Twin Transformation in SMEs: Integrating Digital Technologies and Circular Economy Principles

Abstract

Industry 4.0 (I4.0) based on the proliferation of emerging digital technologies like Internet of Things (IoT), AI, CPS, big data analytics and cloud is transforming manufacturing & production around the globe. Meanwhile, the Circular Economy (CE) paradigm has emerged as a driving force of sustainable industrial sectors which focuses on the improvement of resource optimization and waste generation minimization to ensure economy developed for sustainable benefit. Though significant industry has done a lot of work on the integration of I4.0 – the reality is that from a CE perspective, Small and Medium Enterprises (SMEs) are constrained by financial, structural as well as operational restrictions implicated in engaging with the concept. This paper explores literature regarding emerging diagnostics and assessment models for the nexus of Industry 4.0 with circular economy readiness in SMEs. The paper reviews common research methods, discusses critical gaps in the extant literature, and suggests a multi-level readiness framework based on technological, organizational, and environmental levels. The model is underpinned by fuzzy logic and MCDM methods. By integrating sustainability targets with digital transformation, the paper provides actionability for SME managers, policy makers and industry practitioners in search of competitive, agile and environmentally friendly production systems.