# Development of an Industry 4.0-oriented Tool Supporting Circular Manufacturing: A Systematic Literature Review

Marco Spaltini, Federica Acerbi, Marco Taisch

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Marco Spaltini, Federica Acerbi, Marco Taisch. Development of an Industry 4.0-oriented Tool Supporting Circular Manufacturing: A Systematic Literature Review. 19th IFIP International Conference on Product Lifecycle Management (PLM), Jul 2022, Grenoble, France. pp.609-619, 10.1007/978-3-031-25182-5_59. hal-05420893

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# Development of an Industry 4.0-oriented Tool Supporting Circular Manufacturing: A Systematic Literature Review

Marco Spaltini✉, Federica Acerbi ID, and Marco Taisch ID

Department of Management, Economics and Industrial Engineering, Politecnico di Milano, via Lambruschini 4/B, 20156 Milan, Italy

{Marco.spaltini,federica.acerbi,marco.taisch}@polimi.it

**Abstract.** The traditional linear approach to economy has been recognized as not sustainable any longer. Among the different approaches identified to reverse the current socioeconomic system, Circular Economy (CE) appears a promising field. This approach is based on 3 pillars: preservation and enhancement of natural capital, optimization of resource yields components and materials and fostering system effectiveness. Together with CE, also the concept of Industry 4.0 (I4.0) is gaining traction among manufacturers, academia and policy makers. This manuscript merges these two concepts through a literature review. More specifically, this research has been focused on clarifying how manufacturers can be supported in understanding how to adopt digital technologies to re-design their processes under circular-driven perspectives. Indeed, from the literature emerged that I4.0 might benefit circularity both in terms of modalities to deliver value and rationalization of resources. However, case studies suggest that applications in this sense are still scarce and mostly oriented to service-based and analytics-related solutions. Three main gaps have been identified: lack of a structured and practical model to merge I4.0 and CE that consider the variables characterizing real manufacturing firms, lack of focus on multi-product and multi-asset when assessing the link between I4.0 and CE and lack of a quantitative evaluation of the impact of the application of I4.0 technologies and of the benefits, or pains, to support the transition toward CE. Hence, the objective of this paper is to set the basis for a tool able to support manufacturing firms in defining Circular Business practices enabled by Industry 4.0 technologies.

**Keywords:** Industry 4.0 · Best practices · Circular economy

## 1 Introduction

The call for overcoming the current take-make-dispose paradigm has now become a global imperative for Governments, Business and Academia [1]. Among the paths investigated in literature to achieve an environmentally sustainable sociotechnical system, Circular Economy (CE) appears as a promising solution, especially for manufacturing
companies which can rely of several strategies starting from product design, circular industrial processes and circular networks within their supply chains (SCs) or districts [2]. In addition to CE, another relevant trend for both academia and practitioners is represented by Industry 4.0 (I4.0) paradigm. Despite I4.0 surely benefits firms by improving economic performances for plants and SCs [3], a structured and practical model enabling to merge I4.0 and CE that consider the variables characterizing real manufacturing firms is still missing [4]. Indeed, the implementation of I4.0 technologies might represents a key enabling factor for new intrinsically more circular Business Models (BMs) [5] and thus these technologies might be used to overcome the barriers highlighted by [6] such as: Difficulties in disassembly activities; SC complexity; Lack of information causing coordination problem, both internal and among stakeholders; Lack of CE culture in designing and production processes; Quality concerns about the material used; Lack of capital and high start-up cost threatening economic sustainability; Limited support from governments. Therefore, this research aims to investigate how the relationship between I4.0 and CE might be virtuous and how to practically link the two concepts together with no harm for economic profitability. Hence, the following Research Question (RQ) has been formulated: "How Industry 4.0 technologies could support manufacturing companies to embrace CE overcoming the challenges experienced?" This interpolation between CE and I4.0 is expected to be the key step to develop a framework able to support manufacturing companies in undertaking a digital transformation process oriented to reach their environmental sustainability objectives. The contribution is structured as follow. Section 2 describes the research methodology employed to set up the framework. Section 3 reports the results from the analysis of the state of the art about CE and I4.0 related studies. Section 4 discusses the results proposing a framework for the simultaneous adoption and Sect. 5 concludes the contribution by highlighting the main outcomes and the limitations leading to further research opportunities.

