Metal cutting industry, a key sector in manufacturing, is grappling with the transition to a “net-zero industry” to mitigate climate change and reach sustainable practices. Rare and exclusive materials make recycling and reusing cutting tools more pressing and necessitate efficient circular material flows. The purpose of this research is to explore how collaboration can facilitate circularity in the cutting tool industry. It examines the involvement of stakeholders and their roles in achieving a circular lifecycle for cutting tools. To investigate the interaction between metal cutting tools suppliers and Small and Medium-sized Enterprises (SMEs), this study used a mixed-methods approach that includes data from literature, interviews, and document study. Empirical data is gathered to investigate the factors driving circularity and to identify important participants in the lifecycle of cutting tools. The study revealed challenges to the current situation including underutilization of tools due to the absence of a standardization process and subjective operator judgment, as well as lack of traceability of the tools both internally at SMEs and between the stakeholders. Moreover, by mapping the current actors, the study found cutting tool traceability, undirected decision-making throughout tool lifecycles, and limited awareness of circularity dimensions are key challenges. To handle these challenges. 9Rs circular economy framework used to investigate the possible role of collaboration emerges as a vital enabler for circularity, with SMEs playing a significant role. Moreover, the involvement of machine operators, often overlooked actors, is found to be crucial in influencing circular outcomes. Digital solutions and collaborative strategies that involve CNC machine suppliers and intermittent refurbishing business are pivotal in overcoming the challenges identified, namely, traceability and human subjectivity in tool condition assessment. The study demonstrates that technology providers, intermediary refurbishing businesses, SMEs and other stakeholders operating in the metal cutting tools sector must be involved throughout their lifetime to avoid suboptimal results, exchange information, and inspire industrial actors to support the circular economy.