Digital Transformation and Circular Economy for Sustainability

Digital Transformation and Circular Economy for Sustainability

Renan Carriço Payer (Universidade Federal Fluminense, Brazil), Osvaldo Luiz Gonçalves Quelhas (Universidade Federal Fluminense, Brazil), Gilson Brito Alves Lima (Universidade Federal Fluminense, Brazil), and Níssia Carvalho Rosa Bergiante (Universidade Federal Fluminense, Brazil)
Copyright: © 2023 |Pages: 14
DOI: 10.4018/978-1-7998-9220-5.ch128
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The article analyses how technologies from Industry 4.0 may step up circular economy initiatives inside organizations to provide a sustainable digital transformation. The authors present advances found in the literature towards convergencies between circular economy and digital transformation, and also point out the main challenges and restraints that need to be overcome through more scientific studies, or through the best practices inside the organizational environment. This article also presents an integration between the principles and fundamentals from circular economy and the main technologies from Industry 4.0 using the framework ReSOLVE. Thus, it aims to show how technological resources may cooperate in reaching a circular economy inside organizations.
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The traditional industrialization has been producing many byproducts and generating pollution and environmental degradation (Di Vaio, Hasan, Palladino & Hassan, 2022; Hu et al., 2011). This adverse scene made several researches think over the idea of “circularity”, aiming to reflect upon the way resources are currently used not only inside production and economical systems but also as a way to deal with their lack and its relation to population growth. (Alhawari, Awan, Bhutta & Ülkü, 2021; Cezarino, Liboni, Stefanelli, Oliveira & Stocco, 2019).

The idea of “circularity” (figure 1) was shaped around the conception of “Circular Economy”, which is understood by some authors as a differential perspective about organizational and operational production and consumption systems focused on recovering value from used resources. (Genovese, Acquaye, Figueroa & Koh, 2017; Lieder & Rashid, 2016; Sarc et al., 2019). The organizations which replace the traditional perspective of linear economy for this circular approach on energy and materials may experience economic, environmental and social benefits (Geissdoerfer, Savaget, Bocken & Hultink, 2017).

Figure 1.

A circular economy model

Source: Author’s elaboration

In general, the interest of researchers in studies about the relationship between sustainability and digital transformation has increased. Effectively, the issue of sustainability refers to economic, environmental and social development. Sustainability is a broad concept that is not limited to the environment only, as it also involves economic preservation and the valorization of social resources (Ghobakhloo, 2020).

At the same time, the economic development conducted through the empowerment of the industrial sector and consequently exploration of natural resources has made governments and society itself look for new ways to achieve a sustainable development. So, the digitalization may urge this transformation towards a more sustainable circular economy (Antikainen, Uusitalo & Kivikytö-Reponen, 2018; Cezarino et al., 2019; Hedberg, & Šipka, 2021; Jabbour et al., 2018). Besides, the industry 4.0 and the sustainability may be useful if taken as tendencies in organizational production systems (Rejikumar et al. 2019; Trappey et al., 2017).

With its smart solutions, the industry 4.0 brings in its core the digital transformation, offering an information technology infrastructure capable of providing a more efficient use of resources, enabling reduction of energy consumption, and logistics routes, while also optimizing capacity (Jæger & Halse, 2019; Sreedharan & Unnikrishnan, 2017). The digitalization enables transparent access to products’ data, resource consumption, and the promotion of a life cycle of technological products (Antikainen et al., 2018). The business model may be developed based on the integration between technologies of industry 4.0 and the circular economy, promoting a digital transformation (figure 2).

Figure 2.

Circular economy and industry 4.0: A business model

Source: Author’s elaboration

Key Terms in this Chapter

Circular Economy: Model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible.

Digital Transformation: Incorporation of computer-based technologies into an organization's products, processes, and strategies.

Cyber-Physical Systems (CPS): Computer system in which a mechanism is controlled or monitored by computer-based algorithms.

Cloud Computing: The delivery of computing services over the Internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale.

Industry 4.0: New phase in the Industrial Revolution that focuses heavily on interconnectivity, automation, machine learning, and real-time data.

Additive Manufacturing: The computer-controlled sequential layering of materials to create three-dimensional shapes.

Internet of Things (IoT): Network of things with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet.

Big Data: Data that contains greater variety, arriving in increasing volumes and with more velocity.

Sustainability: Meeting our own needs without compromising the ability of future generations to meet their own needs. In addition to natural resources, we also need social and economic resources.

Chain Value: Step-by-step business model for transforming a product or service from idea to reality.

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