Exploring How Usage-Focused Business Models Enable Circular Economy through Digital Technologies

Recent studies advocate that digital technologies are key enabling factors for the introduction of servitized business models. At the same time, these technologies support the implementation of the circular economy (CE) paradigm into businesses. Despite this general agreement, the literature still overlooks how digital technologies enable such a CE transition. To fill the gap, this paper develops a conceptual framework, based on the literature and a case study of a company implementing a usage-focused servitized business model in the household appliance industry. This study focuses on the Internet of Things (IoT), Big Data, and analytics, and identifies eight specific functionalities enabled by such technologies (improving product design, attracting target customers, monitoring and tracking product activity, providing technical support, providing preventive and predictive maintenance, optimizing the product usage, upgrading the product, enhancing renovation and end-of-life activities). By investigating how these functionalities affect three CE value drivers (increasing resource efficiency, extending lifespan, and closing the loop), the conceptual framework developed in this paper advances knowledge about the role of digital technologies as an enabler of the CE within usage-focused business models. Finally, this study shows how digital technologies help overcome the drawback of usage-focused business models for the adoption of CE pointed out by previous literatur

PHILIPS SMARTPATH: A Circular Economy Business Model Case

This report presents the case study of Philips’ SmartPath business model for MRI scanners. SmartPath for MRI was chosen as the focus for the case study because: MRI systems have been a key focus for the implementation of circular economy models within Philips, and are an important line of business for the company. The SmartPath portfolio of upgrades focus on keeping products at their highest value throughout their lifetime, which is a core principle relevant to the circular economy. The SmartPath portfolio contains a number of circular business model patterns – some of which have been operational for many years at Philips. Nevertheless it is a model which is improving and evolving, and thus offers insights for Philips as well as other businesses. Insights for business guidelines This case study highlights the following key insights relevant to companies in similar industries or sharing a similar context: Significant value can be created by taking a lifecycle and service-centric approach to serving customers. This requires re-balancing priorities from focusing on new product sales towards maximising the value for customers from products already installed (the installed base). With this new focus, the installed base becomes a key resource to be ‘cultivated’ over its entire lifecycle. This creates the foundation for developing solutions and services that are consistent with the principles of circular economy: o Enhancing the utility and value of products at different stages of their lifecycle o Enabling the upgrade and life-extension of products o Establishing mechanisms to incentivise the take-back of products at end-of-cycle so that their value can be re-captured – for example through refurbishment and re-sale Product development and design needs to be consistent with a lifecycle approach, for example ensuring that future solutions are backward-compatible with systems already installed, and that these are equally upgradeable when new hardware or applications become available. This requires additional investment, however creates significant benefits including: o Ensuring systems in the installed base can maintain or enhance their value over the lifecycle o Improving customer experience and satisfaction o Creating opportunities for new and recurring revenue streams Transitioning from a product focus to a service/solutions focus (a form of ‘servitisation’) is a key enabler for circular business models. Offering products as a service creates a focus on value generation and customer satisfaction based on delivering overall performance and outcomes, rather than on the specifications of a produc

Perspective study: governance for C2C

This perspective study will serve as frame of reference for follow-up activities and exchanges both within and outside the Cradle to Cradle Network (C2CN) and it aims to reflect the current challenges and opportunities associated with implementing a Cradle to Cradle approach. In total, four perspective studies have been written, in the areas on industry, area spatial development, governance and on the build theme

