The Impact of Digitalization on Circular Economy

Abstract

This study investigates the impact of digitalization on circular economy practices within the fashion and technology sectors, with particular emphasis on addressing the global challenge of low material recycling rates. A quantitative survey was administered to 90 supply chain professionals to evaluate the extent to which process automation, digital data flows, and blockchain-enabled traceability contribute to enhancing material reuse and reducing scrap disposal. Regression analysis was employed to examine supply chain interconnections, revealing that digital traceability provides significant advantages for advancing circularity, while process efficiency and general digitization exhibit comparatively modest effects. Although turnaround times and product return rates differ across industries, the findings indicate that digitalization facilitates the closing of resource loops. To address challenges associated with reverse logistics and to foster sustainable circular economy practices, the study advocates for the broader adoption and integration of digital technologies.