A Study of the Circular Manufacturing System: Issues and Prospects

N. SANDEEP; R. SURESH

doi:10.21078/JSSI-2024-0088

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Journal of Systems Science and Information ›› 2024, Vol. 12 ›› Issue (6) : 790-803. DOI: 10.21078/JSSI-2024-0088

A Study of the Circular Manufacturing System: Issues and Prospects

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Abstract

The Circular Manufacturing System (CMS) is a critical facet of the circular economy, embodying a closed-loop manufacturing model aligned with circular principles. This research area focuses on prolonging product life cycles and reducing energy and resource consumption. A recent literature review emphasized the need for clear definitions, scopes, and distinctions between CMS and other manufacturing paradigms like sustainable and green manufacturing. Although the 4Rs (Remanufacturing, Reuse, Reduce, Recycle) are commonly discussed in CMS contexts, a unified systemic approach is lacking. The study advocates for exploring CMS's foundational elements, refining performance metrics, and integrating it seamlessly into existing manufacturing systems. It also stresses the importance of analyzing business models, supply chains, and product design interdependencies using advanced technology. Advancements in these areas will enhance CMS theory and practice, aiding manufacturing firms in adopting circular economy principles effectively.

Key words

circular economy / circular manufacturing system / 4Rs practice

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N. SANDEEP , R. SURESH. A Study of the Circular Manufacturing System: Issues and Prospects. Journal of Systems Science and Information, 2024, 12(6): 790-803 https://doi.org/10.21078/JSSI-2024-0088

1 Introduction

Nature, by design, is sustainable and evolves following resource cycles that have been present for ages. In these cycles, natural resources circulate through bio-geo-chemical processes, maintaining a permanent loop that supports and promotes all plant and animal life, creating a network of interdependent and sustainable ecosystems^[1]. On the other hand, modern societies prioritize excessive economic activity, production of goods and services, and job creation through a "take-make-dispose" approach. This breaks the closed loop of natural resource cycles and creates vast amounts of waste, leading to non-sustainable, unstable, open loop resource cycles^[2]. Circular Economy (CE) aims to develop a framework, tools, and methodologies that close open loop resource cycles and balance the interdependent obligations of the economy and ecology. Circular Manufacturing System (CMS) is an offshoot of the CE concept and is defined as a system designed and operated with the intention of being a closed loop system. The goal of manufacturing organizations, from the first industrial revolution to the present-day fourth industrial revolution, is to provide customers with high-quality products at a competitive price^[3]. However, the focus on cost and quality has resulted in a consumerist mentality that prioritizes cost over preserving natural resources. The World Economic Forum warns that if resource consumption continues at its current rate, three planets will be needed by 2050 to sustain the planet's needs^[4]. The traditional linear economy approach, which prioritizes economic activities to improve the standard of living, is unsustainable and damaging to natural cycles. This approach is not only unprofitable in the long run but also causes irreversible damage to the natural environment^[5]. It crosses planetary boundaries and leads to catastrophic effects on the economy and ecology^[6]. The following factors motivate the study of CMS and CE:

● Finite natural resources and rapid consumption^[7]

● Growing middle-class population^[8]

● Impact of open loop production systems and supply chains^[9]

● Over-exploitation of natural resources for economic growth

● Accumulation of toxic, non-biodegradable waste and global warming

● Lack of standard CE transitional methodologies

In light of these factors, the Circular Economy (CE) paradigm has emerged as a promising model with the prime objective of balancing economic and environmental obligations^[10]. The CE model has gained momentum in industry, academia, and government circles as it provides a responsible and profitable alternative to the traditional linear economy model, reducing resource depletion, waste generation, and emissions. This study aims to study the context of CMS, identify challenges and opportunities, and determine areas where further research efforts are needed.

