Internet of Things (IoT) as a Driver for the Circular Economy – Innovation, Quality & Security

INTERNET OF THINGS AS A DRIVER
FOR THE CIRCULAR ECONOMY
[INTERNET OF THINGS (IOT)
ALS TREIBER DER CIRCULAR ECONOMY –
INNOVATION, QUALITÄT & SICHERHEIT]
13. Information-Security-Symposium, Kursalon Hübner, Vienna, 17.5.2017
Prof. Dr. Erik G. Hansen
Head of the Institute for Integrated Quality Design (IQD)

1. Introduction to the Internet of Things (IoT)
2. IoT as enabler for service-based business model innovation
3. IoT as enabler for quality in a circular economy
4. IoT risks
5. Conclusion
AGENDA
17.5.2017 IoT & Circular Economy 2

IOT GROWTH
17.5.2017 3IoT & Circular Economy
Today
Source: The Connectivist based on Cisco data, Online: https://twitter.com/WSWMUC/status/539534110692487168 (15.5.2017)

IOT: RELEVANCE
Source: http://www.beechamresearch.com/download.aspx?id=18 (15.5.2017)

IOT: INDUSTRIAL VS. CONSUMER
Source: http://blogs.intel.com/iot/2015/04/01/all-for-one-and-one-for-all-how-the-iot-is-centralizing-intelligence-across-industries/ (15.5.2017)
Industrial
Internet of Things
Consumer
Internet of Things
Smart ... Smart ...

4. IoT risks
5. Conclusion
AGENDA

IOT-ENABLED SERVICE BUSINESS MODELS:
FROM TRANSACTION TO RELATIONSHIP
D. Performance
contracting
C.
Sharing
A. Product +
Quality Control
Services
B.
Rental,
leasing
& pay-
per-use
IoT
Servitisation
based on Stahel 2010,
p.203; Tukker 2004

A1. WORLD LEADER CATERPILLAR
24,1
14,0
6,5
6,5
6,2
0 5 10 15 20 25 30
Caterpillar (U.S.)
Komatsu (Japan)
Terex (U.S.)
Hitachi (Japan)
Liebherr (Switzerland)
Equipment sales in 2015 in billion U.S. dollars
Source: statista.com

Electronic Equipment Information
collects telematics using "smart
machine" technologies, such as
wirelessly transmitted Product
Link and manually downloaded data
Numerous sensors are integrated into the
vehicle design. An impeding or abnormal
condition in any of the machine's systems
will alert the operator and instruct them to
take appropriate action, whether it's modifying
machine operation, notifying the shop of
needed maintenance, or performing a safe
shutdown of the machine.
Source: http://www.cat.com/en_GB/support/maintenance/condition-monitoring.html (15.5.2017)

Sources: http://s7d2.scene7.com/is/content/Caterpillar/C10333582
http://www.cat.com

A2. WORLD LEADER ROSENBAUER
Source: http://www.rosenbauer.com/de/at/group/investor-relations/finanzpublikationen/finanzpublikationen-2017.html (15.5.2017)

A2. FLEET MANAGEMENT WITH IOT
Source: http://www.rosenbauer.com (16.5.2017)
IoT-based “Service4Fire”:
 Location and tracking
 Condition monitoring (e.g. defects and
malfunctions of components, component
operating states e.g. battery power)
 Automised maintenance schedules

Source: https://www.homiepayperuse.com/ (16.5.2017)

B. PAY-PER-USE BUSINESS MODEL (B2C)
Source: https://www.homiepayperuse.com (14.5.2017)
IoT-enabled billing:
 A cold wash costs €1,37 (incl. VAT)
 A 30°C wash costs €1,42 (incl. VAT)
IoT hardware and services:
 Digital tracker built into appliances
 Usage data sent to central database
 Personalized tips & tricks for increasing
user efficiency
 Basis for fee calculation

C. SHARING
Source: http://blogs.ptc.com/2015/03/16/car-sharing-companies-pioneer-internet-of-things/ (14.5.2017)

C. CARSHARING CAR2GO (DAIMLER)
Source: https://www.car2go.com/AT/en/wien/ (14.5.2017)
IoT-enabled services:
 Real-time information on car2go network
 Smartphone-based location and access to
vehicles
 Monitor individual vehicle performance
 Increase efficiency by analyzing user data
 Trip specific insurance policy

D. PERFORMANCE CONTRACTING
17.5.2017
Slide
[18]
IoT & Circular Economy
Source: Siemens Building Technologies, 2009

4. IoT risks
5. Conclusion
AGENDA

CATERPILLAR (A1): REMANUFACTURING
17.5.2017 IoT & Circular Economy
Source: Caterpillar (2015) Sustainability Report 2014, p.47
 Durable products as the basis
 Designed to be rebuilt multiple times
 Components/machines are overhauled rather than
replaced
 Provision of exchange system where customers can
return end-of-life components
 Reman products with “same-as-new” performance,
reliability and warranty at fraction of costs
20

