Industry 4.0 towards a Circular Economy: Why Small and Medium-Sized Enterprises must be integrated better within Supply Chains

Industry 4.0 is driven by technologies that enables the connection of the digital and physical world throughout the entire value chain and the entire lifecycle of products. While in the past, isolated systems were preferred due to high transaction costs, reduced transaction costs driven by the Internet of Things, allow a holistic view on value chains and lifecycles. Thereby, the framework conditions for the conversion from a linear to a circular economy are created. However, in practice, data continuity across entire supply chains, functional departments, and across the entire lifecycle of products is not given jet. This can partly be attributed to the insufficient integration of Small and Medium-Sized enterprises (SMEs) in supply chains. While SME have niche-specific know-how that is of high importance for supply chains, they also fear data transparency and have lower digitization levels. To analyze this issue more in depth, this paper aims to shed light on challenges concerning data transparency for SMEs that hamper Industry 4.0 implementation towards a Circular Economy.