2 Methodology

A systematic literature review was performed to assess the current state of knowledge on the Circular Manufacturing System (CMS). The search was conducted using keywords in academic databases such as Web of Science and Google Scholar, and was limited to English articles published from 2008 to 2023. The review screened articles for quality, focusing on the definition, principles, benefits, challenges, and best practices of CMS. The results showed that CMS has significant environmental and economic benefits, but also presents challenges such as the need for new business models and technologies. Supporting resources, such standards from National Institute of Standards and Technology (NIST) working under the U.S. Department of Commerce and annual reports of organizations, were also reviewed to emphasize the importance of developing metrics and frameworks to evaluate performance and impact. The review concludes by highlighting the benefits and challenges of CMS implementation and identifying best practices, while also calling for further research.

3 Context of Circular Manufacturing System

In the 20th century, the concept of mass production was introduced, utilizing assembly line techniques to produce large quantities of standardized products. During the same era, advancements in technology and automation transformed manufacturing further, leading to the development of computer-controlled systems and the rise of modern factories^[11]. The recent integration of cutting-edge technologies such as artificial intelligence, robotics, and the Internet of Things has given rise to Industry 4.0 or the Fourth Industrial Revolution, characterized by increased automation and connectivity in manufacturing systems.

These developments have led to cost reductions and allowed consumers to purchase goods at a lower price point, which contributed to the growth of the middle class and increased the accessibility of goods. Further, manufacturing of goods on a large scale requires significant amounts of energy, raw materials, and other resources. This has led to the depletion of resources and has raised concerns about the sustainability of mass production. These concerns must be carefully considered and managed as the manufacturing industry continues to evolve.

The success of a manufacturing system is dependent upon meeting the expectations of its stakeholders. There are eight key stakeholders who influence the operations of manufacturing systems and have expectations, which are summarized in Table 1^[12] and [13]. Balancing economic, social, and environmental considerations is necessary to meet the expectations of each stakeholder. Organizations must maintain proactive, transparent, and responsive relationships with their stakeholders, continuously seeking to improve their operations and practices. The relevance of manufacturing systems in meeting sustainability goals and stakeholder obligations has grown in importance, as sustainability has become a crucial issue for organizations, consumers, and governments. In recent years, there have been several key developments in this area:

Table 1 Stakeholders expectations from manufacturing system

SL No.	Stakeholders	Expectations
1	Owners and shareholders	To be efficient, cost-effective, and capable of delivering high-quality products. They also expect the system to be flexible and adaptable to changing market conditions and customer needs.
2	Company leadership	To be efficient, with a focus on reducing waste, maximizing productivity, and minimizing costs.
		● Cost Effectiveness: To be cost-effective, with a focus on delivering high-quality products at a competitive price.
		● Quality: To deliver high-quality products that meet customer needs and expectations.
		● Flexibility: Manufacturing system to be flexible and adaptable to changing market conditions and customer needs.
		● Innovation: To be innovative, with a focus on developing new products, technologies, and processes that drive growth and competitiveness.
		● Sustainability: To reduce its environmental impact and promoting social and economic equality.
3	Employees	To provide safe working conditions, fair compensation and benefits, opportunities for professional development, and a supportive work environment. They can also engage employees in decision-making processes and provide opportunities for feedback and input.
4	Customers	To produce high-quality products that meet their needs and expectations. They can also provide excellent customer service and be responsive to customer feedback and complaints.
5	Suppliers and vendors	To have a long-term partnerships, provide clear communication and transparency, and pay on time for products and services
6	Regulators	To comply with all relevant laws and regulations related to health, safety, and environment proactively.
7	Local communities	To operate responsibly with a positive impact on the environment and communities.
8	Society at large	To be socially ethical, transparent with a positive impact on the environment and society. Engage with stakeholders to address their concerns.

● Increased focus on the circular economy: Circular economy has gained traction as a way of reducing waste and conserving resources, with organizations and governments increasingly focused on recycling and reusing materials^[14].

● Emergence of Industry 4.0 and the Internet of Things (IoT): Industry 4.0 and the IoT have the potential to revolutionize manufacturing by enabling more efficient, sustainable, and connected production processes, utilizing digital technologies such as artificial intelligence, machine learning, and predictive analytics^[15].

● Growth of sustainable finance: The growth of sustainable finance has spurred investment in sustainable technologies and practices, as investors look to align their portfolios with their sustainability goals. This has led to the development of new financial instruments, such as green bonds, to finance sustainability projects^[16].