ROSENBAUER (A2): REPAIR, UPGRADE & REFURBISHMENT
Sources: http://www.rosenbauer.com/en/at/rosenbauer-world/service/in-use-around-the-world/repairs-and-general-overhauls.html
http://www.rosenbauer.com/en/at/rosenbauer-world/vehicles/aerials/refurbishment.html
A solution for small budgets:
refurbished vehicles
Rosenbauer purchases suitable
old vehicles, fully refurbishes
them and offers the completely
optimized package at
particularly attractive conditions.
The customers get used aerials
at the level of a new vehicle for
a small price.
As good as new again
As a technology leader, it is
important to Rosenbauer that fire
departments worldwide are ready
for operation and that the vehicles
and equipment fulfill all necessary
requirements for the latest
operational scenarios. Only then are
they best equipped to save lives,
extinguish, rescue, and protect.

HOMIE (B): REPAIR & REMANUFACTURING
Source: https://www.homiepayperuse.com (14.5.2017)
• A cold wash costs €1,37 (incl. VAT)
• A 30°C wash costs €1,42 (incl. VAT)
... we also repair, remanufacture
and reuse our products when
you no longer need them.

Sources:basedonStahel,W.R.(2016).Thecirculareconomy.nature,531(7595),435–438.
https://doi.org/10.1038/531435a.p.436;EllenMacArthurFoundation(2016).IntelligentAssets:Unlocking
theCircularEconomyPotential.p.39.
NEW PARADIGM: CIRCULAR ECONOMY
Smart (retro)
logistics
Condition monitoring,
tracking & locating
Preventative
maintenance
“Circular Economy (CE) is a global economic model that
decouples economic growth ... from the consumption of finite resources.” (Webster 2015, p.16)
Material memory &
smart identification
(Industry 4.0)
Identification
& locating
Data informs
product redesign

IoT & Circular Economy 2517.5.2017

CHANGE OF REGULATORY ENVIRONMENT
Sources: http://www.iswa.org/home/news/news-detail/article/commission-adopts-ambitious-new-circular-economy-package-
to-boost-competitiveness-create-jobs-and-g/109/ (3.12.2015)

DECREASING PRODUCT LIFETIME
(OBSOLESCENCE)
Infographic by Youge Xiao.
Taken from http://www.fairphone.com/2014/06/20/next-step-in-life-cycle-assessment-inventory-analysis/
Reasons for
(planned) obsolescence:
 Mechanical
 Functional
 Economic
 Psychologic
(Prakash, 2016)

(PLANNED) OBSOLESCENCE
Source: https://www.konsumentenschutz.ch/tag/geplante_obsoleszenz/ (13.5.2017)

BENEFITS OF SERVICE-BASED BUSINESS MODELS
 Customer
 Get high quality (durable) goods
 Availability/uptime of goods
 Energy efficiency of products
 No/lower investment costs (rental, sharing, contracting)
 Future proof products and technology upgrading
 Firm/Producer
 Differentiation as quality leader
 Closer relationship to customer
 Innovation potential due to deep insights into products-in-use
 Access to new market segments
 Environment and sustainability
 Lower resource needs and waste reduction
 Local job creation in service industries (“regionalised economy”)

4. IoT risks
5. Conclusion
AGENDA

INVADING YOUR PRIVACY
Sources: http://www.bbc.com/autos/story/20160809-your-car-is-not-your-friend (3.5.2017)

PRIVACY STATEMENTS NECESSARY
Source: http://www.cat.com/en_US/support/maintenance/condition-monitoring/condition-monitoringprivacystatement.html (15.5.2017)

HACKING AND HIJACKING
Source: https://www.theguardian.com/technology/2016/sep/20/tesla-model-s-chinese-hack-remote-control-brakes (15.5.2017)
...interfering with the car’s brakes, door
locks, dashboard computer screen ....

POTENTIALLY LETHAL CYBER ATTACKS
AND BLACKMAILING
Source: http://www.computerbild.de/artikel/cb-News-Sicherheit-Sicherheitsluecke-Herzschrittmacher-17168073.html (15.5.2017)
The security wholes allows attackers
to modify the pacing of the
pacemaker, trigger the defibrillator,
or discharge the battery..

4. IoT risks
5. Conclusion
AGENDA

Industrie 4.0 und Lebenszyklusorientierung als Treiber
von Innovation und integrierter Qualitätsgestaltung
Expert study + In-depth case studies (2017-2018)
IoT & Circular Economy
Innovation
Process
PROJECT VIGNETTE:
“INDUSTRY 4.0 + LIFE-CYCLE (I4L)”
36
Product-Service
System
Smart Product
Business Model
Smart product innovations
Integration of smart
products as services
Value proposition,
infrastructure, customer
interface, revenue model
Implications for integrated management systems
Levels of analysis: How?What?
Title
(full)
Team
Focus
Andres Alcayaga, MSc.
Project Lead
Academic Lead
Method
17.5.2017
Partner

CONCLUSION
 IoT strengthens service-based business models
 Rental, leasing, sharing, contracting
 Transaction  relationship
 Differentiation based on “Total Care”
 IoT + service business model the basis for ...
 Condition monitoring + preventative maintenance
 Circularity: repair, reuse, remanufacture, recycle (4R)
 Circular economy as new (service) paradigm
 Goal: decouple growth from resource use while creating regional
(service) jobs
 Important development in political, economic and academic spheres
 IoT risks (selection):
 Privacy
 Cyber attacks and blackmailing
 Rebound effects (e.g. increased energy consumption of ICT, e-waste)?

