From theory to practice
In the previous chapters, researchers have discussed the four main value creation methods in a Circular Economy.
The analysis has presented the cycles and the techniques needed to recover the value embedded in discarded materials and components. The study showed, the companies that have set their businesses within the CE to maximize their resource and energy consumption and minimizing negative externalities. Nevertheless, challenges are advancing towards CE transition:
1) The Product Design for Disassembly:
Companies need to rethink the way products are designed by considering the whole life cycle of materials and components. This is particularly important for industrial businesses, such as Schoeller Plast, Refurb and Plastix, with a value chain that involves multiple actors.
2) Stakeholders are the heart of transitioning to a Circular Economy:
While striving to create closed loops and to extend products’ life cycles, companies need to align their business practices across the various stakeholders, policy makers, legislators, research institutes, NGOs and consumers.
Collaborating with all these stakeholders can provide an insight into the needs and challenges related to a transition to a CE. Those stakeholders and policymakers are the governmental sector, research institutes to NGOs, which encourage cooperation related to the environment and consumers, and across different business sectors.
3) Technology Innovation enables transparency across the value chain:
Product redesign involves the need of integrating new innovations. These innovations need to be aligned again with the whole value chain. Leveraging on the richness of data generated from connected assets.
The current work has shown that a common perspective over CE is needed in order to overcome the challenges for both low-tech and high-tech companies. This CE vision requires a deepened knowledge of what the CE is across different industries as well as for the end-users. On the one hand, companies can act as an example from the economic level, through their business activities. On the other hand, companies can spread a CE vision from a societal level, through the commitment, motivation and satisfaction of their employees. Additionally, experts and
101 opinion leaders in the field can help companies in developing a vision aligned to the policies that are being developed. Figure 27 displays the recommendations for both the internal and the external actors in order to align both perspectives. In this sense the recommendations are complementary and needs to match in terms of vision, technological innovation and captured value, both on the economic and societal level.
Figure 27: Recommendations aligning internal and external perspective. Own creation.
Thus, the following actions for companies have been identified:
Develop Capabilities: circular business models require a broad set of capabilities in areas such as design, engineering, logistics and procurement. Companies need to invest in both recruitment and training activities to build the right skills among their staff to understand and harness the new opportunities. Companies, such as Kaffe Bueno, SvampeFarm and Sprout operating in the biological side find the main challenges in organizing an efficient supply. The companies need new ways to involve suppliers in the CE. This can be reached by an effective use of certification and company-lead initiatives that connect suppliers with the final benefits for the environment. Companies operating in the technical side (Schoeller Plast, Refurb, Plastix) find the main challenges in aligning the needs of the different actors involved in the value chain. This means that products have to be designed to answer both customers’ expectations and the reuse of parts and components. This constitutes a challenge because it has been found that companies often are not willing to coordinate along the value chain as this alignment is seen as compromising the quality of the products.
Develop collaboration platforms: open innovation will not automatically lead to synergistic value creation and increased profits for everyone. The challenge of co-operations is one that can only be overcome through the creation of collaborative environments where businesses, universities and innovators converge to solve problems in an open environment. Recyclers (e.g. Plastix) and companies involved in the recovering of materials
102 (e.g. Refurb), should be able to communicate directly to manufacturers specific instructions or advices for product disassembly.
Develop new Business Models: product innovation needs to be matched with innovative business models.
Product-Service systems is promising paths for companies operating within the CE. Nevertheless, these business models need to be adapted to the different traits of CE in each industry and the opportunities opened from real-time monitoring through IoT. The interplay of CE, PSSs and IoT has been considered promising for Kaffe Bueno, Schoeller Plast, Refurb and Plastix. The match between innovative BM and product innovation is different across the industries. This represents and additional challenge for policy makers in creating and appropriate regulatory environment around a technological innovation that effectively ensures stakeholder trust while encouraging innovation. Policies need to work both on the economic and on the societal level, as it is the role of companies within the CE.
Based on the findings following actions for policymakers have been identified:
Educate end-user: initiatives and projects constantly need to be undertaken to educate the private end-users. The initiatives to be undertaken need to push consumers in changing the current consumption pattern. In this sense, the initiatives should incentivize consumption behavior. For instance, the Danish return system could be extended to other types of products such as returnable plastic bags. For example, by creating point collection systems that incentivize the purchase of products that are manufactured with higher percentages of recycled materials.
Enable the exchange of materials: policymakers have to support digital systems and platforms to optimize the circulation of materials, minimizing the need for virgin resources. For instance, coffee producers could give material surpluses to companies like Kaffe Bueno and SvampeFarm. Also, fishing nets and ropes producers could provide Plastix defective products that cannot be sold anymore. In turn, this increase companies’ competitiveness and the transparency of the complex flow of residual and raw materials.
Enable infrastructure and support services: IoT-enabled innovation with CE principles can help identify new value creation potential. Looking at the ongoing digital revolution using the combined lenses of intelligent assets and CE reveals that numerous businesses are already unlocking value in this realm. Here, the main possibilities are opened by optimizing capacity utilization, implementing predictive maintenance, and automating sales and inventory management, such as for companies like Refurb and Schoeller Plast.
By analyzing the opportunities opened by IoT, it can be argued that many industries will be able to leverage on the use of connected assets. Nevertheless, the potential value creation possibilities within the CE is still uncertain.
This will be determined by the cooperation between public and private sectors in defining adequate policies and practices, able to bring investments to CE-solutions. These policies need to create both an interest for the public and private sectors to cooperate. In order to create an interest for the public and private sectors to cooperate, the policies need to act on two sides. On one hand, policies need to create transparent value for consumers. On the other hand, policies need to create profits for the private sectors. Thus, the mentioned cooperation will involve
103 political, social, economic and financial considerations. Yet, this dialogue is needed to succeed in developing a CE capable of transforming the change.