modelling and simulation is shown in Fig. 2.
In this figure, one of the agents is magnified, revealing its internal
structure to be an integration of AB, DE, and/or SD modules.
To build the proposed CMS simulation model, the general steps
in building an agent-based model as identified by MacAl and North
(2010) are followed:
1. Identify the set of agent types, their attributes and behaviours.
2. Define the set of agent relationships and ways of interaction to
specify how and with whom agents interact.
3. Define the environment agents live and interact with other
agents.
In the CMS simulation model, the different agent types (step
1) include all the relevant stakeholders involved in the concur-
rent process of value creation, value delivery, value use, value re-
covery, and value reuse. Therefore, the set of stakeholders rang-
ing from suppliers, producers, service providers, distributors, and
customers, to recyclers as well as other stakeholders can be iden-
tified as agent types to be modelled individually. The behaviour
of agents can be defined in various ways. Usually, an agent has
a notion of state, and its actions and reactions depend on its
state (Borshchev, 2013). In this case, behaviour can be defined
by using statecharts (Borshchev, 2013). A statechart is an ad-
vanced construct in AB modelling used to simulate event- and
time-driven behaviour to capture a wide variety of discrete be-
haviour. In other cases, a discrete event or a system dynamics
approach might be more appropriate to capture the internal dy-
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Sustainable Production and Consumption 31 (2022) 97–112
namics of an agent (Borshchev, 2013). In these cases, a DE pro-
cess flowchart and/or an SD stock and flow diagram are placed
inside the agent. Stock and flow diagrams are fundamental parts
of SD models where stocks, known as levels or accumulations, are
employed to simulate real-world processes (e.g., stocks of mate-
rial, parts, money) and flows define how values of stocks change
over time (Borshchev, 2013). Whereas process flowcharts are an
advanced construct in DE modelling used to define sequences of
operations performed over entities (e.g., delays and services by var-
ious resources). Given the diverse and heterogeneous nature of the
different stakeholders involved in the CMS, this study proposes us-
ing an AB modelling approach in combination with SD stock and
flow diagrams and DE process flowchart to best capture the be-
haviour of each stakeholder as shown in Fig. 2. For instance, man-
ufacturing processes and logistics activities of a stakeholder, which
is modelled as an agent, can be simulated using a DE modelling
approach (Brailsford et al., 2014) as this approach takes a process
view of the system. Moreover, the continuous nature of the SD
modelling approach can be exploited to capture the continuous fi-
nancial flows in the system through stock and flow diagrams. All
these model elements, be they SD stock and flow diagrams, AB
statecharts, and DE process flowcharts can be linked to better cap-
ture agent behaviour. For instance, the SD stock can trigger a stat-
echart transition, which, in turn, modifies the stock value; an AB
statechart state impacts the SD rate; SD flow depends on DE queue
state; DE queue impacts AB statechart state. In addition, a set of
attributes and methods can be defined and used to describe the
agent’s characteristics and behaviour. An attribute is a variable that
has its own type (e.g., int, double, String, Boolean) with a specific
value for representing some characteristics of the modelled agent
(e.g., location of a stakeholder). Whereas, a method is a block of
code to perform a specific task or operation that can be used to
define the agent’s behaviour.
Once the behaviour of each stakeholder is defined, the next step
(step 2) is to define the set of agent relationships and methods of
interaction to specify how and with whom agents interact. This can
be done by building the agent’s interface (Borshchev, 2013). The
agent’s interface constitutes the set of attributes, methods, ports,
or messages that other agents and external parts of the model
can see and use to interact with the agent. The stakeholders in-
M. Roci, N. Salehi, S. Amir et al.
teract with each other to close the loop of materials and prod-
ucts through multiple lifecycles. Stakeholder-stakeholder relation-
ships are defined through uni- or bi-directional connections be-
tween agents.
Finally, the agent environment in which the agents live
and interact is selected (step 3). Space in agent-based models
can be discrete (i.e., grid of cells), continuous (two- or three-
dimensional space), or a geographical information system (GIS)
space (Borshchev, 2013; MacAl and North, 2010). A GIS space type
that allows placing agents into a geospatial environment defined
with a GIS map is more appropriate to place the CMS agents. In the
CMS model, information on the geographic location of stakeholders
is relevant to establish connections based on agents’ location. For
instance, the labour cost and its dependence on geographic loca-
tion are relevant for estimating the economic performance of the
system. Moreover, in the GIS topology, an agent can move along