● Increased attention to social sustainability: Social sustainability has become an increasingly important area of focus for organizations and governments, with a growing recognition of the importance of fair and safe working conditions, human rights, and community development^[17].

However, mutual competing interests can arise between sustainability and stakeholder expectations in manufacturing systems, as the needs and desires of different stakeholders may not always align^[18]. Manufacturers often encounter conflicting demands from consumers who prioritize environmentally responsible products and leaders focused on minimizing production costs. The circular economy presents a viable approach to harmonize these competing interests, bridging the gap between sustainability objectives and stakeholder expectations within manufacturing systems. In this context, circular economy is a model of economic activity that seeks to keep resources in use for as long as possible, minimizing waste and maximizing value. By adopting this model, manufacturers can reduce the environmental impact of their operations while meeting stakeholder expectations for efficiency and cost-effectiveness. In a circular economy, manufacturers aim to create products that are designed for disassembly, repair, and reuse, reducing waste and increasing product lifespan, thereby reducing demand for new materials and components. This aligns the operations of manufacturers with sustainability goals and stakeholder expectations^[18].

3.1 Definition of Circular Manufacturing System

In the past decade, the concept of Circular Economy (CE) has gained widespr- ead recognition and adoption, both in industry, academia, and governments. It provides a sustainable model of production and consumption that minimizes resource depletion, waste generation, reduces emissions, and balances economic, environmental and social considerations^[20]. Many organizations across various industries have successfully adopted CE principles, leading to economic and environmental leadership. The impact of CE has been seen in policy and innovation strategies in some of the world's largest economies, including India, China, Germany, Japan, and the United Kingdom^[21]. To operationalize CE principles, the concept of Circular Manufacturing System (CMS) has been introduced. CMS aims to implement the CE principles of Designing out waste and pollution, keeping products and materials in use, and Regenerating natural systems, tailored to specific industry requirements. The National Institute of Standards and Technology, a division of the US Department of Commerce, has published an abstract model of CMS. Figure 1 depicts the CMS starting with the extraction of resources, followed by loops for Reuse, Remanufacture, Partner Manufacturer, Mechanical Recycler, Chemical Recycler, and ending with landfill.

Figure 1 Abstract of circular manufacturing system^[22]

Full size|PPT slide

In simple terms, Rashid, Roci and others define the "Circular Manufacturing System (CMS)" as being designed intentionally to close the loop of product reuse, maintaining their original performance through multiple lifecycles, which is essential for sustainable development^[23]. The aim of the CMS is to minimize the use of natural resources and energy, reduce waste and pollution, and maximize the value of products and materials before they are recovered and regenerated^[24]. The principles of the circular economy are expected to be followed in the production processes of the CMS, including:

● Circular Design: Products and processes are designed to be easily disassembled, repaired, reused, remanufactured, and recycled^[25].

● Renewable Energy: The use of renewable energy is maximized and the use of fossil fuels is minimized^[26].

● Waste Prevention: Strategies are implemented to reduce waste, energy consumption, and pollution in the manufacturing process.

● Resource Conservation: The efficiency of the production process is improved to reduce resource consumption and waste.

● Co-operative Approach: Suppliers, customers, and other stakeholders are collaborated with to create closed-loop systems for materials and products.

A company named iPoint, which provides tools to gather and analyze data on the environmental, social, and economic impact of their products and processes, has proposed a model that represents the circular manufacturing system with the integration of data, risk, and process management as shown in Figure 2. This model highlights the need for information technology for data generation, dissemination, and analysis, starting from materials, supply chain, manufacturing, operation, or use, and ending with recycling. Although not presented exclusively, the business model for circularity can be related to supply chain and manufacturing. Each organization defines its own circular manufacturing model or framework based on its level understanding of circular economy. This approach presents a new challenge when collaborating and building CMS programs outside the organizations.