## 2 Methodology

To understand the relationship between I4.0 and CE, the authors developed a systematic literature review enriched by a search for industrial cases. In addition other relevant documents were collected according to the snowball effect [7, 8]. The search was performed on Scopus database. Three relevant keywords were selected: "Industry 4.0", "Circular" and "Manufacturing" followed by an analysis of the most adopted synonyms. "Circular Economy" has not been selected since the term economy is often substituted by other more focused word (e.g. Circular Manufacturing). Hence, the string chosen resulted in ("Industry 4.0" OR "Fourth Industrial Revolution" OR "4th Industrial Revolution") AND ("Circular" OR "Closed loop" OR "Cradle to Cradle") AND "Manufacturing". The filters chosen regarded: language, year of publication, subject area of reference and stage of publication [9]. Only English documents have included. The time horizon ranged from 2011 up to 2021. The selection of 2011 is motivated by the relative novelty of the concept of Industry 4.0 [10]. Concerning the subjects, the authors selected only those related to manufacturing and technology and business. The Literature Search resulted in 96 documents and 25 of them were accepted for the final review process. The sample of papers has been reviewed inspired by the classification done by [11] refining it through an iterative process.
## 3 Literature Review Results

In the extant literature, it has been highlighted that due to the higher relative percentage of activities manually performed and the averagely lower focus on sustainability issues, the benefits provided by I4.0 could have a greater impact for SMEs thus amplifying the potential competitive advantage in terms of costs, access to new markets and environmental performances [12]. As Shown in Table 2, except for Additive Manufacturing (AM), the greater contribution to the achievement of circularity in the manufacturing field is given by IT-related solutions. There are 3 main areas of application: Virtualization of processes (e.g. simulation) [13], optimization and resource reduction (e.g. AI-based decision making) [14]and Virtualization of resources (e.g. cloud solutions) [15] (Table 1).

<table><caption>**Table 1.** Number of papers linking I4.0 technology to a specific Circular approach</caption><thead><tr><th>I4.0 technology</th><th>Rethink</th><th>Reduce</th><th>Repair</th><th>Remanufacture</th><th>Repurpose</th><th>Recycle</th><th>Total</th></tr></thead><tbody><tr><td>CPS</td><td></td><td>4</td><td>1</td><td>3</td><td></td><td>1</td><td>9</td></tr><tr><td>IoT</td><td>1</td><td>4</td><td>2</td><td>3</td><td></td><td>3</td><td>13</td></tr><tr><td>Big data analytics</td><td>2</td><td>2</td><td></td><td>3</td><td></td><td>3</td><td>10</td></tr><tr><td>Cloud computing</td><td>3</td><td>4</td><td></td><td>2</td><td>1</td><td>1</td><td>11</td></tr><tr><td>Cloud manufacturing</td><td>1</td><td>3</td><td></td><td>2</td><td></td><td></td><td>6</td></tr><tr><td>AM</td><td>1</td><td>4</td><td>3</td><td>3</td><td>1</td><td>4</td><td>16</td></tr><tr><td>Cobotics</td><td></td><td></td><td></td><td>2</td><td></td><td></td><td>2</td></tr><tr><td>AR/VR</td><td>1</td><td>1</td><td></td><td>2</td><td></td><td></td><td>4</td></tr><tr><td>AI/ML</td><td></td><td>4</td><td></td><td>4</td><td></td><td>3</td><td>11</td></tr><tr><td>Advanced automation</td><td></td><td></td><td></td><td>1</td><td></td><td></td><td>1</td></tr><tr><td>Blockchain</td><td>3</td><td>4</td><td></td><td>1</td><td></td><td></td><td>8</td></tr><tr><td>Total</td><td>12</td><td>30</td><td>6</td><td>26</td><td>2</td><td>15</td><td></td></tr></tbody></table>

