Waste return product management strategy based on 4R through circular product innovation to increase profitability. (Study on MSMEs Eyang's Recipe)

Abstract

Sustainability and food waste are major challenges for food-based MSMEs, particularly those implementing consignment-based distribution systems, where unsold perishable products can reduce operational efficiency and profitability. This study aimed to formulate a Circular Economy strategy through Circular Product Innovation to reduce product waste, improve cost efficiency, and strengthen the business sustainability of Resepnya Eyang baked brownies. The study employed an Action Research design dominated by qualitative methods and supported by descriptive quantitative data. Data were collected through field observations, semi-structured interviews, documentation, and focus group discussions involving 16 consumers. The data were analyzed using Root Cause Analysis, RBV-VRIO, source triangulation, and the Mass Balance Model. The findings showed that product returns were primarily caused by limited outlet control, inaccurate demand forecasting, short product shelf life, weak product display positioning, and restricted marketing activities. Consumer acceptance of Browny Cookies was high, with taste ratings of 4.5/5 among loyal consumers and 4/5 among potential consumers. The Mass Balance Model indicated that approximately 7–8% of previously unsold brownies could be reprocessed into marketable cookies, reducing potential waste to nearly zero. The study concluded that Circular Product Innovation can support waste reduction, resource efficiency, competitive advantage, and sustainable profitability among food-based MSMEs through a closed-loop production system.