A System-Dynamics Based Approach for Modeling Circular Economy Networks: Application to the Polyethylene Terephthalate (PET) Supply Chain

The transition to a circular economy (CE) requires agents in circular supply chain (SC) networks to take a variety of different initiatives, many of which are dynamic in nature. We use a system dynamics (SD)-based approach to develop a generic framework for dynamic modeling of CE networks and propose a prototypical circular SC network by combining dynamic models for five actors: a manufacturer, consumer, material recovery facility (MRF), recycling facility, and the Earth. We apply this framework to the supply chain for Polyethylene Terephthalate (PET) plastic packaging by considering different scenarios over a 65-year time horizon in the US. We include both �slow-down-the-loop� initiatives (i.e., those that extend product use time through demand reduction or reuse) and �close-the-loop� initiatives (i.e., those that reintroduce product to the supply chain through recycling) by the consumer, as well as sorting and recycling capacity expansion. We find that, given the current recycling infrastructure in the U.S., �slow-down-the-loop� initiatives are more effective than �close-the-loop� initiatives for improving circularity and minimizing environmental impact. However, combining the two initiatives eliminates the need for capacity expansion and leads to the highest circularity in the shortest amount of time.