As far as the findings enabled to highlight, Internet of Things (IoT) is considered, together with AM, the most mentioned technology able to support CE. In fact, the application of sensors to products and assets are essential to enable their monitoring in real-time and consequently condition-based or predictive maintenance [16]. According to [17], IoT technology is a key element for the development of new BMs like sharing mobility and so to increase the overall usage of assets along their lifecycle. Moreover, data collected from IoT devices, elaborated through Big Data Analytics models are key to support firms to define and optimise their sustainability performances [18]. Similarly,
Cloud-based solutions represent a viable element, on the one hand, to reduce the virtualise computing and production resources [19] and consequently increase the overall use of the assets along their Lifecycle [20]. On the other hand, [17] underlined that Cloud Manufacturing can also be an enabler of CE by supporting collaborative design, process resilience, waste reduction, re-use and recovery of materials. Also, Artificial Intelligence (AI) is considered a valuable technology to foster CE. In particular, modelling and simulation software are deemed useful to test and predict future behaviour of complex systems [21]. AI and Machine Learning (ML) have been also implemented in energy management to reduce the overall energy consumed by assets and achieve better efficiency [17]. CE enabled by I4.0 technologies could be an opportunity also for technology consumers. Virtualisation, through Virtual Reality (VR) and Augmented Reality (AR) systems, is a way to reducing the environmental footprint of manufacturing firms [13]. Finally, one of the main enablers of CM is determined by the Product-Service System (PSS) concept [22] which represents an opportunity for manufacturers to provide the functionality given by the product rather than the product itself and maintain the ownership [23]. This allows manufacturers to increase the usage of the good and reduce the physical resources to produce it and even extend the life cycle if supported by I4.0-based maintenance tools [24]. Literature suggests that also Blockchain technology has a role in facilitating the transition toward CE. Most of contribution in this direction are refer to it in terms of Track & Trace capabilities and control along the SCs [25–27]. Moving toward OT solutions, AM is currently considered one of the most disruptive technologies for business and society [8]. Regardless the purely economic benefits, this also has a wide range of applications to integrate CE principles. Firstly, [28] argued that AM can reduce the length of SCs by reducing the distance between consumers and producers with benefits for transportation emissions. In addition, most of the material wasted (e.g. metals) in AM processes can be recycled up to 95% of the total scraps [19, 29]. Regarding material and emission reduction, AM generates less scrap than extrusive methods [30] and allows to produce lightweight geometries without compromising resistance nor other functional proprieties [31]. [30] highlighted that AM has uses in repairing and remanufacturing activities too. Concerning collaborative robotics and automation, these are relevant to support disassembly and repair activities and to perform in unsafe working conditions [21]. Although literature identifies a variety of solutions supporting CE through the adoption of I4.0, few examples are available in Industry. Such mismatch between academia and business suggests that a set of blocking factors impedes firms to digitalize their processes by encompassing also environmental sustainability. Most of the case studies collected refer to firms applying I4.0 solutions to enable pay-per-use BMs. An example is provided by [17] that presented an electric scooter manufacturer who shaped its new BM by embedding IoT and cloud to enable a sharing service. Similar examples have also been analysed by [24] in which different pay-per-use/sharing-based models have been presented. [32] studied the modalities through high value manufacturers are moving to develop circular BMs. [33] collected 11 case studies involving large multinational firms from different sectors that implemented circular practices. Among them, several technologies were both embedded in the product offered (e.g. Michelin and EON ID) but also introduced in operations (e.g. Apple's disassembly robotic system) thus strengthening the dual benefit achievable by I4.0. Other common I4.0 application in
defining sustainable practices refers to predictive maintenance solutions. Such solutions directly aim at reducing material by extending the lifecycle of products and assets. Evidence from manufacturing Industry is indeed available for both the cases. Several Pay-per-Use or sharing-based BM specifically included predictive or condition-based repair services with their strategy [17]. However, also pure predictive maintenance approaches are spreading as well [34]. Finally, [35] investigated the costs related to unsustainable approaches in manufacturing and the modalities through which I4.0 plays in supporting circular processes. In particular, the study introduced a quantitative methodology to convert in monetary terms environmental externalities thus supporting manufacturers in taking more rational and consistent evaluations of investments.

# 4 Discussion and Framework Proposal

The potentials represented by the I4.0 must be expressed in terms of improvement of economic performances for companies or SCs but also as elements to overcome the main barriers identified for the CE adoption [6] such as difficulties in disassembly activities, SC complexity, coordination problem (both internal and among stakeholders), lack of CE culture in designing and production processes, quality concerns about the material used, and high start-up cost threatening economic sustainability. Indeed, a proposed framework is reported in Fig. 1.

<figure><img src="image_3.png" /><figcaption>Fig. 1. New framework proposal</figcaption></figure>

Among the major potentialities of I4.0 emerged that is possible to shorter time to market through visualization and simulation [36], to improve control over production processes through IoT and Big Data Analytics [37], to reduce the capital invested through Cloud Computing and Cloud Manufacturing [38], to design new product through AM [31], to establish new BMs and Revenue Streams like pay-per-use. [17], and many others.

