Exploring How Usage-Focused Business Models Enable Circular Economy through Digital Technologies (original) (raw)
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Circular Economy has been usually indicated as a promising approach to promote economic development and sustainability. Despite this general agreement, the Circular Economy paradigm is still little adopted by companies, as they need to face several challenges. In this context, Product-Service Systems (PSS) Business Models play a major role, as they have been proposed as an opportunity for promoting sustainability. Today, digital technologies are seen as a key factor to enable PSS, allowing at the same time the introduction of Circular Economy into companies. However, little attention has been set on how new digital technologies can overcome in practice the main Circular Economy challenges. To fill this gap, this paper explores such a role through a case study of a company who leverages Internet of Things, Big Data and Analytics in the provision of its PSS Business Model. Based on the findings of the empirical investigation, the role that the selected digital technologies play in overcoming the Circular Economy challenges is presented and discussed
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Internet of Things (IoT), sensors, wireless networks, cloud computing and big data analytics are technological innovations that have the power to transform traditional businesses. These technologies can enable and accelerate a circular economy on a broader scale. We aim at providing information on how to disrupt current prevailing linear business models by employing digital data and IoT technologies. We give the reader a short overview of IoT technologies affecting the incumbents of industry. We present the current deployment of a tool rental service experiment and develop a scenario anticipating the possible future of the tool rental service. The envisioned tool rental scenario provides understanding on the effects of digital technologies and helps companies in identifying more sustainable and circular
The service sector has the potential to play an instrumental role in the shift towards circular economy due to its strategic position between manufacturers and end-users. However, there is a paucity of supporting methodologies and real-life applications to demonstrate how service-oriented companies can implement circular economy principles in daily business practice. This paper addresses this gap by analysing the potential of service-oriented companies in the information and communication technology (ICT) sector to build and implement circular economy business models. To this end, the Backcasting and Eco-design for the Circular Economy (BECE) framework is applied in an ICT firm. BECE, previously developed and demonstrated for product-oriented applications, has been developed further here for applications in the service sector. By shifting the focus from a product-oriented approach to a user-centred eco-design, the paper shows how ICT firms can identify, evaluate and prioritise sustainable business model innovations for circular economy. The two most promising business model innovations are explored strategically with the aim of designing circular economy models consistent with the company's priorities of customer satisfaction and profitability. The findings suggest that ICT companies may be able to support the deployment of a circular economy in the service-oriented technology sector. Importantly, micro and small organisations can play a fundamental role if provided with macro-level support to overcome company-level barriers. Finally, the BECE framework is shown to be a valuable resource to explore, analyse and guide the implementation of circular economy opportunities in service-oriented organisations. Further research to verify the application of the findings to other service-oriented organisations is recommended.
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Data driven organizations such as Amazon and Uber have raised the capabilities and expectations of customers to a new level by providing faster and cheaper products and services. The reviewed literature documented that 10–15% of the online products are returned and in many cases such products are not shelf-ready due to product obsolescence or slight wear and tear, thereby reducing profits. Many of these products are disposed of in landfills. There were very few publications that documented how integration of digitized product life cycle into the business model improves product returns and the remanufacturing processes. As societies continue on, environmentally responsible, digital journeys with connected devices and people, reverse supply chains and remanufacturing will play increased importance in fulfilling customers expanded expectations. The networks are evolving, wherein, data are collected from all phases of the product lifecycles from design, prototype, manufacturing, usage a...
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The digital age we live in offers companies many opportunities to jointly advance sustainability and competitiveness. New digital technologies can, in fact, support the incorporation of circular economy principles into businesses, enabling new business models and facilitating the redesign of products and value chains. Despite this considerable potential, the convergence between the circular economy and these technologies is still underinvestigated. By reviewing the literature, this paper aims to provide a definition and a conceptual framework, which systematize the smart circular economy paradigm as an industrial system that uses digital technologies during the product life-cycle phases to implement circular strategies and practices aimed at value creation. Following this conceptualization, the classical, underlying circular economy principle, ‘waste equals food’, is reshaped into an equation more fitting for the digital age—that is to say, ‘waste + data = resource’. Lastly, this paper provides promising research directions to further develop this field. To advance knowledge on the smart circular economy paradigm, researchers and practitioners are advised to: (i) develop research from exploratory and descriptive to confirmatory and prescriptive purposes, relying on a wide spectrum of research methodologies; (ii) move the focus from single organizations to the entire ecosystem and value chain of stakeholders; (iii) combine different enabling digital technologies to leverage their synergistic potential; and (iv) assess the environmental impact of digital technologies to prevent potential rebound effects.
Business Models and Internet of Things
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Information technology has massively transformed the world of business over the past fifty years - first individual functional areas within companies (“first wave”), later increasingly also cross-divisional value-added processes and trade (“second wave”). Those companies that recognized the tremendous economic potential of these upheavals and consistently adapted, profited enormously - many others, however, fell dramatically. At the same time, innovative startups emerged that successfully created and occupied new markets. With the Internet of Things (IoT), the third digital wave is currently rolling up. Their impact will be enormous - both for our everyday lives and for many industries that have so far been largely spared the disruptive power of digital transformation. Accordingly, the challenges facing most companies today are: understanding more complex competition, acquiring new digital technologies, making existing offerings smart, developing new services, networking production,...
Towards Circular Economy in the Household Appliance Industry: An Overview of Cases
Resources (ISSN 2079-9276), 2020
Circular Economy is a means to ensure sustainable production and consumption patterns. However, it is still at an embryonic stage of implementation in manufacturing companies. Given its potential, the household appliance industry is a promising arena for the adoption of Circular Economy. Thus, this study aims to investigate and systematize how Circular Economy has been adopted in the household appliance industry, through a multiple case study research. Twenty cases are analyzed following a Research Framework, to map: (i) the Circular Economy 4R strategies of reduce, reuse, remanufacture and recycle; (ii) the Circular Economy levers, i.e., whether circular product design practices, servitized business models or supply chain management actions are undertaken; (iii) the role of digital 4.0 technologies as enablers; (iv) the benefits achieved. The analysis showed that servitized business models and supply chain management actions are widely used levers, while little attention is devoted to circular product design practices. Internet of Things (IoT), Big Data and Cloud emerged as powerful enablers of servitized business models. Two main patterns of Circular Economy adoption in the household appliance industry emerged from cases: incremental and radical adoption patterns. Incremental adoption patterns are based on design strategies focused on reduce and recycle, mainly led by manufacturers. Radical adoption patterns are instead focused on disruptive practices based on reuse, remanufacture, servitization and sharing, where digital 4.0 technologies serve as enablers. Overall, this exploratory research lays the foundation for a stronger and more systemic understanding of the adoption of Circular Economy in the household appliance industry.