You’ve decided to start a refurbishment business for your own products. How many do you actually need back to make it work?
It’s a deceptively simple question — and a recurring problem I hear from manufacturers and remanufacturers alike: they need far more volume than they currently get back.
So the question really has two parts:
-
How much volume do you need?
-
How do you make sure that volume actually comes back?
1. You can’t calculate a circular business case like a linear one
A circular business case depends on things a standard, linear calculation tends to ignore. To find the volume you need, you first have to understand your specific situation:
-
How many times can the product realistically come back and be refurbished?
-
How does your market actually behave — is returning products something your customers will realistically do?
-
How is your business set up — do you already have channels that could support reverse logistics?
You can’t simply borrow someone else’s numbers. The answers depend on your product, your customers, and your business model.
2. Then you have to secure the return flow
Estimating the volume isn’t enough. You have to secure it. In practice, that comes down to some combination of mechanisms that actively bring products back:
-
Contracts that build return into the deal
-
Incentives that make returning easy and worthwhile
-
Reverse-logistics channels and partners that make the flow actually happen
Why I work with simulation, not fixed numbers
Here’s the honest part: there isn’t always one exact number you can calculate with confidence. There are simply too many variables moving at the same time.
That’s why I work with simulation rather than fixed figures — much like the slide bars in a credit calculator.
Change the return rate, the resale value, the refurbishment cost, or the setup investment, and watch how the business case moves with them. More importantly, you can see which variable has the biggest impact on whether the model works.
This changes the whole conversation. It turns:
“Give me the exact number we need.”
into a far more useful question:
“What has to be true for this business model to work?”
And that is the question a circular business case should actually answer.
How do you approach circular business case calculations — with exact figures, with simulation, or based on experience? I’d be glad to hear how you handle it.