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Sustainability, traceability, visibility: New rules and tools for complex manufacturing

Jan. 22, 2024
Technological changes are challenging industrial operations, but customer expectations won’t ease, so it’s on manufacturers to keep up with the new solutions.

The speed of technological changes and the evolving requirements driven by the environmental, social and governance (ESG) movement continue to challenge the manufacturing sector.

The trends in this sector for 2024 will double down on what’s already taken place as manufacturers work to keep pace with upcoming shifts in regulatory requirements and customer demands. They will need new tools and processes to manage the increasing complexity of configurable products.

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As AI takes hold, the bar for customer expectations will only get higher. There's a battle going on in terms of customer experience. Everyone is looking to ensure that they can offer their customers a wonderful omnichannel experience. Some of the trends we've seen here include visual configurations and the ability to offer 3D visualization, and that's going to continue. We've crossed the Rubicon on that one. Once you start making these types of things available to customers, they come to expect them, and it becomes table stakes.

And as you keep pushing the boundaries of what makes a great customer experience, the bar gets raised for everybody. The next frontier of this is going to be AI-based. The main question will be: How much guidance can you get? Are you as the consumer making choices, or will you just tell an AI model your list of “wants” and then it will give you the available options? This could be the way buyers make purchases going forward, and that could be a game changer.

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Part of what manufacturers will continue to realize is that they can spend a lot of effort on making the front-end user interface look great, but if you don’t match that on the back end, it won’t matter.

You need to ensure your data is aligned in the background to support these efforts on the customer-facing side—especially if you want to offer that same kind of consistent experience across different platforms and applications, such as your partner portal, your sales service portal and your direct sales portal.

The importance of traceability will gain traction this year. In the European Union, the forthcoming digital product passport regulations are expected to start rolling out in 2026. These will require companies to be able to show what is essentially a digital record of a product’s sustainability and circularity information throughout its lifecycle, from design to end-of-life.

Regulations like this, coupled with the increased adoption of technologies like digital twins, will really drive the need for traceability in terms of being able to see how a product is designed, manufactured, sold, and serviced. Organizations will need to look more closely at how to create comprehensive visibility across functions in order to meet this need.

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As sustainability regulations increase, manufacturers will need to think carefully about their production processes. While sustainability is one of those things that's long been in the background, in 2024 it’s going to take a more front-and-center position, especially in the EU, as more regulations are introduced around emissions standards and carbon footprints.

Once the digital product passport goes into effect in the EU, this will require companies to be able to show consumers information such as data on raw material extraction, production, recycling, and so on.

There will be more teeth to these regulations than ever before, incentivizing organizations to set goals and meet those goals—and disclose this information in their reports. ESG is becoming larger around the world, and more organizations will need to be able to show in their financial statements their progress in meeting these benchmarks.

To be able to have this information readily accessible to consumers—and stay competitive as customers increasingly prioritize sustainability in their purchase decision-making—manufacturers will need to more closely inspect their own internal processes around transparency as well as looking at their carbon footprint/emissions.

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The need for a cohesive, comprehensive view becomes greater. The confluence of these trends, as well as the further adoption of AI, is going to lead to an increased recognition of the need for an end-to-end solution for operational visibility.

As you collect data from all the different areas and associate it together, this will require a cohesive solution that can help different departments access all of the available information and determine how this informs the configuration of their products. In other words, it means establishing a shared source of truth regarding product configuration information.

The only way to know what to manufacture or deliver or service is to capture the product configuration that the customer initially purchased. Today, consumers aren't so much buying products as they are purchasing configurations.

This is what organizations will have to manage moving forward. They'll have to have that single shared source of information of what they can sell and of what configurations are possible. This will be key—because it’s that visibility that will help with feeding AI tools with the right data, meeting sustainability requirements or enabling traceability.

The writing on the wall is clear: Sustainability regulations and AI-enabled functionality will drive both customer expectations and manufacturer processes. The need for traceability and visibility will escalate as companies work to comply with ESG standards. This all points to stronger adoption of modern configuration technologies to adapt to these new standards.

About the Author

Henrik Hulgaard

Henrik Hulgaard is VP of product management and co-founder of Configit, provider of Configuration Lifecycle Management (CLM) solutions and a supplier of software for the configuration of complex products. Hulgaard is an associate professor of computer science and has published more than 25 articles internationally.

About the Author

Henrik Reif Anderson

Henrik Reif Andersen is the chief strategy officer and co-founder of Configit, provider of Configuration Lifecycle Management (CLM) solutions and a supplier of software for the configuration of complex products. He has more than 25 years of experience in IT development and research.