Flevy Management Insights Q&A
What role does technology play in enabling and advancing circular economy practices?
     Mark Bridges    |    Circular Economy


This article provides a detailed response to: What role does technology play in enabling and advancing circular economy practices? For a comprehensive understanding of Circular Economy, we also include relevant case studies for further reading and links to Circular Economy best practice resources.

TLDR Technology is indispensable in advancing Circular Economy practices, enhancing Product Lifecycle Management, recycling, and fostering Sustainable Design and Innovation for economic growth.

Reading time: 5 minutes

Before we begin, let's review some important management concepts, as they related to this question.

What does Circular Economy Practices mean?
What does Product Lifecycle Management (PLM) mean?
What does Sustainable Design Practices mean?
What does Digital Platforms for Resource Sharing mean?


Technology plays a pivotal role in enabling and advancing circular economy practices by providing the tools and solutions necessary for companies to design waste out of their systems, keep products and materials in use, and regenerate natural systems. This approach not only contributes to sustainability but also offers significant economic benefits by transforming the linear "take-make-waste" model into a circular and regenerative system. Through various technological innovations, businesses are able to reduce their environmental footprint, enhance efficiency, and create new value propositions.

Enhancing Product Lifecycle Management through Digitalization

One of the key areas where technology has a profound impact is in the enhancement of Product Lifecycle Management (PLM). Digital technologies such as the Internet of Things (IoT), artificial intelligence (AI), and blockchain provide unprecedented visibility and control over the entire lifecycle of products. For instance, IoT devices can track the condition and location of products in real-time, enabling more effective maintenance, repair, and eventual recycling or repurposing. AI algorithms can predict when a product is nearing the end of its useful life and suggest actions to extend its lifespan, thereby reducing waste and promoting reuse.

Blockchain technology further supports circular economy practices by providing a secure and transparent way to track the provenance and journey of products and materials. This visibility is crucial for certifying the authenticity of recycled materials and ensuring compliance with environmental standards. For example, companies in the fashion industry are using blockchain to trace the origin of garments, ensuring they are made from sustainable or recycled materials.

Moreover, digital platforms facilitate the sharing of products and resources, which is a cornerstone of the circular economy. Platforms like the sharing of vehicles, tools, and even workspaces reduce the overall demand for new products, thereby saving resources and reducing waste. These digital platforms rely on sophisticated algorithms to match supply with demand, optimize usage, and ensure a seamless user experience.

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Advancing Material Recovery and Recycling Technologies

Technology also plays a critical role in advancing material recovery and recycling processes. Advanced sorting technologies, such as near-infrared spectroscopy and AI-driven robotics, have significantly improved the efficiency and accuracy of recycling operations. These technologies enable the separation of materials at a granular level, which is essential for high-quality recycling. For instance, AI-powered robots can sort plastics by color, type, and even brand, making it easier to recycle them into high-grade materials.

In addition to sorting technologies, chemical recycling is emerging as a promising solution to recycle plastics that are currently considered non-recyclable. This process breaks down plastics to their molecular level, allowing them to be repurposed into new plastics without losing quality. Companies like Loop Industries are pioneering this technology, offering a sustainable solution to plastic waste by enabling infinite recycling of PET plastics.

Furthermore, digital platforms are revolutionizing the way waste is managed by connecting waste producers with recycling facilities and material buyers. These platforms optimize the logistics of waste collection and transportation, ensuring that more materials are recycled properly and efficiently. They also provide valuable data on waste streams, helping companies identify opportunities to reduce waste and improve recycling rates.

Facilitating Sustainable Design and Innovation

At the heart of the circular economy is the principle of designing out waste and pollution. Here, technology empowers companies to adopt sustainable design practices through advanced simulation and modeling tools. These tools enable designers to assess the environmental impact of their products at the design stage, allowing them to make informed decisions about materials, manufacturing processes, and end-of-life options. For example, Autodesk's Eco Materials Adviser helps designers select materials that meet both performance and environmental criteria.

