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Digitalization to support sustainability and the circular economy

July 19, 2022
Author Max BeerMax Beer
Solution Architect

A multitude of challenges facing today’s society cannot be mastered through individual efforts or actions by individual participants. Instead, we must seek end-to-end solutions that consider and incorporate the reality of a globally connected world.

One such solution is the digital product passport, introduced by the European Commission. The concept of the digital product passport was presented in 2019 as part of the European Green Deal and as a decisive tool for achieving a sustainable, resource-efficient economy.

The complex value chains created by globalization make it more difficult to access information from previous added-value steps. The following consequences arise from the lack of availability of this end-to-end information.

  • Customer perspective: Consumers have only limited ability to make deliberately sustainable purchasing decisions. They are not provided with reliable or relevant information (end-to-end ecological and social KPIs with regard to the entire value chain).
  • Company perspective: The lack of relevant information makes it more difficult to preserve existing resources in a circular economy. A lack of instructions for making repairs can be named as one example. Another is the absence of exact material compositions, which could be used to optimize recycling activities.

The digital product passport attempts to master these challenges by providing the relevant information digitally. Information generated along the value chain can be made available globally and used by other participants. Consumers can consider this provided information in their purchase decisions, while the additional information gives companies new opportunities to increase circularity in the creation of added value.

The text below addresses the following topics:

  1. Concept of the digital product passport
  2. Standardization initiatives: From concept to standard
  3. Digitalization expertise as a challenge to companies

The digital product passport to optimize the exchange of information along the value chain

The graphic below illustrates the deficiencies of the conventional flow of information along the value chain and how the digital product passport can optimize this flow of information. The digital product passport supplements the physical product instance with a virtual representation of it (digital twin), to provide information.

In the figure below, the fundamental principle of the digital product passport is explained based on a highly simplified value chain. Of course, value chains are tremendously more complex in the reality of a globalized economy.

The concept of the digital product passport can be described based on the areas highlighted in the figure:

Conventional creation of added value

The conventional value chain is described by the physical flow of goods and a non-standardized flow of information. The materials needed for production and the final product that is formed from these materials move reliably along the value chain. The same does not apply to the corresponding information. While some information is transferred between individual participants, this does not result in the dissemination of all the information that arises during creation of added value. Much information gets lost after the product is used, in particular, and is no longer available to the participants that follow the user.

Digital twin

The digital twin concept is intended to counteract this loss of information in conventional added value creation. The figure illustrates the continual growth of information that is captured by a digital twin. Subsequent participants in the value chain can access this aggregated information – even after the product is used and at the end of the product life cycle.

The digital twin is located in a trusted data store. Initially, it is enough to understand this data store as an abstract concept – in specific cases, data stores like this could be provided centrally, by a trusted institution, or locally, by the involved participants. Every participant can add new information to the digital twin and retrieve the information already provided.

The link between the physical product instance and the virtual digital twin is created by assigning a unique identifier. This unique identifier is found on the physical product instance (as a number, bar code, or QR code, for example) and is used when exchanging information with the trusted data store.

Product transparency and increased circularity

The generated digital twin and the information it stores for a product instance can now be used to provide additional information to the participants along the value chain. At the time of the purchase decision, the potential user (customer) now has more end-to-end information that can be taken into account in the decision for a deliberate, sustainable purchase. Other participants (companies) can use this new information to increase circularity within the value chain, based on optimized processes and offerings. The figure indicates the return of materials as an example, thanks to optimized recycling activities that are based on better knowledge of the material compositions. Another example is prolongation of the useful life of a product, by supporting repair activities through provided repair advice and instructions.

The digital product passport is a trusted storage of relevant information for a product instance

The digital twin was incorporated in the process of creating added value in the previous section. In the figure below, we will examine the data that is stored in a digital twin for further clarification.

It depicts the compilation and linking of the data from the digital twin with the physical product instance. It should be noted that the data shown merely involves examples – different data may be relevant, depending on the product.

The data interactions between the different participants in the value chain are also indicated at the lower edge of the figure.

When we examine the digital twin itself, we see the following categorization of the data:

  • “Birth” data: Data that is defined upon creation of the product instance and that does not change over the product’s life cycle (static data).
  • Life data: Data that is added during the product life cycle and can also change during the life cycle (dynamic data).
  • Meta data: Higher-level data that can be derived based on data already saved or added by participants in the value chain and authorized institutions (such as certification authorities).