Figure 2 Design, manufacture and track circular products^[27]

Full size|PPT slide

4 Synergy Between Circular Economy and Circular Manufacturing System

The circular manufacturing system can play a crucial role in addressing future challenges such as resource scarcity, environmental degradation, and climate change. For example, a circular manufacturing system can help address resource scarcity by reducing the use of raw materials and energy and by recycling and reusing materials, extending the life of resources, and reducing dependence on virgin materials^[28]. Additionally, the CMS can help address environmental degradation by reducing waste and pollution. By designing products and processes that can be easily disassembled, repaired, reused, remanufactured, and recycled, the circular manufacturing system can minimize the environmental impact of production. In total, circular manufacturing system can help organizations to achieve goals of the circular economy by:

● Reducing the use of natural resources and energy

● Reducing waste and pollution

● Improving the overall efficiency of production system

● Extending the life of products and materials

● Creating closed-loop systems for materials and products

● Collaborating with suppliers, customers, and other stakeholders to create circular systems for materials and products.

Therefore, the interrelationship between circular manufacturing system and the circular economy is that circular manufacturing system are a crucial tool for achieving the principles of the circular economy. Both are need to be implemented together in order to create a truly circular economy^[29]. CMS works synergistically with the circular economy, where CMS provides the practical tools for creating closed-loop systems. It is closely linked with product design, supply chains, and ICT. Implementing CMS in organizations leads to benefits such as improved efficiency, reduced waste, and a competitive edge in sustainability^[30]. However, literature directs that CMS has close interactions with product design, supply chain and circular business model and with Information and Communication Technologies (ICT)^[23]. Adopting circular economy thinking and operationalizing it by circular manufacturing practices can drive positive impact and stay ahead in the business landscape. Organizations that have adopted CMS practices gained benefits, see Table 2. Therefore, circular manufacturing system plays a crucial role in achieving the goals of circular economy.

Table 2 Summary of CMS practices and beneflts

Sl. No.	Company Name	Circular Manufacturing System		Benefits
Sl. No.	Company Name	Category	Practice	Benefits
1	Renault^[31]	Product life extension	Remanufacturing	● 85% of energy and 96% of water saved
				● 92% of the collected material gives new life to a new mechanical part
				● 20% of the material is recycled
		Resource conservation	Reuse, Recycling and Repair	● 900 parts references in reuse or recycling
				● 10 to 20 kg of copper per end-of-life vehicles
		Cooperative model for theory and practice expansion	Mobility Circular Industry Campus	● Training modules for students, working professional
				● Applied research projects with universities
				● Support teams and projects team seminars
2	Caterpillar^[32]	Product life extension	Remanufacturing under Cat Reman Program	● 127 million pounds of material taken back for remanufacturing
				● 61% less GHG emissions, 85% less material and 85% less water
3	Toyota^[33]	Design for circularity	Easy-to-dismantle Design for Effective Resource Recycling	Vehicle models launched in FY 2022 for which an easy-to-dismantle design is adopted.; Recyclability rate of 85% by design
		Responsible recycling	Facility fort Recycling of end-of-life vehicles in India	A facility for appropriate treatment and recycling of test cars and other end-of-life vehicles
4	Michelin^[34]	Upscale resource utility with external partner	Recovery of carbon black from end-of-life tires.	Using the technology of partner company Enviro, identified a potential to recycle 56 million tires annually for the production of Michelin tires.
5	Volkswagen^[35]	Resource conservation	Closed Material Loop	Avoided 720,000 metric tons of $C O_{2}$ since 2017 to 2021
			Recycling Production Waste	Proportion of freshwater needed at sites in risk zones measured in million $m^{3}$ /year reduce by 6% in 2021

4.1 Performance Indicators of Circular Manufacturing System

To monitor and improve the performance of manufacturing systems, Key Performance Indicators (KPIs) are crucial. Table 3 lists existing KPIs for the 4Rs as expected practices in CMS. These KPIs can offer valuable insights into the system's performance, but they only represent a part of the overall picture. KPIs for an expected practice are specific measures used to evaluate a particular aspect or characteristic of the system. However, KPIs for the entire system provide a comprehensive view of its performance, taking into account multiple practices and characteristics. System-level KPIs are essential to measure and evaluate the performance of a circular manufacturing system, as the absence of these KPIs can lead to limited decision-making, difficulty in tracking progress, inability to measure overall system effectiveness, under-representation of efforts, poor alignment with strategic goals, etc. The KPIs in Table 3 that can constituted to drive remanufacturing systems level KPIs such as quality, cost and delivery and requirement with the existing manufacturing system level KPIs and expectations. This become essential, because the customer must not be affected due the remanufacturing initiatives of the organization^[36].