the routes of a GIS map’s existing transportation network with the
specified speed from one location to another. In this way we will
be able to retrieve real distances travelled between stakeholders
for better estimating transport cost and CO2 emissions.
To summarise, the proposed multi-method simulation approach
aims at capturing the system behaviour emerging as a result of
complex and mutual interactions amongst the different stakehold-
ers involved in the process of closing the loop of materials and
products through multiple lifecycles. Thus, the proposed approach
can be applied to support CMS analysis in the different phases of
the circular value model shown in Fig. 1, i.e., value creation, value
delivery, value use, value recovery, and value reuse. Depending on
the purpose of the modeller and the questions the modeller is in-
tended to answer, this approach can be applied to quantitatively
analyse these value-phases and their interactions in a ‘risk-free’ en-
vironment to propose solutions that are feasible in both economic
and environmental terms. For instance, one can employ the pro-
posed multi-method simulation approach to evaluate the economic
and environmental performance of adopting new circular business
models as illustrated in section 4.
4. Results and discussion
4.1. Implementation example of a large-large scale white goods
demonstrator
To illustrate the applicability of the proposed multi-method
simulation approach, a case study from a large-scale white goods
demonstrator implementing CMS in practice within the EU-funded
ReCiPSS project (EU, 2018) is used. The white goods manufacturer
is developing and implementing a product-service system that in-
cludes built-to-last washing machines provided through a service-
based model. These washing machines are designed for connec-
tivity and reuse capacity to facilitate multiple lifecycles. Moreover,
the white goods manufacturer is setting up necessary reverse lo-
gistics for value recovery and redistribution of the washing ma-
chines and creating dedicated service organisations that are able
to deploy and provide the service proactively in the corresponding
markets. Therefore, it is crucial for the white goods manufacturer
to establish a collaborative network that aims at integrating the
different stakeholders involved in the different stages of the value
chain. Alongside, an IoT based platform is being developed to trace
and track the product throughout the multiple lifecycles and mon-
itor operational and user data to enable prompt service and repair.
The multi-method simulation modelling approach proposed in
section 3 is employed to evaluate the economic, environmental,
and technical performance of the demonstrator’s CMS implemen-
tation. The physical (e.g., products), information (e.g., subscription
requests, orders, service requests) and financial flows (e.g., monthly
payments/revenues, cost streams) are tracked through time along
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Sustainable Production and Consumption 31 (2022) 97–112
Table 2
List of assumptions used to develop the business scenario of the white goods man-
ufacturer.
• A subscription-based model is considered, i.e., a fixed monthly fee is
charged to customers without restrictions to the number of washing
cycles.
• Customers receive a washing machine at home including free installation,
service and maintenance, and deinstallation at end of the subscription
period.
• The number of washing cycles assigned to each customer is drawn from a
triangular(min, mode, max) distribution where min stands for the
minimum value, max for the maximum value, and mode for the most
likely value.
• The subscription-based offers are segmented as gold, silver, and bronze to
cover different customer segments from high income to low income: gold
customers are served with newly manufactured washing machines, silver
customers with one-time refurbished washing machines, and bronze
customers with two-time refurbished washing machines.
• Three termination events are taken into consideration to simulate different
customer behaviours in terms of subscription duration: premature contract
termination, termination at end of the contract, and subscription renewal.
• Each termination event is considered as a stochastic process using a
triangular(min, mode, max) distribution where min stands for the
minimum value, max for the maximum value, and mode for the most
likely value.
• The washing machines offered in this business scenario are long-lasting
and designed for 30,000 washing cycles (i.e., at least 15 years of service
life).
• At the end of each usecycle the washing machines are collected and
refurbished to serve the next customer. The intensity of this refurbishment
activity depends on the condition of the washing machine (i.e., the current
service life of the washing machine): washing machines that have been in
use for at least five years undergo a more advanced processing.
• When a washing machine is available for the next usecycle, it is assumed
that there is always a customer willing to subscribe.
the value chain from the manufacturer upstream to the customer
downstream. As a result, the journey of each washing machine is
tracked throughout the entire lifecycle in order to estimate lifecy-
