2. Introduction
2.1 Frame of Reference
With the continuous depletion of natural resources, there has been increased pressure both politically and socially for manufacturers to consume materials with more conservative methods. The standard linear economic model, in which new materials are continuously consumed, cannot be ethically sustained. About 80 million tons of fossil fuels and similar resources were used in 2011, and this number has continued to rise over time [1]. Climate change, demographic shifts, and technological innovation directly affect the availability and prices of raw materials [2]. Therefore, to avoid environmental and economic risks, manufacturing companies should reconsider their current production processes. Implementing a CE model provides one possible solution. This business structure involves circular value creation with regenerative processes in terms of resource consumption [3].
2.2 Project Description
SMEs must have a unique approach to a CE transition since they are limited in labor and financial resources. In addition, specialized processes within the manufacturing industry can make implementation more difficult [3]. While considering specific CE goals and strategies, this paper evaluates current CE methods in the metalworking and tool & die industries with a focus on how SMEs can reutilize resources.
3. Project Research
3.1 Circular Economy
3.1.1 Three Main Strategies
Numerous frameworks are available to help companies to determine how to implement CE methods. Three main strategies are commonly identified, each of which can be further specified to fit specific industry demands. The first is Retaining Product Ownership (RPO), in which companies rent products to consumers rather than sell. This approach is great for SMEs producing products with high embedded value. Companies utilizing this strategy will likely have to invest in maintenance processes to best recover the value of their products. Next is Product Life Extension (PLE), which involves companies purposefully designing their products to have longer lifespans. Although customers may purchase fewer products, companies are able to charge a premium and gain a competitive advantage while also reducing waste of resources. This strategy can also involve companies remanufacturing their products to extend their lifespan. The third strategy is Design for Recycling (DFR), where companies design their products and manufacturing processes to ensure maximum recovery of materials. The resources are then recycled for new uses. This strategy often requires collaboration between manufacturers and recycling partners. To best create CE frameworks for SMEs, there must be important discussions on what internal and external factors can be manipulated. Then, a company can align its vision with either a strictly outlined strategy or a combination of multiple [4].
3.1.2 Five Business Models
There are five general categories of circular business models: circular supply, resource recovery, product life extension, sharing, and product service system. These models align with the previously discussed circular economy strategies and can be tailored to different industries. Figure 1 illustrates how the five business models are classified and applied across various sectors [1].
Table 2.1. Circular business models addressed in this report |
||||
Circular supply |
Resource recovery |
Product life extension |
Sharing |
Product service system |
Replace traditional material inputs with renewable, bio- based, recovered ones |
Produce secondary raw materials from waste |
Extend product lives |
Increase utilisation of existing products and assets |
Provision of services rather than products. Product ownership remains with supplier |
Close material loops |
Close material loops |
Slow material loops |
Narrow resource flows |
Narrow resource flows |
Cradle to cradle |
Industrial symbiosis |
Classic long life |
Co-ownership |
Product-oriented |
Recycling |
Direct reuse |
Co-access |
User-oriented |
|
Upcycling |
Repair |
Result-oriented |
||
Downcycling |
Refurbishment |
|||
Remanufacture |
||||
Metals |
Automotive |
Short term lodging |
T ransport |
|
Diverse consumer product sectors |
Paper and pulp |
Heavy machinery |
Transport |
Chemicals |
Plastics |
Electronics |
Machinery Consumer products |
Energy |
|
Source: [1]
3.2 Industry
3.2.1 Metalworking
There are many recorded solutions for circularity within the metalworking industry. However, before an analysis, it is important to note the relevance of the “9 Rs”, an expansion of the familiar reduce, reuse, recycle model. The expanded framework includes refuse, reduce, reuse, repair, refurbish, remanufacture, repurpose, recycle, and recover. Each strategy has unique integrated solutions for improving resource efficiency within CE companies [5]. In practice, metalworking firms often combine approaches to maximize circularity. The most common sustainable practices in the metalworking industry are resharpening tools instead of disposing of them and recovering tools through a buyback system. Technological innovation and integration are another critical factor of circularity. Automated monitoring systems that provide immediate adjustments to machining protocols can improve efficiency and extend tool lifespans [5]. These support systems are most useful if they have real-time analysis and predictive capabilities [6]. Another important strategy is data-sharing between stakeholders. Coordinating actions and aligning objectives are a crucial aspect of the circular value supply chain [5,6].