Moreover, digital fabrication technologies, such as 3D printing, are fostering innovation in product design and manufacturing. By enabling on-demand production and minimizing material waste, 3D printing supports the circular economy's aim of resource efficiency. Companies like Adidas are leveraging 3D printing to create customizable and recyclable footwear, exemplifying how technology can drive sustainable innovation.

Lastly, technology facilitates the development of new business models that are essential for the circular economy. Models such as Product-as-a-Service (PaaS) rely heavily on technology for tracking product use, maintenance, and return processes. This shift from owning to using not only extends the lifecycle of products but also encourages companies to design for durability and recyclability. Philips' "Light as a Service" model is a prime example, where customers pay for lighting services rather than the physical lighting fixtures, incentivizing Philips to use long-lasting, energy-efficient, and recyclable materials.

In conclusion, technology is indispensable in enabling and advancing circular economy practices. Through digitalization, advanced recycling technologies, and the facilitation of sustainable design and innovation, technology provides the tools necessary for businesses to transition to a circular economy. This not only helps in mitigating environmental impact but also opens up new avenues for economic growth and competitiveness.

Best Practices in Circular Economy

Here are best practices relevant to Circular Economy from the Flevy Marketplace. View all our Circular Economy materials here.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Explore all of our best practices in: Circular Economy

Circular Economy Case Studies

For a practical understanding of Circular Economy, take a look at these case studies.

Circular Economy Advancement for Ecommerce in Sustainable Retail

Scenario: The organization, an ecommerce platform specializing in sustainable retail, is facing challenges integrating Circular Economy principles into its business model.

Read Full Case Study

Circular Economy Transformation in Maritime Industry

Scenario: The organization is a global maritime shipping company that has recognized the need to transition to a Circular Economy to stay competitive and reduce environmental impact.

Read Full Case Study

Circular Economy Transition for Packaging Firm in Sustainable Market

Scenario: A packaging company specializing in consumer goods is grappling with the transition to a Circular Economy model to reduce waste and enhance resource efficiency.

Read Full Case Study

Explore all Flevy Management Case Studies

Related Questions

Here are our additional questions you may be interested in.

What metrics can companies use to measure the success of their circular economy initiatives?
Companies can measure circular economy initiative success through Resource Efficiency, Waste Reduction, Financial Performance, and Customer Engagement metrics, identifying improvement areas and driving sustainability, profitability, and brand value. [Read full explanation]
What are the most common barriers companies face when transitioning to a circular economy, and how can they overcome them?
Overcome barriers to transitioning to a Circular Economy through Leadership, Innovation, Operational Excellence, and Collaboration for sustainable growth and competitive advantage. [Read full explanation]
What impact will emerging blockchain technologies have on transparency and traceability in circular supply chains?
Emerging blockchain technologies will significantly improve Transparency and Traceability in Circular Supply Chains, ensuring data integrity, fostering trust, and enabling precise product lifecycle tracking. [Read full explanation]
How is artificial intelligence (AI) being used to optimize resource recovery in the circular economy?
AI is enhancing the circular economy by improving Waste Management, Product Lifecycle Management, and Supply Chain Sustainability, offering significant environmental and economic benefits through innovation and efficiency. [Read full explanation]
Can you provide examples of how small and medium-sized enterprises (SMEs) can adopt circular economy principles?
SMEs can adopt circular economy principles through Product-as-a-Service models, optimizing supply chain sustainability, and developing circular products and services for environmental and competitive advantages. [Read full explanation]
How can businesses effectively communicate their circular economy efforts to stakeholders and consumers?
Effectively communicating circular economy efforts involves a multifaceted approach that includes Transparency, Stakeholder Engagement, and innovative Strategic Storytelling, leveraging digital platforms, collaborative initiatives, and immersive experiences to inspire community action towards sustainability. [Read full explanation]

Source: Executive Q&A: Circular Economy Questions, Flevy Management Insights, 2024


Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials



Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.