cle costs, lifecycle revenues, and lifecycle environmental impacts.
The list of assumptions used to develop the business scenario of
the white goods manufacturer is summarised in Table 2. Any-
logic University 8.5.2, a Java-based simulation development plat-
form that combines simulation features of AB, DE, and SD mod-
elling approaches, is used for implementation. The model bound-
ary consists of the geographical location of the value chain stake-
holders involved in the demonstrator: the washing machines are
produced in Slovenia and delivered to the service providers in
the Netherlands, which are responsible for deploying the service-
based offerings in the Dutch market. All relevant data (e.g., busi-
ness case specifications, supply chain parameters, product specifi-
cations, and cost values) have been collected from the white goods
manufacturer and the service providers involved in the demon-
strator. To roughly estimate the environmental performance, the
lifecycle assessment study of household washing machines con-
ducted in WRAP (2010) and the report on value recovery impacts
by Nasr et al. (2018) have been referred to in this study. Moreover,
Ecoinvent 3.1 lifecycle inventory database is used to estimate the
environmental impact during the transportation phase based on
actual geographical locations of the value chain stakeholders. Fi-
nally, the model has been analysed and validated using the valida-
tion techniques presented in (Sargent, 2010) including animation,
comparison to other models (e.g., analytical solutions), degenerate
tests and extreme condition tests, and face validity.
4.2. Multi-method simulation model architecture
The model architecture proposed in section 3 is applied to
model the CMS adopted by the white goods demonstrator. Step 1
of the proposed multi-method simulation model consists of iden-
M. Roci, N. Salehi, S. Amir et al.
tifying the set of agent types and their behaviour. The set of
agent types considered in this model includes the manufacturer,
the service providers, the customers, and the value recovery en-
tities. Note that agents of the same type have common structure
and behaviour, but may differ in details, such as parameter values
and state information that includes variable values, statecharts and
event states. For example, two agents of the type Customer have
the same set of parameters and behaviour pattern but may differ,
for instance, in age and location.
To simulate the customer behaviour in a subscription-based
model, the statechart shown in Fig. 3 under the Customer agent
is developed. Three different service packages (i.e., gold, silver,
and bronze) are considered depending on customer preferences in
terms of washing machine type, contract duration, service readi-
ness, and software updates. Therefore, when a customer enters
the RequestSubscription state, the method requestSubscription is
called, which sends a request to the ServiceProvider agent indicat-
ing the preferred service package. This request enters the process
flowchart of the ServiceProvider agent, who matches the subscrip-
tion type with the product type and deploys the service. Once
the washing machine is installed at the customer’s location, the
customer enters the UsePhase state, under which it communicates
with the service provider for maintenance and repair activities by
calling the method requestService, with request type being repair,
or upgrade. When the customer intends to terminate the subscrip-
tion, it enters the TerminateSubscription state where the method re-
questService is called again, with the request type being subscrip-
tion termination. Different behaviours in terms of premature con-
tract termination, termination at end of the contract, or subscrip-
tion renewal are considered.
While the customer is in the UsePhase state, a subscription fee
is paid every month. To capture this phenomenon, an SD modelling
approach is adopted. Given the continuous nature of the financial
flows in a subscription-based model (compared to a one-time cash
flow in a sales-based model), an SD modelling approach, which
represents a continuous simulation methodology, is necessary to
plot the revenues every time unit (i.e., every month). By adopt-
ing only an AB modelling approach, instead of a multi-method ap-
proach, one could plot the revenues generated by a customer only
when the customer exits the UsePhase state, i.e., the revenues gen-
erated during the total subscription period. Whereas, the aim is to
calculate the revenues generated every month until the end of the
subscription period. As shown in Fig. 3 under the Customer agent,
the AB statechart is linked with the SD stock and flow diagram:
while the customer is in the UsePhase state, the stock UsePhaseDu-
ration is increasing (equal to each time unit). This is captured by
calling the inState(UsePhase) method in the equation of the flow.
This method returns one if the statechart is in the UsePhase state,
and zero otherwise. Thus, given the subscription fee for each time
unit, we can get the revenues generated from each customer ev-
ery time unit (i.e., revenues generated by each customer every
month).
The service provider is responsible for deploying the
