Technologies and data pave the way for a circular economy

With digital technologies and data to the Smart Circular Economy

Smart Circular Economy
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Global supply bottlenecks, rising raw material prices, dwindling resources - sustainable business makes sense not only ecologically, but also economically. And that's not all: The regulatory requirements of the German government or the EU are also demanding more and more commitment from business. For example, companies must continuously demonstrate their CO2 emissions by calculating their product carbon footprints, while at the same time demonstrating suitable measures to reduce their own CO2 footprint and reduce the need for natural raw materials. Circular or circular economy approaches offer high solution potential here and are therefore increasingly coming to the fore in considerations.

For this reason, the Association of the Bavarian Metal and Electrical Industry (bayme vbm) and Kompetenzzentrum Mittelstand GmbH (KME) have commissioned the Fraunhofer IIS Supply Chain Services working group to conduct a study entitled »Use of digital technologies to implement circular economy solutions in the M+E industry«: In this study, the researchers will systematically analyze the benefits and potential of digital technologies and identify fields of action for implementing circular value creation in the metal and electrical industry (M+E industry).

Circular Economy as a solution approach for a sustainable economic system

In contrast to linear value creation, circular economy refers to an economic system in which economic activity is gradually decoupled from the extraction and consumption of finite resources. Companies face major challenges here: Because in the transformation to a Circular Economy, the specified or targeted ecological goals must be closely aligned with the economic and social ones from the outset. To achieve this, companies must address the targeted development of circular approaches, weigh up their potential and develop a roadmap for appropriate implementation tailored to the company's needs.

Technologies and data as enablers

A prerequisite for the success of the measures is to repeatedly take a holistic view of the entire product life cycle and value creation cycle and, on this basis, to identify or evaluate suitable fields of application.

Digital technologies and the consistent use of the right data along the product life cycles can be decisive pioneers here: They form the basis for the development of data-based services around product offerings, through which circular solutions are ultimately implemented. For example, data provided by a smart product during its operation can predictively trigger maintenance measures and thus extend the product life. Or they predict the extent to which products, components or materials can flow back into the company's value creation process so that new things can be created from them.

Circular Economy in practical application: A study in the M+E industry

The study is now intended to identify opportunities for smart circular approaches in the SME M+E industry. To this end, the specific needs will be discussed with member companies of the Association of the Bavarian Metal and Electrical Industry (bayme vbm) and suitable, transferable solutions will then be developed.

The results will be developed as follows:

  • Needs assessment on circular solutions among member companies, identification of current challenges as well as initiatives already launched.
  • Research on the use of digital technologies and data relevant for the M+E industry to implement circular solutions.
  • Determination of the current state of circular solutions in member companies based on the transformation navigator »Smart Circularity« developed by the Center for Applied Research on Supply Chain Services at Fraunhofer IIS.
  • Analysis and evaluation of the results and preparation of company-specific results reports.
  • Interactive focus group workshops with member companies in which application examples of digital technologies and data use for implementing circular solutions are highlighted and discussed with member companies.
  • Detailed description of digital technologies and data used for circular solutions with concrete case studies and mini use cases.
  • Derivation of application-oriented recommendations for action in the transformation fields of organization, products and value creation for the use of digital technologies for a circular economy.

Results and benefits for companies in the M+E industry

In addition to clarifying fundamental questions about the meaning and possibilities of Circular Economy (What is meant by Circular Economy? What are the R strategies? What regulatory requirements exist?) and knowledge of the potential of digital technologies for implementing circular approaches (What data can be collected through digital technologies for localization, traceability and condition monitoring of products or material flows?), the participating bayme vbm member companies additionally receive concrete solution proposals, ideas and recommendations for action for their company in the form of:

  • A company-specific executive summary (1-page) based on the transformation navigator »Smart Circularity«, a structured and detailed description of existing application examples and good practices on smart circular solutions,
  • Knowledge transfer into practice through intensive discussions in focus group workshops (exchange of experience and good practice transfer),
  • The presentation of possible business model patterns (e.g. sharing approaches, platform-based business models, etc.) for the circular economy,
  • Recommendations for action with regard to Circular Economy in times of digitalized value creation.

The study thus addresses the principles of the Smart Circular Economy in the M+E industry: It makes the connection between digitalization and the Circular Economy tangible for their medium-sized companies by working out which digital technologies are available for the implementation of a Circular Economy. It determines the status quo of circular approaches in the member companies and answers the question which digital technologies are already used in the companies in this context. It identifies the challenges in implementing circular approaches and makes initial, practical recommendations for action that show companies possible solutions.

Podcast: Factory of the future

If you want to learn more about the Smart Circular Economy, we recommend the following podcast (German) by Lydia Bühler:

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