By now, more and more often we are hearing the term “digitalization” being used. What does it mean and how does it connect to the Circular Economy? Digitalization refers to enabling, transforming, and optimizing business processes by leveraging digital technologies and digitized data. In this context, the word digital is a synonym for the change in pace that is occurring in today’s world driven by the rapid adoption of new technologies. As a result, it is altering the way we communicate both internally as well as externally. Also, it is creating new competitive, and sustainable advantages.
Digitalization is not just simply digitizing existing services. Certainly, it is a word that encompasses a whole new way of approaching business and ultimately solving problems. Digitalization is creating new innovative business processes. Consequently, it is easier to extract important information; such as big data, to inform decision making.
In the report Intelligent Assets: Unlocking the circular economy potential published by the Ellen MacArthur Foundation, the article looked at the benefits of these technological advances. Indeed, they can foster more intelligent economic growth, resource, and food security, and improve the infrastructure. The use of intelligent assets, such as the Internet of Things (IoT) is already increasing efficiency in our current linear take-make-dispose economy. Could it also, however, facilitate a less resource-dependent circular economy that is restorative and regenerative by design?
Digitalization and intelligent assets
Most information available on the topic of digitalization in the circular economy focuses on intelligent assets, and more specifically the use of Internet of Things (IoT) while ignoring the value and importance of digital platforms enabling the communication as well as management of these circular ecosystems. As opposed to selling products, the circular approach is aimed at offering services. This leads to a vast amount of information and data needing to be stored and managed. Digital solutions are of utmost importance to efficiently handle this data.
In the article – Using Digital Tech to Spin the Circular Economy – Peter Lacey asks the question “how can companies use their physical assets to provide services?”. One of the key answers to this question, he argues, is to focus on user experience. As a result, it is critical to improving the communication possibilities between consumers, suppliers, and the products themselves.
This is possible through digital technologies, such as mobile apps. They can offer a better service to clients by simplifying the control and monitoring of assets without physically being present.