Performance measurement system for circular supply chain management

Circular supply chain management is characterized by multiple interdependencies between various performance objectives for circularity, economic, environmental and social performance. A performance measurement system which takes these interdependencies into account is currently not available, however, is needed to identify effective actions, involve stakeholders and prevent unintended consequences of actions. The objective of this paper is to develop this performance measurement system. Using a methodology of multiple case studies, we identify the interdependencies between the various performance objectives and combine these in a causal loop diagram and a system dynamics model. We then evaluate the usability of these models in two companies which are in transition to circular supply chain management. The companies confirm the relevance of performance objectives, their interdependencies and the validity of the outputs. This results in the following contributions: Service lifetime - the time period of use, recovery and reuse until incineration - is as relevant to circularity as the much-mentioned product lifetime. The maturity of circularity follows four phases: virgin materials only, combination, recovered materials only, deterioration. Shortening the supply chain leads to a rebound effect and increases the environmental impact. The circular premium can relate to shareholders as well as to customers.