subscription-based offerings in the corresponding market, handling
the different types of customer requests including installation, ser-
vice and maintenance, deinstallation, recovery and redistribution
activities. Given the nature of service management that deals
with queues and services, the DE modelling approach is adopted
to model the behaviour of the ServiceProvider agent. The process
flowchart shown in Fig. 3 under the ServiceProvider agent has been
developed to simulate the service management at the service
provider agent. The match block is employed to synchronise two
streams of entities by matching pairs according to a given criterion
(e.g., request type with corresponding product type). The entities
that have not yet been matched are stored in two queues (one
for each stream). Therefore, each customer will be served only
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Sustainable Production and Consumption 31 (2022) 97–112
when a product (new or refurbished) is available. In addition,
each service provider has a pool of technicians, which are also
modelled as agents, to perform the installation, deinstallation and
repair activities.
Similarly, the Manufacturer and the Recycler agent are mod-
elled using a DE modelling approach as both these stakehold-
ers deals with manufacturing and logistics processes. While the
manufacturer is responsible for producing the washing machines,
the recycler is responsible for disposing of the product. The pro-
cess flowcharts shown in Fig. 3 have been developed to simulate
the manufacturer behaviour and the recycler behaviour under the
Manufacturer and Recycler agent, respectively.
Once the behaviour of each agent is defined, step 2 of the pro-
posed multi-method simulation model consists of defining the set
of agent relationships and ways of interaction to specify how and
with whom agents interact. The Customer agent is in communica-
tion with the ServiceProvider agent by sending a ServiceRequest to
subscribe or request a service (e.g., repair or upgrade). The Servi-
ceProvider agent is in communication with the Manufacturer agent
by sending a ProductRequest to order new products, and with the
Recycler agent by sending a TreatmentRequest to recycle the prod-
uct. Note that ServiceRequest, ProductRequest, and TreatmentRequest
represent agent orders that contain information regarding the ref-
erence to the agent that sends the request and the type of request.
Step 3 of the proposed multi-method simulation model consists
of defining the environment in which the agents live and interact
with other agents. The different CMS stakeholders are placed in a
geospatial environment defined by the GIS map according to the
supply chain configuration of the white goods demonstrator. Thus,
the Manufacturer agent is placed in Slovenia, whereas the Service-
Provider, Customer, and Recycler agents are placed in the Nether-
lands.
After defining the behaviour of each stakeholder and their in-
tegration and interaction, the journey of each washing machine is
tracked during its multiple lifecycles. For this purpose, each wash-
ing machine is modelled as an agent that is in continuous commu-
nication with the value chain stakeholders during its entire lifecy-
cle. In fact, when the Manufacturer agent calls the method man-
ufactureProduct in the delay process flowchart block, a new agent
of type Product is created with a set of attributes (e.g., ID, failure
rate). When the product is created, it enters its initial state of the
statechart (i.e., Manufacturing state) where its manufacturing cost
and CO2 emissions are accounted for. Upon request, the product is
then delivered to the corresponding ServiceProvider agent by call-
ing the method moveTo. Upon agent arrival, the method distance-
ByRoute is called that measures the distance from the Manufacturer
agent to the ServiceProvider agent based on their geographical lo-
cation. This information is used to estimate forward transportation
costs and CO2 emissions. Once the product arrives at the Service-
Provider agent, it enters the process flowchart of the ServiceProvider
agent, where a queue block is used to stock the product. Upon a
subscription request, the product is delivered and installed at the
customer’s location. During this transition, the installation cost and
CO2 emissions are estimated based on transportation distance and
technician labour cost. During the product use phase (i.e., AtCus-
tomer state) repair activities are accounted for based on the prod-
uct failure rate. Upon subscription termination, the product is col-
lected and refurbished to serve another customer. During this tran-
sition, the cost and CO2 emissions related to deinstallation and re-
furbishment activities are accounted for. This process of product
renewal to serve an additional customer can continue as long as it
is viable from both the economic and environmental perspectives
(Asif et al., 2021; Rashid et al., 2013). At the end of the product
lifetime, the product enters the Disposal state, where the Service-
Provider agent communicates with the Recycler agent, who is re-
sponsible for disposing of the product. The resulting statechart de-
M. Roci, N. Salehi, S. Amir et al. Sustainable Production and Consumption 31 (2022) 97–112

