Smart Products as Enabler for Circular Business Models: the Case of B2B Textile Washing Services

Service business models have the potential to improve the product life cycle due to their emphasis on maximising value over time. Emphasising access to products over ownership may encourage firms to keep their products at their highest value during their entire lifetime and reuse materials after end of life. Against this background, service business models may allow a restorative and regenerative system to thrive and thereby contribute to a circular economy. Moreover, investing in technologies like smart products and the Internet of Things could facilitate the optimisation of closed-loop business processes and services, enabling the provision of access. However, extant literature has acknowledged an absence of empirical evidence of this emergent phenomenon. This paper explores how the industry uses smart products to optimise service business models in the context of the circular economy. We present an in-depth case study in which we analyse a textile rental firm in the business-to-business domain. The firm has operated a rental business model for several decades and has recently become a front-runner in using textiles tagged with Radio Frequency Identification (RFID) chips. Implementing smart textiles has allowed the firm to improve the transparency of the product life cycle (e.g. product location and condition). This information has enabled a more accurate internal analysis of the reuse loop, losses, and the product quality-longevity nexus. The firm has also used lifetime information to raise customer awareness (e.g. product misuse and theft) and improve product procurement decisions.