GETTING IN TOUCH
Institute for Integrated Quality Design (IQD)
Johannes Kepler University (JKU) Linz
Science Park 3
Web: http://www.jku.at/iqd

REFERENCES
Caterpillar. (2015). Local Citizen: Making Sustainable Progress Possible One Community at a Time. 2014
Sustainability Report. Online: http://s7d2.scene7.com/is/content/Caterpillar/C10545862 (accessed: 10.4.2016).
Ellen MacArthur Foundation (2013): Towards the Circular Economy 1. Economic and business rationale for an
accelerated transition. Online: http://www.ellenmacarthurfoundation.org (accessed 25.12.2014).
Ellen MacArthur Foundation (2016). Intelligent Assets: Unlocking the Circular Economy Potential. p. 39.
Hansen, E. G., & Schmitt, J. (2016). Circular Economy: Potenziale für Produkt- und Geschäftsmodellinnovation
heben. UC Journal, (2 - October), 8–10.
Prakash, S., Dehoust, G., Gsell, M., Schleicher, T., & Stamminger, R. (2016). Einfluss der Nutzungsdauer von
Produkten auf ihre Umweltwirkung: Schaffung einer Informationsgrundlage und Entwicklung von Strategien
gegen „Obsoleszenz“. Retrieved from
http://www.umweltbundesamt.de/sites/default/files/medien/378/publikationen/texte_11_2016_einfluss_der_nutzu
ngsdauer_von_produkten_obsoleszenz.pdf (accessed: 17.2.2016).
Stahel, W. R. (1991). Langlebigkeit und Materialrecycling. Essen, Germany: Vulkan.
Stahel, W. R. (1994). The Utilization-Focused Service Economy: Resource Efficiency and Product-Life Extension.
In B. R. Allenby & D. J. Richards (Eds.), The greening of industrial ecosystems (pp. 178–190). Washington, D.C:
National Academy Press.
Stahel, W. R. (2010). The performance economy (2nd ed.). Basingstoke, England, New York: Palgrave Macmillan
(Original work published 2006).
Stahel, W. R. (2016). The circular economy. nature, 531(7595), 435–438. https://doi.org/10.1038/531435a.
Steffen, W., Sanderson, A., Tyson, P. D., Jager, J., Matson, P. M., & Moore, B. (2004). Global change and the earth
system: A planet under pressure. Berlin: Springer.
Tukker, A. (2004). Eight types of product–service system: eight ways to sustainability? Experiences from
SusProNet. Business Strategy and the Environment, 13(4), 246–260. https://doi.org/10.1002/bse.414.

VORTRAGSZUSAMMENFASSUNG: „IOT CIRCULAR”
Aufgrund marktlicher und regulatorischer Veränderungen stehen Industrien zunehmend
vor der Herausforderung Wertschöpfungsketten vom Ressourcenabbau bis zur
Produktentsorgung zu gestalten. Darauf basierend fordert das auch von der
europäischen Union vorangetriebene Konzept der „Circular Economy“ Produkte nicht
nur zu recyceln, sondern eine verbesserte Ausbeute der Produkte (oder Komponenten)
durch Services wie Sharing, Reuse, Repair und Remanufacturing zu erreichen. Hierfür
birgt die zunehmende Digitalisierung von Produkten und Prozessen und deren
Vernetzung im Internet of Things (IoT) neue Innovationschancen. So kann die Qualität
von Smart Products durch Fernüberwachung, -wartung und -identifikation erhöht
werden. Als Bestandteil von servicebasierten Geschäftsmodellen, können Kunden per
Smartphone Zugang zu einer flexiblen Produktnutzung erhalten. Ortung, Identifikation
und digitales Gedächtnis kann die Produktrückführung vereinfachen. Organisatorische
und sicherheitsbezogene Herausforderungen sind in der Transformation zum „smarten
Dienstleister“ zu meistern.
Internet of Things (ioT) als Treiber der Circular Economy –
Innovation, Qualität & Sicherheit

SMART FACTORY VS. INTERNET OF THINGS (IOT)

IOT DRIVES
CIRCULARITY
Source: Ellen MacArthur Foundation (EMF). (2016). Intelligent Assets: Unlocking the Circular Economy Potential. p. 39.

Internet of Things (IoT) as a Driver for the Circular Economy – Innovation, Quality & Security

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