The CE-I4.0T Nexus Framework: A tool to accelerate the transition towards a Circular Business Model for Electronic products Manufacturing Companies

Abstract

The circular economy (CE) is a potential solution for manufacturing companies to better utilize resources and balance economic growth and environmental protection. By implementing circular economy principles into business models, companies can shift from one-time product sales to continual profit generation through reused materials and products. Circular Business Models (CBMs) can help manufacturing companies mitigate critical raw material supply risk by reducing waste and landfill and reuse resources. By incorporating all CBM elements, businesses can create value by closing resource loops, reusing products and materials, and using renewable resources where possible. By reducing costs through reusing materials
and enhancing environmental values, manufacturing companies can create new opportunities and reducetheir dependence on raw materials.

CBMs are a promising approach for manufacturing companies to transition to a circular economy. However, widespread adoption and implementation of circular business models remain challenging due to various barriers. Digital Technologies, such as Industry 4.0 technologies (I4.0T), can enable the implementation of
circular strategies and practices. IoT can improve transparency and optimize processes, while additive manufacturing and 3D printing can enable CBMs for remanufacturing. However, there is a lack of understanding of how circular strategies can structure elements of a circular business model and create value in a closed-loop manner.

This thesis aims to explore the use of the CE-I4.0T Nexus Framework (HCBMT-Framework) to facilitate
the transition towards circular business models for Electronic products manufacturing companies. The
research will focus on the influence of circular strategies on a company's value proposition, value creation, and value delivery, as well as how Industry 4.0 Technologies can accelerate the transition towards circular business models.

We researched three case companies to assess the applicability of the CE-I4.0T Nexus Framework in the electronic product manufacturing sector. The research focuses on circular strategies, practices, and utilization of Industry 4.0 Technologies (I4.0T) of the three European electronic manufacturing companies: Bosch Siemens Home Appliances (BSH), BlueMovement, and Miele. BSH is a multinational household appliances producer committed to sustainability and circularity, promoting energy-efficient technologies, durability, ease of maintenance, and recyclability in its products. BlueMovement is a division of Bosch that
specializes in providing home appliances, offering rental services, maintenance, repair, refurbishment, and recycling services. Their circularity strategy is characterized by their business model, where consumers leasem appliances while the company retains ownership and takes responsibility for maintenance, repair, collection, and processing. Once the contract period has ended, the appliances are refurbished and recycled. Miele is a premium manufacturer of high-quality household appliances known for their durability, performance, and
timeless design. We collected data by analysing publicly available documents and information from the case companies and by interviewing case company representatives. The interviewed company representatives are well-informed about the business models, CE, circular strategies, and the usage of I4.0Ts. The findings present the results of data collection and development of frameworks for each case company. Empirical evidence for the CE-I4.0T Nexus Framework is gathered through observing implemented practices at the
case companies which the framework also provides.

Case company 1 focuses on cycling, narrowing, and extending strategies, with practices from the intensifying strategy less mentioned. The CE-I4.0T Nexus Framework is used to identify circular strategies, practices, I4.0Ts, and business model elements. Case company 1 uses big data and predictive models to optimize product life cycles and promote the circular economy. To improve, the company can implement practices
such as balancing supply and demand, utilizing Industry 4.0 technologies, optimizing resource consumption efficiency, and focusing on reselling channels.

Case company 2 focuses on the intensifying strategy in its business model by implementing practices related to sharing, leasing, and recycling. The CE-I4.0T Nexus Framework provides content for the current CBM of case company 2, which includes a greening strategy, focusing on delivering green products and reducing energy consumption through sustainable product delivery and eco-friendly packaging. Marketing channels
should focus on creating awareness about their green offerings and using eco-friendly appliances.

Case company 3 implements cycling and extending strategies using IoT, big data, cloud computing, and
analytics to monitor usage data and product performance. The framework also provides insights into practices that could be developed from the CE-I4.0T Nexus Framework, such as offering an app with energy insights, maintenance insights, and remote technical support for product maintenance or repair. 

During the case company analysis we focused on three propositions and three rival arguments to minimize bias and verify the results. Proposition 1 suggests that Industry 4.0 technologies enhance the value
proposition, value creation, and value delivery of electronic product manufacturing companies through the implementation of circular strategies. Proposition 2 asserts that Industry 4.0 technologies act as enablers or accelerators of circular business models by providing tools and capabilities that facilitate the adoption of circular strategies in electronic product manufacturing companies. Proposition 3 asserts that the CE-I4.0T Nexus business model tool provides clear insights that help manufacturing companies identify and leverage synergies between industry 4.0 technologies and circular strategies, facilitating an efficient transition towards a circular business model. However, rival arguments argue that implementation of Industry 4.0 technology
may require significant financial investments, training, and adjustment, and that compatibility concerns with current systems and workflows could hinder its usefulness.

In this study we analysed the cases of three electronic household appliance companies, Case Companies 1, 2, and 3, to determine their implementation levels and improvement areas in their circular practices. The data showed that the companies either see the potential of Industry 4.0 technologies to enhance their business models or are already leveraging I4.0Ts to enhance their offerings. However, there were opposing
arguments, such as the importance of customer approval for retrieving usage data and the focus on other factors like quality, hygiene, and price.

The CE-I4.0T Nexus Framework was empirically validated through analysing three electronic household appliance industry companies. It showed that it should be possible to derive circular practices enabled by I4.0Ts and implement them along the business model. 12 practices were found at the case companies which the CE-I4.0T Nexus Framework also provides. 

However, there are limitations and recommendations to consider. Firstly, the framework in table format shows per circular strategy the I4.0T capabilities but doesn't include them in the practices shown in each business model element. Additionally, the case companies had practices in place that are not provided by
the CE-I4.0T Nexus Framework but will give added value when implemented in the framework. A proposed improvement is to included practices that propose implement I4.0Ts in the products which enable circular practices. Further limitations are regarding the research itself. The case company analysis included only one interview from each case company, and more interviews with multiple representatives are recommended to get a full picture of all circular practices and industry 4.0 technology usage. Future research could focus on
the enhancement of empirical evidence by conducting multiple interviews at each case company, improving the framework and testing its effectiveness.