Track: Supply Chain and Logisitcs Competition

Abstract

Nowadays, environmental and social sustainability issues besides the increment in the customers’ awareness regarding global warming are pushing companies toward more sustainable business models. Accordingly, the Subscription-Based Business Model (SBBM) is grabbing more attention from both business owners and consumers as it has the potential to enhance business sustainability performance by implementing Circular Economy (CE) practices such as reducing, reusing, and recycling. Besides, some studies show that SBBMs are more resilient during disruptions such as the pandemic. Moreover, SBBM offers additional after-sale services to the customers at a more reasonable price and brings constant revenue streams for the companies through subscription fees. However, conducting CE initiatives for SBBMs causes more complexities in the operations of the companies due to increasing reverse logistics activities and requiring repair and recycling operations to increase product lifetime and close the supply chain loop. To overcome these challenges, new technologies like blockchain and Artificial Intelligence (AI) facilitate data collection and analysis along the whole value chain and improves the decision-making procedures for business owners. Accordingly, this study focuses on different parameters and decision conditions that subscription firms should consider in their analysis to compare the impact of implementing CE practices on the operational cost and their sustainability performance with the traditional business models. Moreover, we provide the optimal solutions for the service capacity to maximize the profit concerning CE practices. The outputs indicate the importance of managing inventory and ordering policies, repair and maintenance costs, and efficient recycling plans to achieve a profitable model. Furthermore, we discuss the conditions that the SBBM outweighs traditional models in terms of improving reducing, reusing, and recycling indicators.