Table 3 List of Key Performance Indicators of 4Rs

Sl. No.	CMS Initiative	Key Performance indicator (KPI)
1	Remanufacturing^[37]	● Core/Product Value Ratio (CPV)
		● Core Class Distribution
		● Core Class Assessment
		● Product Salvage Rate
		● Component Salvage Rate
		● Core Disposal Rate
2	Reuse^[38]	● Weight or units of product developed to be reused
		● Business share from reuse
		● Number product loops
		● Number of implemented areas(store, packing)
3	Reduce^[39]	● Total non-value adding (auxiliary) material per produced unit (kg/#) Product output/(productive material + auxiliary material)
		● The volume of hazardous materials used per produced unit (kg/#)
		● Total waste generated per produced unit (kg/#) Sorting rate: waste sorted/ segment waste total Consumable material (auxiliary) used per produced unit (kg/#)
		● Total material consumption (both productive and auxiliary) per produced unit (kg/#)
4	Recycle^{[40, 41]}	● Recycling efficiency
		● Recycled Input Ratio

4.1.1 Comparison with Sustainable and Green Manufacturing Approaches

The goal of sustainable, circular, and green manufacturing is to minimize negative environmental impacts and promote sustainability in production processes. These approaches aim to reduce waste, conserve resources, minimize pollution, and promote the use of clean technology and sustainable practices. There is overlap between these concepts, with similarities and differences, see Table 4. Organizations that adopt sustainable, green, or circular initiatives can improve their responsible production and consumption. Organizations like Renault, Michelin, Caterpillar, HP, and Xerox have adopted circular economy (CE) and circular manufacturing system (CMS) and have seen benefits. These organizations can be classified into four categories: business model, product design, supply chain, and communication technologies (ICTs).

Table 4 Comparison with sustainable green manufacturing and approaches^{[14, 42, 43]}

Term	Sustainable Manufacturing	Green Manufacturing
Definition	Sustainable manufacturing refers to the integration of environmental, social, and economic considerations into the production processes of goods, with the aim of reducing negative impacts and promoting long-term viability.	Green manufacturing refers to the integration of environmental considerations into the production processes of goods, with the aim of reducing negative impacts on the environment and promoting sustainability.
Scope	A holistic approach to production and considers a range of factors beyond just material use and waste, including energy use, water consumption, and social impacts	More general term that encompasses a range of initiatives aimed at reducing the environmental impact of production, including energy efficiency, waste reduction, and pollution control
Approach	To reduce negative impacts and promote positive outcomes in a range of areas, such as resource efficiency, social responsibility, and clean technology	Adopts a variety of strategies to reduce the environmental impact of production, such as using renewable energy, improving energy efficiency, and reducing waste
Aim	To create a more sustainable production process that reduces negative impacts and promotes long-term viability	To create a more environmentally friendly production process that reduces negative impacts and promotes sustainability

4.1.2 Issues and Prospects in CMS

One of the main issues organizations face when transitioning to circular manufacturing systems is the lack of knowledge and experience in designing, developing, and operating closed-loop systems. This can pose significant barriers, as organizations may not have the necessary resources or expertise to design and implement circular systems. Furthermore, there may be a scarcity of standardized approaches and available resources in the market, making it difficult for organizations to adopt CMS. In the inter relationship between the circular business model and circular business model needs to understood, so that challenges can be addressed. A summary of few issues and prospects for CMS adoption is shown in Table 5.

