Tuesday, 28th November 2017, Velenje, Slovenia

How to initiate “circular economy” thinking in the innovation process

How to initiate “circular economy” thinking in the innovation process

Gorenje successfully participated in the project ResCoM - Resource Conservative Manufacturing, co-founded by the European Commission. One of the aims of the project was to develop tools that would help companies with circular economy transformation.

In a circular economy:
  • the value of products, materials and resources is maintained in the economy for as long as possible; 
  • waste generation and resource use are minimised;
  • when a product reaches the end of its useful life, it is reused/refurbished or recycled to create further value.1
As per Dr Aleš Mihelič 2, Innovation Leader, R&D Competence Centre Laundry Care, Gorenje Group, "there is a lot of potential in changing/adopting the new circular economy business models,” which present many benefits
  • for the producers (new markets and customers, higher added value …)
  • for the environment (less waste, less pollution, less energy …)
  • for customers (better quality, fewer worries, shorter wash cycles …)
  • for new research and innovation.
Dr Mihelič further emphasized that "through producing innovative products that cut energy and water use, and improved end-of life recycling techniques, the home appliance industry is already a proven driver of resource efficiency."

But for any organization, transition from linear to circular system presents a big step. This transition may require an organization to change the way it runs its business, designs products and the way it manages its supply chain. As these three areas are interdependent, bringing change in one area would influence the others. Meaning, transition is also a step-by-step process on several levels that require several steps to be taken simultaneously. For instance, changing the business model from conventional sales to leasing would require changes in both product design and the supply chain. At the same time, it is essential for an organization to anticipate the economic and environmental impact of all changes before it may decide to implement the circular product systems. Still, no tools are available today that could assess economic and environmental performance of circular product systems. Thus, the purpose of research and case studies, prepared within the ResCoM project, has been to develop a multi-method simulation-based tool that would help evaluate economic and environmental performance of circular product systems.

During the ResCoM project, Gorenje developed and explored a service-based business model that not only brings value to the company and users but also has a strong impact on environment conservation. It is a potential new service model for ASKO washing machines, which offers a leasing model for household users and the commercial market. Washing machines would be leased to three market segments cascaded through to the next segment over time: each washing machine starts as a premium new product (the 1st segment); is refurbished and offered as economy model (the 2nd segment); and then re-refurbished and offered as a budget or a used economy product (the 3rd segment). After this, the company takes back the product/materials for recycling.

"Over its three lifecycles, the washing machine will have saved 146 kg of materials and 21 kWh of production energy costs, plus 18 kWh of energy consumption costs for a total saving of 2.5 tons kg of CO2eq," Dr Mihelič reported. 

Gorenje participated in the project as one of four OEMs, providing researchers information and feedback on the developed tools that would "guide company decisions by illustrating the benefit of products designed in this way, highlighting economic impact, resource efficiency, greenhouse gas emissions, and energy use."3

"The ResCoM tools and methodologies have successfully supported Gorenje identify opportunities to capture value from circular business models. Having developed a service-based concept for our ASKO washing machine throughout ResCoM, we have now moved beyond theory and into implementation with an application of a large-scale industrial pilot of this model with EU Horizon 2020 funding. We are looking forward to new challenges," said Janez Uplaznik, Executive Vice President for Joint R&D, Gorenje Group.3


1 “Circular Economy”, European Commission, accessed November 3rd, 2017, https://ec.europa.eu/growth/industry/sustainability/circular-economy_en.

2 “How to initiate “circular economy” thinking in the process of innovation creation – case study of Gorenje’s project ResCoM,” Dr. Aleš Mihelič Presentation, accessed November 3rd, 2017, https://daninovativnosti.gzs.si/Portals/210/Dan%20inovativnosti%202017%20-%20Ales%20Mihelic.pdf .

3 ResCoM Case study Gorenje”, ResCoM, accessed November 3rd, 2017, http://www.rescoms.eu/case-studies/gorenje.