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This article was originally written for and published by Supply & Demand Chain Executive.
Manufacturing is operating at a breakneck speed and the accelerator is far from easing up.
Today’s evolving business landscape is bringing with it a variety of regulatory challenges, including a significant volume and incredible pace of change to laws across jurisdictions, regions, and countries. It is a landscape that demands manufacturers have a deep knowledge and understanding of their organization’s products and operations, past, present and future.
A recent KPMG study underscores this challenge, revealing that 43% of chief ethics and compliance officers believe new regulatory requirements pose the greatest challenge to their compliance efforts. That study also found an overwhelming 73% of participants predict that the level of focus on compliance, particularly in relation to regulatory expectations and scrutiny, will rise.
In order to solidify a competitive edge and ensure success as new regulations emerge, manufacturers must act now. Adapting to these changes is non-negotiable. Failure to do so could cause business operations to come to a screeching halt. Below are three areas where manufacturers can begin.
Understand Component Availability
In today’s fast-paced world, it is paramount for manufacturers to maintain constant awareness of compliant component availability at all times. The supply chain instabilities from four years ago helped shift the focus in the right direction, but future shocks are inevitable. Innovative manufacturers need to be prepared or risk their business coming to a standstill.
Product companies understand the tightrope of balancing supply and demand; customer demand is the driving force behind business success. If you can’t source enough of the right components (e.g. they perform the right function, at the right cost, and importantly here – adhere to the required regulations), customer orders go unfulfilled, leaving you in a breach of contractual obligations. Having a clear line of sight into an adequate supply of compliant materials required to produce products at volume is essential.
- Act now to weather supply shocks. Tracking all materials in one centralized location facilitates timely adjustments during supply shortages or delays. With advanced insight into supply shortages, manufacturers can quickly identify alternative sources and maintain production schedules even in times of disruption.
- Failure to act could put your product and business at risk by not having back up component suppliers at the ready in a time of need. Without a single digital source for tracking every aspect of your product in real-time including input from your suppliers and component availability, contingency plans are unable to be made quickly, and products will miss shipping dates.
Secure Future Success Today with a Digital Product Passport Strategy
Many of you have probably already heard or read about Digital Product Passports (DPP), the digital record that provides comprehensive information about a product and its entire value chain. This includes everything from its origin, materials used, environmental impact, and disposal recommendations. For instance, if you are sourcing a chip to include in your electronic device, the digital product passport would have a wide range of information on that chip - from details on where the metal or material was sourced, to disposal instructions.
Why is this important? Beginning in 2026, Digital Product Passports are expected to become mandatory to do business across the 27 European Union (EU) member countries. Some of the first industries projected to be impacted include textiles, batteries, consumer electronics and construction products.
These passports have become increasingly important as new European Union regulations place a greater emphasis on regulating sustainable products. In fact, the European Union DPP legislation requires brands to examine their current supply chain, manufacturing processes and work practices to ensure they’re compliant with legal requirements. This applies to any product that is bought or sold in the European market. No matter where the product is made, or where the manufacturer is located, the Digital Product Passport will become a globally relevant standard. This will come in handy when new regulations start to be implemented, which could come in the next few years.
- Act now to take proactive steps to achieve compliance before DPP regulations are enforced. Doing so can build brand credibility and increase customer loyalty, enabling a competitive advantage over others in your industry. Manufacturers who implement changes early will save time and expense down the road by avoiding last-minute complications within their supply chain.
- Failure to act could ultimately result in being forced to scrap products due to lack of compliance, wasting time, money and resources.
Keep Pace with Regulatory Requirements
Keeping pace with ever-changing regulatory requirements is non-negotiable. The speed of regulation is fast and furious. What’s not required today could very well be mandated tomorrow. This is why it’s imperative for manufacturers to invest in technology that assists in tracking industry-specific requirements.
For instance, on July 18, 2024 the European Commission’s Ecodesign for Sustainable Products Regulation (ESPR) came into force as a measure to help the European Union reach its environment and climate goals. This new framework legislation aims to significantly improve the energy performance and sustainability aspects of products and will apply to all products placed on the EU market, whether produced inside or outside the EU. This is an example of a new regulation manufacturers must pay attention to and proper technology can help ensure mandates are met so manufacturers can be on pace with their goals.
- Act now to update manual tracking that just won’t cut it. It is not enough today and certainly won't keep business running tomorrow. You need to lean into software that can track the origin, source, and material composition of the components that make up their products. Acting now gives your business total control over the system you choose without the pressure of having a ticking clock in your ear reminding you how much time you have left to be compliant. Modern technology with software that helps monitor changes in regulations, saves time, boosts efficiency, and increases productivity. It will also identify and mitigate potential risks quickly, reducing the likelihood of non-compliance violations.
- Failure to act could mean your business is left behind. The legacy approach to technology and/or manual tracking is not only inefficient, but also error prone. These are two vital aspects that can jeopardize business when deadlines and government requirements are on the line.
Take Control of The Future
Acting now to put clear processes and policies in place to navigate the changing regulatory environment will give you control of your supply chain. This requires an investment that enables proper management and oversight of regulatory change, providing confidence that key risks are mitigated and ensuring the supply chain remains operational.
With changes accelerating at an unprecedented pace, manufacturers need to evolve, adapt and grow. Having a clear line of sight into the product thread, a detailed history of the digital product passport, and modern technology can help respond to regulatory changes, enabling your business to thrive. Manufacturers of tomorrow will see their products reign supreme.
Learn how a modern solution with a robust product thread can streamline your regulatory compliance processes. Take a product tour today.