Fig. 3. Multi-method model architecture for a subscription-based scenario. The stakeholders are placed in a geographical information system (GIS).

veloped to capture the journey of the washing machine is shown
in Fig. 3 under the Product agent.
The statechart shown in Fig. 3 under the Product agent, which
simulates the journey of each washing machine throughout its en-
tire lifecycle, is used to account for all the costs and emissions
generated by a washing machine during its multiple lifecycles.
Eqs. (1) and (2) are used to estimate the lifecycle costs and life-
cycle environmental impact, respectively. Note that the subscript
i ∈ {1, . . . , n} refers to the product under consideration, being n
the total number of products; the subscript j ∈ {1, . . . , b} refers
to the product usecycle, being b the total number of usecycles of
product i; whereas the subscript k ∈ {1, . . . , c} refers to the cus-

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M. Roci, N. Salehi, S. Amir et al. Sustainable Production and Consumption 31 (2022) 97–112

tomer, being c the total number of customers served by product 4.3.1. Technical performance
i. In this study, technical performance of CMS refers to the quan-
tity, quality and timing of product returns for value recovery and
LCCi = manufacturingCosti + forwardTransportCosti redistribution. Fig. 4 shows the distribution of gold, silver, and

b 
c 
b 
c bronze customers that 100 washing machines can serve during
+ instal l ationCost ijk + repairCost ijk their multiple use cycles. It is assumed that gold customers are
j=1 k=1 j=1 k=1 served with newly manufactured washing machines, silver cus-

b 
c 
b 
c tomers with refurbished washing machines not older than ten
+ deinstal l ationCost ijk + re f urbishCost ijk years (refurbished WMs of type A), and bronze customers with
j=1 k=1 j=1 k=1 refurbished washing machines older than ten years (refurbished
+recyclingCosti (1) WMs of type B). At the end of the simulation, 100 washing ma-
chines served a total of 621 customers: the number of gold, silver,
and bronze customers amounted to 100, 313, and 208, respectively.
As a result, one washing machine served on average six different
LCIi = manufacturingCO2i + forwardTransportCO2i
customers during its entire lifecycle (one gold, three silver, and two

b 
c
bronze customers). The duration of each usecycle varied from a
+ instal l ationCO2ijk + usePhaseCO2ijk minimum of three months (due to contract obligations) to a max-
j=1 k=1
imum of seven years as different user behaviours are simulated in

b 
c 
b 
c terms of subscription termination or renewal.
+ repairCO2ijk + deinstal l ationCO2ijk
j=1 k=1 j=1 k=1 4.3.2. Lifecycle costs and lifecycle environmental impact

