The Digital Product Passport becomes mandatory by 2030 at the latest: Implications of transparent value chains

Aug 27 2024

The Digital Product Passport will promote transparency and sustainability along the value chain by 2030 and open up opportunities for companies. Not only is the DPP mandatory, but it is transforming e-commerce anew. It's a topic that's worth addressing early on.

Companies increasingly have to address the issue of sustainability. This is a trend that is being reinforced by a new EU legislation: the Digital Product Passport (DPP) will be mandatory for all products sold in the EU by 2030 at the latest. It is intended to provide information on recycling and repair options, thus closing information gaps. The DPP means both an effort for companies and an opportunity for customer retention and acquisition, especially if introduced at an early stage.

Combining digital and ecological transformation

The idea behind the DPP is to combine digitalisation and ecological transformation, known as the ‘twin transition’. The DPP is designed to make all relevant product data digitally available along the entire value chain in order to support sustainable purchasing decisions. The first product groups will have to comply with DPP requirements starting from 2026. From 2030, this will apply to all products, including batteries, electronics, IT, plastic items and textiles. This is expected to help strengthen the circular economy and reduce resource consumption.

Added value for customers and challenges for companies

The DPP provides customers with essential information on the disposal, reuse and repair of products. However, companies must make considerable efforts to ensure transparency across the entire value chain and the entire life cycle of a product. This requires close cooperation with all stakeholders involved and verification of supply chains, especially in the case of non-European production. In addition, products must be designed so that all parts are interchangeable and recyclable in order to increase their lifespan and keep materials in the circular economy. This may mean that companies need to adapt their production processes and introduce new materials or design principles.

Technical challenges and implementation

The implementation of the DPP poses technical challenges, as all the necessary information must be digitally documented and made available. This affects both manufacturers and retailers and requires new or customised IT systems. Small and medium-sized enterprises (SMEs) in particular will be heavily burdened, as they often do not have the necessary IT systems and resources to begin with. The introduction of the DPP requires the implementation of processes for data collection and maintenance as well as the adaptation of existing data models in the ERP/PIM system. This is necessary to meet the requirements of the authorities and end customers.

Efficient data integration systems and automation processes

To meet the requirements of the DPP, efficient data integration systems, modern data management and cloud technologies as well as automation techniques are crucial. Modular, easily customisable IT systems and cloud solutions provide the flexibility and scalability needed. A central data platform can integrate and synchronise data from different systems. Clear data governance guidelines and automated processes help to ensure high data quality and minimise delays.

By automating processes, errors, deficits in the DPP and legal consequences can be avoided. A consistent database leads to quick decisions and efficient product launches. Therefore, data models used should be flexible and customisable, as the requirements for the DPP can change over the years. Track-and-trace systems are also important in order to be able to trace the origin and route of products.

Downloadable DPP checklist

External expertise for rapid implementation

Companies can benefit from external support in implementing the IT systems and processes required for the DPP. Specialised service providers can assist with the selection and integration of suitable systems and offer employee training. Consultants also offer objective assessments and suggestions for improving processes and systems in order to maximise potential.

The involvement of external expertise is particularly useful for SMEs that may not have the necessary internal resources. External partners can not only help with technical implementation, but also provide strategic advice to improve the organisation's overall processes. This can make the difference between a successful and a failed DPP implementation.

Long-term benefits and strategic importance

Early adoption of the DPP offers long-term benefits. Companies that start working towards sustainability even before they are legally obliged to do so, have the potential to stand out from the competition and gain the trust of their customers. This strengthens customer retention and can open up new business opportunities. Transparency along the value chain and the provision of comprehensive product information is increasingly becoming a competitive advantage.

Governments and regulators will also benefit from the introduction of the DPP, as it will give them better insight into companies' sustainability practices and make it easier for them to check compliance with environmental standards. The availability of product information supports the circular economy and contributes to meeting the EU targets for sustainability and resource conservation.

Conclusion

The introduction of the Digital Product Passport (DPP) by the EU by 2030 promotes transparency and sustainability along the entire value chain of a product. This offers opportunities for customer retention and differentiation in the market, but requires considerable adjustments to IT systems, data management and supply chains. Small and medium-sized companies in particular face major challenges, but can benefit from the involvement of external expertise and early implementation of processes and systems. Efficient data integration and automation are key to successfully implementing the DPP and fulfilling sustainability requirements. The strategic importance of the DPP for long-term competitiveness and customer loyalty should not be underestimated. Companies that act early can secure significant advantages and make an important contribution to sustainable development.