Elinkaaritiedon hallinta tuotetietomallissa

In modern, global manufacturing business, value is increasingly created by services related to products rather than the products themselves. In industries related to the built environment, various products installed in the buildings are a major asset for the operators and managers of buildings. Product Lifecycle Management (PLM), managing and exploiting product-related information throughout the lifecycle of the product, has become both a requirement and an important tool for effective service business development. Extensive and interactive PLM requires a universal system for information exchange across the lifecycles of buildings and products. The objective of the study is to define and implement the minimum requirements set by a product-centric information exchange system in an IFC-based product information model, based on use case of managing installed medical equipment in hospital environment. The study comprises a literature analysis and a use case. Late literature was reviewed to analyse developments of intelligence and lifecycle management in products and buildings. It was found that major challenges exist in exchanging lifecycle information between stakeholders and across lifecycle stages. Based on the analysis, it is proposed that using the technologies of building information modelling and a product-centric information exchange system could provide novel solutions to the identified challenges. In the use case, a method was developed for incorporating an open, product-centric PLM information exchange system into the existing IFC standard. It was found that an URI-based, product-centric information exchange system using external databases and product servers satisfies the requirements of effective PLM information exchange. Additionally, it was found that using IFC for product information modelling can effectively support such a system by linking virtual building and product information models into the lifecycle information stored in external servers.Nykyaikaisessa, kansainvälisessä valmistavan teollisuuden liiketoiminnassa arvoa luodaan entistä enemmän tuotteisiin liittyvillä palveluilla kuin itse tuotteilla. Rakennettuun ympäristöön liittyvässä liiketoiminnassa rakennuksiin asennetut tuotteet muodostavat suuren pääoman rakennusten käyttäjille ja hallinnoijille. Tuotteiden elinkaaren hallinta (Product Lifecycle Management, PLM), eli tuotteisiin liittyvän tiedon hallinta ja hyödyntäminen tuotteen elinkaaren aikana, on muodostunut sekä vaatimukseksi että tärkeäksi työkaluksi tehokkaiden liiketoiminnallisten palvelujen kehittämisessä. Laaja-alainen ja vuorovaikutteinen PLM edellyttää yleismaailmallista tiedonvaihtojärjestelmää rakennusten ja tuotteiden elinkaarten varrelle. Työn tavoitteena on määritellä ja toteuttaa tuotekeskeisen tiedonvaihtojärjestelmän asettamat vähimmäisvaatimukset IFC-pohjaiseen tuotetietomalliin käyttötapauksessa (use case), jossa kiinteästi asennettavia lääkinnällisiä laitteita hallitaan sairaalaympäristössä. Työ koostuu kirjallisuustutkimuksesta ja käyttötapauksesta. Tuotteiden ja rakennusten elinkaaren hallinnan ja älyn kehitystä analysoitiin kirjallisuuslähteiden perusteella. Elinkaaren aikaisen tiedon vaihtamisessa osapuolten ja elinkaaren vaiheiden välillä havaittiin merkittäviä haasteita. Analyysin perusteella työssä esitetään, että tietomallintamisen teknologioiden ja tuotekeskeisen tiedonvaihtojärjestelmän käyttäminen voivat tarjota uusia ratkaisuja tunnistettuihin haasteisiin. Käyttötapauksessa kehitettiin menetelmä avoimen, tuotekeskeisen PLM-tiedonvaihtojärjestelmän yhdistämiseksi nykyiseen IFC-standardiin. Työssä havaittiin, että URI:in perustuva, ulkoisia tietokantoja ja tuotepalvelimia hyödyntävä tuotekeskeinen tiedonvaihtojärjestelmä täyttää tehokkaan PLM-tiedonvaihdon vaatimukset. Lisäksi havaittiin, että tuotteiden tietomallintaminen IFC:ia käyttämällä tukee järjestelmää tehokkaasti linkittämällä virtuaaliset rakennus- ja tuotetietomallit ulkoisilla palvelimilla sijaitsevaan elinkaaritietoon

E-business and circular supply chains : increased business opportunities by IT-based customer oriented return-flow management

This paper deals with the application of IT in circular supply chains (CSCs). We consider information on the installed base critical, and present an illustrative example. Next we discuss a framework of different kinds of value contained in a return, and IT-applications useful in supporting its recovery or neutralisation in case of negative externalities. Also we show which kind of CSC is needed for which kind of return. We illustrate our work by three real life case studies.reverse logistics;supply chain management;electronic commerce;product life cycle

Is my medical software allowed to go to market?

The central importance of software in healthcare practices is highlighted by the increasing regulation of medical software in order to safeguard medical activities and patient’s rights. Medical software suppliers need to meet regulatory requirements from different countries to gain market access and offer necessary compliant solutions. The present report focuses on providing methods and tools to allow software suppliers to evaluate which software products should be sold in which countries. Using design science and behavioral science two artifacts are presented integrating influence of regulatory requirements on market access and product lifecycle management. It is required to present all the regulatory information in an actionable way in order for it to be operationalized by businesses and engineering staff within a company

Are digital servitization-based Circular Economy business models sustainable? A systemic what-if simulation model

Manufacturing companies are struggling with the implementation of Circular Economy, especially due to the uncertainty regarding its potential sustainability benefits. In particular, and despite digital servitization is advocated by several studies as a way to achieve environmental gains, circular business models based on digital servitization are not always sustainable due to burden shifting and unexpected consequences which are difficult to assess before implementation. This is particularly relevant for the Electrical and Electronics Equipment industry, which suffers structural weaknesses such as the dependance on critical raw materials and an increasing waste generation. However, literature lacks models and tools able to address the complexity inherent in the systemic micro-macro perspective envisioned by Circular Economy, while studies that quantitatively assess the sustainability impacts and trade-offs of digital servitization-based circular scenarios are limited. This article aims to develop a better understanding of how the sustainability impacts of circular and servitized scenarios can be assessed and quantified at the economic, environmental, and social level, adopting a systemic perspective through the development of a what-if simulation model. The model is implemented in a spreadsheet tool and applied to a digital servitization-based Circular Economy scenario inspired by the case of a company offering long-lasting, high-efficient washing machines as-a-service. Results show that digital servitization can actually lead to a win-win-win situation with net positive effects to the environment, the society, and the economy. This result is based on the joint application of product design for digitalization and life extension, pay-per-use business models, and product reuse. These results are robust within a significant range of key parameters values. Practitioners and policymakers may use the model to support the evaluation of different circular and servitized scenarios before implementation