a 
c By following the product journey from manufacturing to its end
+ re f urbishCO2ijk + recyclingCO2i (2) of life, allows to account for all the costs and emissions occurred
j=1 k=1 during the entire lifecycle of the product. Fig. 5 shows the cost
streams throughout the entire lifecycle of 100 washing machines.
To determine the monthly subscription fee, cost-based pricing
It can be observed that manufacturing cost represents the high-
is applied using the average lifecycle cost and the average service
est cost factor, followed by installation, refurbishing, and deinstal-
life (expressed in months) of n machines. Thus, the monthly sub-
lation costs. Fig. 6 shows the emissions of 100 washing machines
scription fee is calculated using Eq. (3) as follows:
throughout their entire lifecycle. These results indicate that the use
n
i=1 LCC i /n
phase causes the highest environmental burden, followed by the
subscriptionFee = n ∗ (1 + markUp ) (3) manufacturing, refurbishing, installation and deinstallation of the
i=1 serviceLi f e/n
washing machines.
This cost-based pricing is used as a reference to determine the A high manufacturing cost can be attributed to the fact that
price based on cost plus the desired profit margin. However, the the washing machine is designed for longevity and connectivity.
white goods demonstrator is considering segmenting the offers as However, designing long-lasting products is one of the core prin-
Gold, Silver, and Bronze depending on customer preferences in ciples of the CE (Bocken et al., 2016) as it allows for less inter-
terms of washing machine type, contract duration flexibility, ser- ventions during their lifetime in terms of repair and maintenance
vice readiness, and program packages with software updates to (Tukker, 2015). Moreover, design for reuse, remanufacturing and
cover different customer segments from high income to low in- recycling will ease the recovery operations (den Hollander et al.,
come. Thus, value-based pricing, i.e., pricing determined in accor- 2017) leading to better economic and environmental performance
dance with the value created for customers (Hinterhuber, 2004), during their lifecycle.
is applied in conjunction with cost-based pricing to determine the High installation, deinstallation, and refurbish costs and emis-
monthly fee for Gold, Silver, and Bronze customers. As a result, the sions can be attributed to the high number of usecycles a washing
revenues generated from a washing machine throughout its lifecy- machine goes through during its lifecycle. The total number of use-
cle are calculated using Eq. (4) as follows: cycles and the duration of each usecycle the washing machine goes
through in a subscription-based model depends on the customer

b 
c
behaviour in terms of subscription termination or renewal. How-
LCRi = Revenuesi jk
ever, the higher the number of usecycles, the higher the lifecycle
j=i k=1
costs and the lifecycle environmental impacts due to more frequent

b 
c
transportation and recovery operations. Thus, business model de-
= useP haseDurat ioni jk ∗ subscript ionF eek
sign in terms of, for instance, contract duration can have implica-
j=i k=1
tions in terms of economic (e.g., installation, deinstallation, and re-
furbish cost), environmental (e.g., emissions during transportation
4.3. Multi-method simulation model output and recovery operations), and technical (quantity, quality, and tim-
ing of return flows). Consequently, companies can consider adding
The results presented in this section refer to 100 washing ma- economic (e.g., low subscription fees) and environmental incen-
chines deployed in a subscription-based scheme. The simulation tives to stimulate customers to subscribe for long-term contracts.
runtime is set to 212 months, equivalent to the duration of the Moreover, since in energy-using products, the use phase represents
period that starts when the first washing machine is manufac- the highest aggregated environmental impact, companies can de-
tured and ends when the last washing machine reaches its end of sign the business model to stimulate sustainable consumption pat-
life. By tracing and tracking the journey of each washing machine, terns in addition to considering eco-design requirements. For in-
its technical, economic, and environmental performance are esti- stance, introducing a pay-per-wash business model has shown to
mated. The main variables, their initial values and units of mea- be effective in changing consumer behaviour in terms of reduc-
sure are reported in Table 3. The input cost values are based on ing both the number of washing cycles and washing temperatures
a real case but have been altered to avoid sensitive information (Bocken et al., 2018). In addition to business model design, inte-
while still keeping a representative case. grated forward and reverse supply chains that are optimised to

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Table 3
Main variables, initial values, and their units of measure.