3.2.2 Tool & Die Industry
Data collection and sharing are also critical to the CE strategy in the tool & die industry. The most important information gathered from tool usage includes cutting time, material processed, wear patterns, failure modes, operating conditions, regrinding operations, coating renewals, modifications, and repairs [6]. These aspects are crucial when analyzing the life cycle and circularity potential of tools. Establishing product circularity typically involves several stages. Companies first conduct a circularity diagnostic, collecting and analyzing operational data. Next, a summary of parts is created, and each part is designated a relation to the circularity potential. This is followed by defining target values and adjusting a broader CE strategy to better align with the company’s goals. Finally, products and processes are modified to improve circular performance, and there is a formal evaluation of redesign adjustments [7]. There are many tools that have been developed to allow for simpler inquiries into company finances and capabilities regarding a transition to a CE business model. For example, a production cost algorithm was created to help companies compare manufacturing costs. This includes a designated mathematical analysis to compare costs between new manufacturing and component reutilization [8]. These formulas make it easier for companies to track current expenses and analyze potential cost reductions with a circular business model. Also, visual tools for tracking emissions and waste can allow SMEs to gain a clearer understanding of harmful environmental effects, such as carbon footprint, and identify areas of improvement [9].
3.3 SME Survey
To better understand how companies are approaching CE adoption, a survey was conducted with 30 companies in the tool & die industry. The results provide a great insight into how SMEs view circularity and the barriers that they face. First, when asked if CE is part of their current toolmaking strategy, responses were evenly split, with 50% answering yes and 50% answering no. Similarly, when asked if CE issues needed to be addressed because of environmental or economic pressures, 50% said yes and 50% said no. However, over 73% of SMEs replied that their tools are designed for non-destructive disassembly, suggesting many companies already possess the capabilities for remanufacturing. Figure 2 displays the results of the question “What experience does your company have with the circular economy?” In the same order as the key in the figure, the results are ”approaches conceptualized”, “no experience”, “pilot projects carried out”, and “regular implementation”. The results are very diverse, highlighting that surveyed companies are at different stages of CE implementation.
Experience with the Circular Economy
When asked about primary motivations for implementing remanufacturing, a wide range of factors were identified. The results are displayed in Figure 3.
Motivation for Remanufacturing
Despite these motivations, only 8% of SMEs report having a formal strategy to increase remanufacturing. These findings indicate that although many companies have the capability and motivation to adopt CE practices, they often lack structured strategies to implement changes.
4. Business Tools
4.1 Maturity Assessments
Based on the barriers identified in the SME survey, several business tools were evaluated and developed to support the implementation of CE strategies. The Technology Industries of Finland developed two tools, the Technology Maturity Assessment and the Capability Maturity Assessment [10]. These Excel documents ask SMEs to examine various aspects of their company and answer “current level of maturity”, “complexity to implement”, and “strategic importance”. Based on the answers, a prioritization graph is automatically created to help companies see what they should focus on improving.
4.2 Roadmap Tool
Also developed by the Technology Industries of Finland, their roadmap tool helps companies create a timeline for a transition to a CE business model. Companies categorize key activities that can be sorted into functions like “manufacturing” and “research and development”. The key activities are then divided into three timeline sections: “explore and shape”, “attract and win”, and “scale fast & keep growing”. By sorting necessary tasks into short, medium, and long-term time frames, companies can better understand transition pathways and allocate resources effectively.
4.3 Development of Business Canvas Tool
Currently, there are many business canvas tools available for companies to use. These typically follow a standard format and allow SMEs to visualize the structure of their company. However, these templates are very broad and aren’t designed for the tool & die industry or CE businesses. To counter this issue, a more specialized business canvas tool was developed. A comprehensive literature review was conducted to determine the best way to adjust the standard form [11–15]. The final tool is displayed in Figure 4.
Business Canvas Tool
This simple organizational tool is accompanied by a PowerPoint presentation containing explanations and guidance. The boxes are split into four categories: operation model, offering, market, and financial aspects. By expanding upon the standard template by adding more categories, companies can take a deeper dive into their approach to a CE culture. Additionally, the PowerPoint guide has completed examples for additive manufacturing, remanufacturing, leasing, and general CE business types. The end of the guide asks companies to consider their mission/vision, incentives and directives, environmental impact, social impact, and economic impact.
5. Discussion and Conclusion
The findings of this paper suggest that while many SMEs recognize the importance of CE practices, they often lack the strategic framework and resources required for implementation. Existing research emphasizes that manufacturing industries are well-positioned for circular practices such as remanufacturing, additive manufacturing, and reducing waste. The survey results in this study further support this claim, showing that although many companies express interest in reducing material costs and improving sustainability, only a small percentage have formal CE strategies in place. This gap between motivation and execution highlights the importance of practical business tools. The maturity assessments, roadmap templates, and specialized business canvas tools discussed in this paper provide structured ways for SMEs to evaluate current operations and identify feasible CE goals. However, several limitations should be acknowledged. First, the survey sample size was relatively small and limited to small manufacturing companies in Germany. As a result, the findings may not fully represent the entire manufacturing industry or SMEs in other regions. Also, while the business tools introduced in this study were developed through literature review and industry input, their long-term effectiveness has not yet been evaluated. Future research could focus on testing these tools and recording their impact on waste reduction, cost savings, and efficiency. Overall, the transition to CE practices in the metalworking and tool & die industries presents both challenges and opportunities. Supporting SMEs in this transition is essential for reducing environmental impact and building long-term cost-efficient solutions.
References
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