The concept of the trusted data store is intended to ensure that the stored data and the resulting information for data consumers are correct and cannot be manipulated subsequently.

Implementation of the digital product passport: a variety of initiatives aimed at establishing standards

The path from the theoretical concept of the digital product passport to standardization efforts and specific implementations is being followed by a number of different initiatives. Some of them tend to concentrate on specific product groups, industries, or use cases. This makes it possible to take the individual circumstances and needs into account and create practical results.

In addition to producing specific results, this approach presents the opportunity to grow within a defined framework and, in cooperation with other initiatives, learn from their experiences and solutions.

The following figure illustrates the parallel existence of two standardization initiatives as an example.

Each initiative involves different companies (represented by blue buildings). Of the companies within the reference framework of a standardization initiative, some have already implemented the standard (represented by a green clipboard), whereas other companies have not yet proceeded with this implementation.

The figure also indicates how companies that have implemented the standard access a shared data store (represented by a blue cylinder).

Even when standardization initiatives work on independent solutions, there is still a large intersection of the technical aspects to be defined and implemented. The following technical aspects represent a selection of those that must be handled within these initiatives.

  • Definition of data, data formats, and interfaces: Definition of relevant data and data structures in which the data can be exchanged between the individual participants.
  • Providing a trusted data store: Development and implementation of a specific concept for the trusted data store, taking the relevant requirements into account. The data provisioning must be ensured for the entire life cycle of a product. The storage of the data must be dependable: performed by a central, trusted institution; decentralized by the participants that provide the data; or decentralized through a trusted data store (blockchain).
  • Ensuring the protection and confidentiality of data: The confidentiality of the data to be exchanged must be ensured. The data that should be provided to specific participants must be defined in detail. To do so, appropriate technical solutions must be implemented – taking the specific implementation of the trusted data store into account.

The individual requirements of the separate initiatives determine the specific implementation of the technical solution. Initiatives can also learn from one another in the technical implementation and the identification of certain success factors is expected.

The implementation of a standard poses different technical challenges to companies

The actual implementation of the standard requires digitalization expertise among the implementing companies: Existing data must be handled and transformed into the format defined by the standard. This data must be provided through interfaces and the technical integration to retrieve the data provided by other participants must be established. Depending on the concept of the trusted data store defined by the standard, persistence and the guarantee of cybersecurity are other important capabilities.

Expertise in software development is also needed to develop novel value-added services based on the new data made available by the standard. Among these value-added services is the specific implementation of the solutions for promoting sustainability (such as providing end-to-end ecological and social KPIs for consumers) and increasing circularity in the economy (such as optimized recycling by incorporating additional data regarding material compositions) that were mentioned as examples at the beginning of this article.

The technical solutions created through the expertise listed above should be embedded in a strategic IT architecture, to serve as the foundation for future optimization and the focus on new requirements.

The figure below visualizes the fundamental principle and the tasks that a specific company will face in developing value-added services in the context of the digital product passport.

 

Integration with the data landscape of the corresponding standard is essential to the development of a new service. This integration entails two perspectives: using the data of other participants and making one’s own data available.

  1. Using data: To use other participants’ data, technical integration with interfaces to the trusted data store must be implemented (in the figure: Client).
  2. Providing data: To provide data for other participants, the data stored within the company (in the figure: Internal data store) must be transformed into the format required for the standard (in the figure: ETL). In addition, depending on the technical implementation of the trusted data store, interfaces may have to be provided or the data may have to be saved in an external store.

Building on this data integration, the company can implement relevant value-added services (in the figure: Added value/optimization).

Digital product passport: from standardization initiatives and the necessary digitalization expertise at companies to supporting sustainability and the circular economy

This text introduced the concept of the digital product passport and then provided insights into the approach of the distributed standardization initiatives. It then described, at an abstract level, the technical tasks and challenges facing companies that implement the standard. In addition to the central challenge of defining standards that are tailored to specific product groups and industries, the implementing companies must also possess digitalization expertise.

It will be exciting to see which standards and technical concepts are established in the framework of the digital product passport and how the technical challenges can be mastered by the companies involved.

This article first appeared on Beschaffung aktuell (in German). We appreciate your feedback and sharing the article.

Original article (in German)