Circular Economy: Challenges and Potentials for the Manufacturing Industry by Digital Transformation

The world is steering towards a situation, where resource scarcity will result in cost explosion of material and governments are overstrained to dispose the constantly accumulating amount of waste in their countries. One way to overcome the resulting challenges is the implementation of a circular system, in order to create a closed material cycle and eliminate the production of further waste. The ongoing digital transformation offers the potential to enable a transition towards a circular economy. Therefore, recent studies have been examined, which advocate that digital technologies are key enabling factors to realize the shift from a linear to a circular system. Despite this general agreement, the literature still neglects how digital technologies enable such a circular economy transition for the manufacturing industry. To fill the gap, this paper presents a research framework comprising nine success factors, based on digital transformation technologies. The research framework is composed of two dimensions. The first dimension describes the three phases (manufacturing, usage and reutilization/recycling) of a product lifecycle. The second dimension depicts the design levels of business engineering (strategic-, system- and information level). Therefore, the nine success factors have been described for each level of the framework along the product lifecycle in the context of digital transformation. Thus, the paper gives recommendations to overcome the challenges of manufacturing companies concerning the realization of a circular economy.