Discrete manufacturers today face a complex web of variants they must account for when designing, developing, and selling products. Consumers increasingly demand more customization, but manufacturers must also accommodate several other factors, including evolving and overlapping compliance mandates. Not only do regulations vary by country, but by industry and product type. For an organization that manufactures multiple products and conducts business globally, navigating this can be a significant undertaking.
Manufacturers must adopt smarter configuration and lifecycle management strategies to keep up. Fortunately, today's modern approaches to product configuration and engineering data can help.
Navigating Evolving Compliance Standards
The manufacturing industry is subject to different compliance standards, depending on the country or region in which the company is located. For instance, the European Union (EU) has different standards than the U.S., and even within the U.S., regulations can vary by state.
ESG mandates encompass regulatory and voluntary frameworks that require companies to measure, disclose, and improve their performance in areas such as sustainability, social responsibility, and ethical governance.
In manufacturing, these mandates often involve tracking carbon emissions, energy efficiency, labor practices, supply chain accountability, and corporate transparency. Because requirements differ by region, such as the EU's Corporate Sustainability Reporting Directive (CSRD) versus the U.S.'s evolving SEC climate disclosure rules, manufacturers doing business in multiple markets must remain carefully attuned to stay compliant and competitive globally.
Regulations can also vary by industry; for instance, the pharmaceutical manufacturing sector must adhere to Current Good Manufacturing Practice (CGMP) regulations, which are overseen by the Food and Drug Administration (FDA).
CGMP establishes systems to ensure that drug companies properly design, monitor, and control their manufacturing facilities and processes. Its requirements cover the quality of raw materials, including robust quality management systems and operating procedures, as well as maintaining dependable testing laboratories and addressing deviations in product quality. If companies adhere to these standards, they help prevent product errors, deviations, mix-ups, failures, and contamination.
Another example is the Digital Product Passport (DPP), which requires most products sold in the EU to comply with what's called the Ecodesign for Sustainable Products Regulation. Its goal is to improve visibility throughout the product lifecycle by requiring complete information about the origin, materials, environmental impact, and recommended disposal of every product. More consumers are demanding transparency, and the DPP aims to satisfy that demand by mandating reliable product data. Complying with this requirement also improves supply chain management.
These are just a few examples of how regulations vary across regions. They highlight how challenging the compliance landscape can be for manufacturing organizations doing business globally. Each of these also impacts how products are manufactured and sold.
Increased Variance and New Complexity
Because different markets have their own requirements, this necessitates the need for distinct product configurations. This, in turn, means growing complexity in managing Bills of Materials (BOMs), rules, and versions. Compliance now also includes software and firmware configurations, and software versions must be tracked, validated, and supported over time.
If not managed in a structured manner, compliance and the various configurations required to support it can quickly become onerous.
Here's an example: A window manufacturer faced new energy-efficiency mandates that it needed to factor in when building its products. Initially, they tried to navigate this using their existing legacy systems and a patchwork approach to enabling new configurations, but this isn't a scalable or sustainable solution for the long term. Other organizations have tried to use tools like Configure, Price, Quote (CPQ) solutions, but these traditional approaches tend to fall short as well. That's because CPQ tools are often only sourced by information relating to configuration constraints related to the sales function.
In this example, compliance with new environmental requirements and energy rating schemas, which varied in different markets, was strictly tied to the engineering of the windows. Without access to engineering information, it is impossible to accurately calculate precise energy compliance groups. So, CPQ tools focusing solely on sales information would either have to limit the product portfolio (due to the inability to accurately calculate the correct energy classes) or risk offering incorrect products that may not meet the required standards.
Tools to Manage Complexity and Compliance
Managing compliance variants must be proactive and structured, not reactive. Organizations can take a configuration lifecycle management approach, coupled with Product Lifecycle Management (PLM) systems, to directly tie requirements to product configurations. This avoids ad hoc or siloed requirement handling and enables end-to-end traceability.
Invest in tools that support configurable engineering frameworks as well as engineering-to-order and configure-to-order workflows. This will ultimately help reduce rework and accelerate time to market, even with variant-heavy portfolios. Closing the loop between engineering, manufacturing and commercial teams ensures all teams are speaking the same language and can navigate variances and compliance mandates uniformly.
In the window manufacturer's example, the company relied on engineering-heavy PLM systems to provide accurate information to support calculations for the new energy requirements. The engineering data was aligned with commercial aspects, ensuring that the correct calculation logic is provided at the point of sale.
Consequently, changes to product design (from engineering) or requests for ETO orders (input via a sales channel) will benefit from the alignment between engineering and marketing information, ensuring immediate feedback on the consequences of introducing changes on either side of the fence. This resulted in smoother adaptation of changes and faster time to market.
Toward Proactive Transparency
Regulations are not only here to stay but continue to change in keeping with societal and governmental shifts. Different regions or countries require different documentation or may not allow some products or variations to be sold at all. Industry-specific laws add an additional layer of complexity. But there's an opportunity here to see these rules as more than a tiresome paperwork headache. Instead, manufacturers need to reframe compliance as a strategic capability, not a hurdle.
With the right data model and platform, discrete manufacturers can efficiently, accurately and profitably respond to evolving regulations. Organizations need to take a closer look at how their current configuration processes handle variants and understand whether they're hurting or helping their compliance readiness. Ultimately, those who treat compliance not as a constraint but as a catalyst will be best positioned to thrive in an increasingly regulated, variant-heavy world.