Table 5 Issues and Prospects in CMS

Type	Issues	Prospects
Technical	Circular manufacturing system often require new technologies, processes and equipment, which can be difficult to develop and implement. Also, there may be a lack of expertise within organizations to design and operate circular systems^[21].	Organizations can invest in research and development to develop new technologies, processes and equipment needed for circular manufacturing system and partner with other organizations that have expertise in circular manufacturing system^[21].
Behavioural and cultural	Changing the mindset and behaviour of employees, customers and suppliers to adopt circular systems can be a major challenge^[44].	Organizations can implement training and education programs to raise awareness and educate employees, customers, and suppliers about circular systems.
Economic	Implementation of circular systems often requires significant investments in new technologies and processes, which can be a barrier for many organizations, especially small and medium-sized enterprises (SMEs)^[45]	Organizations can seek out government grants and subsidies to help cover the costs of implementing circular systems^[45].
Legal and regulatory	Legal and regulatory framework for circular systems is still under development in many countries, which can create uncertainty and barriers for organizations looking to implement circular systems^[46]	Organizations can work with governments to develop laws and regulations that support implementation of circular systems.
Supply chain challenges	Circular systems often require collaboration and coordination across the entire supply chain, which can be difficult to achieve^[47]	Organizations can implement strategies for collaboration and coordination across the entire supply chain with support of OEM and industry bodies.

5 Discussion

Circular economy, defined by its principles to eliminate waste, circulate products at their highest value, and regenerate nature^[48], can be operationalized through systemic approaches with measurable outcomes. This study explores key aspects of Circular Manufacturing Systems (CMS) by reviewing existing literature. CMS aligns with sustainable, green, and lean manufacturing, sharing common goals such as resource optimization and lead time reduction^{[19, 49]}. Understanding sustainable and green manufacturing helps contextualize CMS and supports the adoption of best practices. A significant challenge for CMS is the lack of expertise in designing and operating closed-loop systems, which often leads to incomplete adoption of circular principles and inefficient resource use. Additionally, each organization's unique interpretation of circular manufacturing complicates external collaboration, causing misalignment. A clear operational framework, similar to Total Quality Management (TQM) or Lean Manufacturing, with defined implementation stages and metrics^{[50, 51]}, could help address these issues. Despite challenges, CMS offers opportunities at both strategic and operational levels. Literature identifies circular design, renewable energy, waste prevention, and resource conservation as key CMS elements, alongside 4R practices (Remanufacturing, Reuse, Reduce, and Recycle). Organizations adopting selective CE and CMS practices have seen benefits, but a cohesive business operational model is crucial for sustained success. Lieder and Rashid^[52] proposed a top-down and bottom-up approach that combines legislative support and collaborative business models to guide CE and CMS, ensuring comprehensive stakeholder involvement.

6 Conclusions

After reviewing and analyzing research articles in the field of circular economy and circular manufacturing system, this study asserts that research related to CMS is in its early stages. CMS is an interesting but less explored aspect of circular economy (CE) and it is gaining attention as organizations seek to improve their sustainability targets and reduce impact on the environment. Circular manufacturing system is crucial to the successful implementation of the circular economy, as without well-designed models, practices, and metrics, the goals of the circular economy can be thwarted and its validity called into question. Sufficient literature is developed on circular economy related to circular business model, circular supply chain etc. When it comes CMS there is ample scope to develop the theory as well implementation mechanism considering internal and external factors of organization. It can be concluded that the term "circular manufacturing" can be used to describe a wide range of practices. But there are fundamental aspects that still needs to addressed, such as definition, implementation framework, performance metrics and integration with existing systems. Once the theory for CMS is developed and validated it will be helpful for both academia and industry to recognize and implement the CMS across industry. The prospects for CMS can be bright if the flowing aspects are addressed:

● Clarify definitions, understand its scope and differentiate it from sustainable manufacturing approaches.

● Develop models that identify the building blocks of CMS and propose tangible and intangible advantages of circular manufacturing system.

● Formulate system level performance indicators.

● Frame mechanism to facilitating integration of circular manufacturing into existing manufacturing systems.

● Explore interdependencies among business model, supply chain, product design and CMS.

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