Main variables Values Unit of measure Source

Contract duration Mid-term 24 Months Assumed

Termination events Premature contract Triangular distribution Months Assumed
termination

min=3; max=contract
duration
Termination at end of contract duration Months Assumed
contract
Subscription renewal Triangular distribution Months Assumed

min=contract duration;
mode = 60; max=84
Pricing Gold 35 €/month Value-based pricing in
Silver 25 €/month conjunction with
Bronze 15 €/month cost-based pricing
Washing cycles Triangular distribution washing cycles/month Extrapolated from
(A.I.S.E, 2020)

min=4; mode=15;
max=23; μ=13.4
Cost parameters Manufacturing cost 610 €/washing machine
Transport cost 1.2 €/km/truck Assumed
Service transport cost 1.2 €/km/van Assumed
Labour cost 60 €/h Assumed
Repair cost 75 €/washing machine Assumed
Refurbish cost 150 €/washing machine Assumed
Recycling cost 15 €/washing machine Assumed
Environmental parameters Manufacturing CO2 223 LCA study (WRAP, 2010)
Transport CO2 0.229∗ kg CO2 /tkm Ecoinvent 3.1
Service transport CO2 1.949∗∗ kg CO2 /tkm Ecoinvent 3.1
Use phase CO2 0.7 kg CO2 /washing cycle LCA study (WRAP, 2010)
Repair CO2 5% of Manufacturing CO2 kg CO2 -eq (Nasr et al., 2018)
Refurbish CO2 20% of Manufacturing CO2 Kg CO2 -eq (Nasr et al., 2018)
Recycling CO2 8.9 kg CO2 -eq LCA study (WRAP, 2010)
∗
Transport, freight, lorry 7.5–16 metric ton.
∗∗
transport, freight, light commercial vehicle.

Fig. 4. Number of users over time served by 100 washing machines (WMs) deployed in a subscription-based model.

handle the dynamics of multiple lifecycle products (Rashid et al.,
2020) are crucial for improving the economic and environmental
performance of the system.
4.3.3. Lifecycle revenues and break-even point
The lifecycle revenues generated by each washing machine over
different time horizons are shown in Fig. 7. It can be observed that
100 washing machines generated in total €469 299, meaning that
on average one washing machine generates ca. €4 693 during its
entire lifecycle. As mentioned in section 4.3.1, a washing machine
serves on average one gold, three silver, and two bronze customers,
generating in this way ca. €1309, €2621, and €763 in each market
segment, respectively.
Thus, shifting to a service-oriented business model leads to
continuous revenue flows compared to one-time cash flows in
a sales-based model. Therefore, higher lifecycle costs due to the
manufacturing of long-lasting products and their multiple trans-
portation and recovery operations, are offset by the lifecycle rev-

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M. Roci, N. Salehi, S. Amir et al. Sustainable Production and Consumption 31 (2022) 97–112

Fig. 5. Lifecycle costs of 100 washing machines deployed in a subscription-based model.

Fig. 6. Lifecycle environmental impacts generated by 100 washing machines deployed in a subscription-based model.

Fig. 7. Lifecycle revenues generated by 100 washing machines deployed in a subscription-based model.

Fig. 8. Profit over time generated by 100 washing machines deployed in a subscription-based model.

enues generated by multiple lifecycle products. However, in these
service-based models, there is a time mismatch between the time
costs occur and revenues are generated. When looking at the
profit over time shown in Fig. 8, the business becomes profitable
around month 23, i.e., it takes around 23 months for the company
to break even. This timing mismatch between revenues and cost
streams can be considered as a critical challenge in implementing
service-based business models (Bressanelli et al., 2019). In order
to overcome this timing mismatch, companies can consider differ-
ent strategies to improve the financial flow (e.g., apply a deposit at
the beginning of the subscription period to improve liquidity, ap-
ply a collection fee if the subscription period is lower than a cer-
tain threshold, or cancellation fees in case of cancellation before
the end of the contract).
5. Conclusions
CMS are complex and dynamic in nature. Traditional analysis
approaches have limitations in capturing the complexity and dy-
namism of CMS. This research views CMS as CAS and proposes to
use complex systems modelling and simulation to study their sys-
temic and dynamic nature. In this regard, a multi-method model
architecture is proposed where different CMS stakeholders are
modelled individually as autonomous agents by integrating AB, DE,

