Why the Digital Thread Is Necessary for Consumer Goods Manufacturers Navigating EU Regulations

The European Union (EU) is undergoing significant regulation deployment. Policies such as the Ecodesign for Sustainable Products Regulation (ESPR) went into effect July 18, 2024, establishing new eco-friendly design standards across most consumer-focused product groups (excluding food and medicine). The Packaging and Packaging Waste Regulation (PPWR) was adopted February 11, 2025, but will come into full effect this August. Lastly, the EU’s Digital Product Passport (DPP) rollout comes in waves, with batteries, textiles, and consumer electronics all expected to comply by 2030. The EU is expected to finalize a digital registry for storage of DPP data by mid-July of this year.

The impact of these regulations varies in terms of scope and applicability, but each shares a fundamental truth: manufacturers must prove what is in their products. Information including material origin, durability, and circularity will need to be readily available, or else the product will not be sold within the EU. Certain estimates have indicated that as much as 20% of current EU products will not meet these incoming criteria.

These new regulations will apply not just to every manufacturer operating within the EU, but all of those hoping to export consumer goods to the EU. The EU’s Gross Domestic Product (GDP) is expected to reach an estimated US$30.2 trillion in 2026, or roughly one-sixth of the total global economy. In addition, countries such as China and Japan continue to explore their own sustainability-focused regulations, and even in the United States (where the topic has become tangled in political bickering), progress is still expected to be made in the coming years. Consumer goods manufacturers must be prepared for this new normal, and this understanding begins with deepening their oversight into their own internal processes. Those manufacturers lacking comprehensive software management platforms, notably digital thread solutions, will be at a severe disadvantage.

Important details regarding DPP remain in flux. The exact reporting data repository has not been finalized, rules regarding manufacturer access remain unclear, and the general nature of the data—what is publicized and restricted—and even broader data governance specifics are still in flux. Given the challenge of preparing data accessibility, traceability, and management, consumer good manufacturers should not wait for these variables to resolve.

Recent ABI Research findings showed that only 22% of manufacturing respondents were prioritizing digital thread initiatives within the next 12 months. The digital thread serves as connective tissue, joining previously fragmented information sources such as material sourcing, supply chain data, production data, and even service/maintenance history into a single source of product truth. Organizations such as PTC focus their digital thread offerings through their Product Lifecycle Management (PLM) solutions, whereas Siemens provides optimized digital threads for areas such as product engineering, manufacturing, lifecycle management, and services.

Deploying a digital thread will be more effective in improving product transparency versus utilizing software such as a Manufacturing Execution System (MES). An MES does improve monitoring real-time production activities on the production floor, but it rarely provides linking data streams that allow the product information to readily flow from phase to phase of its lifecycle. Even only having a PLM solution—while a good starting point—will not produce the same level of product visibility as a digital thread solution.

The push toward improved sustainability will not cease in coming years, and the EU will likely remain at the forefront of such efforts. Industries such as consumer goods will need to be upfront with product data or risk losing market share. This effort will require comprehensive visibility into the complete product lifecycle. The digital thread represents the path forward. Investment will not only allow the consumer goods industry to keep pace with the EU’s advancing regulations, but it will provide a range of other competitive benefits as well.