Additionally, I4.0 represents an opportunity to foster circularity of products by extending their lifecycle [8] or by substituting them with equivalent services [23] creating new BMs [19]. In parallel, digital technologies enable CE adoption at process level too,
<table><caption>**Table 2.** Synergies between I4.0 and CE to overcome CE barriers</caption><thead><tr><td>I4.0</td><td>CE approach</td><td>Opportunities</td><td>Barriers addressed</td></tr></thead><tbody><tr><td>IoT</td><td>Rethink, repair, reduce</td><td><ul><li>Optimize sustainability performance</li><li>Increase assets usage along their lifecycle</li></ul></td><td><ul><li>Lack of capital and high start-up cost</li><li>Quality concerns about the material used</li></ul></td></tr><tr><td>Cloud-based solutions</td><td>Recycle, Repurpose, Remanufacture</td><td><ul><li>Virtualize production resources</li><li>Increase assets usage along their lifecycle</li><li>collaborative design waste reduction; re-use; materials recovery</li></ul></td><td><ul><li>Lack of information causing coordination problem, both internal and external</li><li>Lack of capital and high start-up cost</li><li>Quality concerns about the material used</li></ul></td></tr><tr><td>AI/ML</td><td></td><td><ul><li>Test and predict behavior of complex systems</li><li>assets lifecycle extension energy management</li></ul></td><td><ul><li>SC complexity</li></ul></td></tr><tr><td>Virtual Reality (VR) and Augmented Reality (AR)</td><td>Repair, Reduce</td><td><ul><li>Turn part of the costs from fixed to variables</li><li>Reduce environmental impacts</li></ul></td><td><ul><li>Difficulties in disassembly activities</li><li>Lack of CE culture in designing and production processes</li></ul></td></tr><tr><td>Sensors</td><td>Repair, Rethink</td><td><ul><li>increase the usage of the good</li><li>reduce the physical resources to produce it</li><li>extend the life cycle</li><li>improve maintenance activities</li></ul></td><td><ul><li>Lack of capital and high start-up cost</li><li>Difficulties in disassembly activities</li><li>Quality concerns about the material used</li></ul></td></tr><tr><td>Sensors</td><td>Repair, Recycling, Remanufacturing</td><td><ul><li>increase the usage of the good</li><li>extend the life cycle</li><li>improve maintenance activities</li></ul></td><td><ul><li>Lack of capital and high start-up cost</li><li>Difficulties in disassembly activities</li><li>Quality concerns about the material used</li></ul></td></tr></tbody></table>

(continued)
<table><caption>**Table 2.** (continued)</caption><thead><tr><th>I4.0</th><th>CE approach</th><th>Opportunities</th><th>Barriers addressed</th></tr></thead><tbody><tr><td>AM</td><td>Reduce, Recycling, Repair</td><td><ul><li>reduce the length of SCs</li><li>reduce transportation emission and costs</li><li>reduce the overall need for virgin material</li><li>reduce scrap generation lightweight products with special geometries</li><li>high • functional proprieties</li><li>ease to repair and remanufacture products</li></ul></td><td><ul><li>SC complexity</li><li>Quality concerns about the material used</li><li>Lack of capital and high start-up cost</li></ul></td></tr><tr><td>Collaborative robotics and automation</td><td>Reduce, Repair, Remanufacturing</td><td><ul><li>support the disassembly</li><li>support repair activities</li><li>perform unsafe/dangerous working activities</li></ul></td><td><ul><li>Difficulties in disassembly activities</li><li>Lack of information causing coordination problem, both internal and external</li></ul></td></tr></tbody></table>

within factories' boundaries [39] and at SC or network level [40] supporting for instance the information sharing among several stakeholders [41]. Table 2 summarizes the outcomes of adopting I4.0 technologies to overcome the barriers emerged while embracing CE. Nevertheless, the limited availability of concrete robust case studies supporting the existence of a virtuous relationship between the two concepts suggests that practitioners still experience some challenges in putting into practice what has been conjectured so far by academia. It is also proven that such scarce population of empirical implementations is not due to a low interest toward the topic either from consumer or manufacturer side [20, 21, 42].

## 5 Conclusions

The present contribution aimed at investigating how to properly use I4.0 technologies to overcome the barriers experienced by manufacturing companies while embracing CE approaches. To address this goal, a systematic literature review has been conducted and once defined the barriers for adopting CE, the contributions were analysed by studying the potentialities of each I4.0 technology in this context. Therefore, as seen above in Table 2, most of the barriers could be solved or reduced through I4.0 technologies. In future works, the framework proposed in this contribution is supposed to be extended by
exploring the different manufacturing processes opportunities in order to clarify the best practices to be implemented in order to use the right technology to overcome a specific CE barrier emerged in a certain manufacturing process, among the main characterizing and affecting operations [11], as depicted in Fig. 2.

<figure><img src="image_4.png" /><figcaption>**Fig. 2.** Structure of the model conjectured.</figcaption></figure>

Additionally, other two main gaps observed from the literature are still open and need to be addressed in future studies: i) Lack of focus on multi-product and multi-asset (e.g. machine, lines etc.) when assessing the link between I4.0 and CE [18]; ii) Lack of a quantitative evaluation of the impact of the application of I4.0 technologies and of the benefits, or pains, to support the transition toward CE [43].

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