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M. Roci, N. Salehi, S. Amir et al.
and/or SD modules within each agent. The applicability of the pro-
posed multi-method simulation approach is illustrated through a
case study of a white goods manufacturing company implement-
ing CMS in practice. This case study clearly shows how an AB
modelling approach is beneficial at capturing the complex system
behaviour resulting from interactions amongst several individual
stakeholders. In addition, it shows how the integrated hybrid de-
sign where SD, DE, and/or AB modules are integrated within each
agent, allows to model individual stakeholders with rich internal
structures as active entities with individual characteristics. For in-
stance, manufacturing processes and logistics activities of a stake-
holder could be better captured by using a DE modelling approach
as this approach takes a process view of the system, whereas fi-
nancial flows could be captured by exploiting the continuous na-
ture of the SD modelling approach.
The proposed multi-method modelling approach plays a signifi-
cant role as a decision support tool for systemic exploration and
quantification of CMS prior to implementation. In fact, the im-
plementation example of a white goods manufacturing company
showed how the proposed multi-method modelling approach can
be used to adopt a lifecycle perspective in terms of costs, rev-
enues and environmental impacts in order to identify hotspots
and, therefore, design circular systems that are viable in both
economic and environmental terms. Simulation results indicated
that a washing machine offered in a subscription-based model can
serve on average six different customers during its entire lifecycle.
This high number of usecycles led to high lifecycle costs and life-
cycle environmental impacts due to more frequent transportation
and recovery operations. In order to improve the economic and
environmental performance of the system, companies can consider
adding economic (e.g., low subscription fees) and environmental
incentives to stimulate customers to subscribe for long-term con-
tracts, thus, reducing in this way the total number of usecycles of
a product offered in a subscription-based model. Moreover, sim-
ulation results indicated that the high lifecycle costs were offset
by the lifecycle revenues generated during the multiple usecycles
of the product. However, these results indicated a time mismatch
between the period costs occurred and revenues were generated,
thus, indicating a break-even point, i.e., the point at which costs
equal revenues, of about 23 months. In order to overcome this tim-
ing mismatch, companies can consider different strategies to im-
prove their financial flows. For instance, they can apply a deposit
at the beginning of the subscription period to improve liquidity,
apply a collection fee if the subscription period is lower than a
certain threshold, or cancellation fees in case of cancellation be-
fore the end of the contract.
Since the implementation of CMS is still in its infancy stage,
there is a lack of publicly available market data. Therefore, assump-
tions made to simulate consumer behaviour in terms of subscrip-
tion duration are not supported by market data as such statistics
are not available. On the other hand, a simulation modelling ap-
proach is highly beneficial in a context where no market data is
available because it allows the companies to investigate different
scenarios in terms of subscription duration and evaluate their con-
sequence on the economic and environmental performance of the
system. The major strength of the proposed approach is the break-
down at the operational level to identify hotspots for optimisation
with a lifecycle perspective. It is to be noted that this study does
not take into consideration the total cost of ownership from a cus-
tomer perspective and how that may affect the customer accep-
tance as well as the success of the business model. Furthermore,
the social impacts of CMS, which are necessary to present a com-
plete sustainability outlook, have been scoped out of this study.
Thus, the authors recommend including these analyses in future
work.
111
Sustainable Production and Consumption 31 (2022) 97–112
To conclude, the approach used in this research is capable of
streamlining the complex phenomena of CMS and presenting the
outcomes in economic and environmental terms that are useful for
decision-making. Therefore, this study clearly contributes to paving
the path from a linear to a circular economy.
Declaration of Competing Interest
The authors declare that they have no known competing finan-
cial interests or personal relationships that could have appeared to
influence the work reported in this paper.
Acknowledgment
This work has been conducted as part of the Resource-Efficient
Circular Product-Service Systems (ReCiPSS) project that has re-
ceived funding from the European Union’s Horizon 2020 research
and innovation programme under grant agreement No 776577-2.
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