Is The Digital Product Passport Just a Cost, Or Can I Turn It into an Advantage?
The short answer is: it depends entirely on how you approach it. The rule will be almost the same for all your competitors, so simply complying with it will not give you any competitive advantage.
The advantage, or the disadvantage, comes from how you use the Digital Product Passport beyond the basic requirement.
And when facing this choice, there are three possible approaches.
The Three Approaches to the Digital Product Passport
The first is to do nothing. Wait and ignore it. In the early years, it may seem like the easiest option: the requirement to prepare a Digital Product Passport has not yet fully come into force, and companies that take no action do not feel the impact immediately.
The cost comes later. Once the Digital Product Passport becomes mandatory and you do not have one, you are simply out of the market. Your company and your products can lose their ability to compete almost overnight. And the market can exclude you without sending a single warning letter.
The second approach may appear to be the most cautious: do the minimum required to comply and maintain the status quo. It sounds reasonable, but it is actually the most expensive of the three. You pay all the costs of compliance and receive no return, other than remaining in the market as just another player.
The third approach is to go beyond the basic requirement: design the Digital Product Passport to collect more data—and better-quality data—than the regulation requires, and structure that information so it can create value.
This is the only approach that truly pays off.
What Does It Actually Mean to Use It?
This is not just a theoretical concept. Every time a customer scans the code on your product, that action can provide valuable insights: who they are, where they are located, and what they are looking for. But there is an important condition: it can only happen if you have designed your system to collect and use that information.
If you simply do the bare minimum—a Digital Product Passport created only to comply with the regulation—the valuable signals will go to your competitors who planned for them earlier, not to you.
Then there is a second market opportunity: spare parts, maintenance, and remanufacturing, which are often more profitable than the initial sale. This is where the Digital Product Passport can make a real difference, because it carries the history of the individual product or component: what is installed, when replacement is needed, and which spare part is required.
But the same rule applies here: it only works if the passport has been properly designed from the beginning, not if it was rushed just to meet regulatory requirements.
Caterpillar has been remanufacturing used components since 1973 and selling them again with a warranty equivalent to new products. It has been doing this for half a century, but manually and within its own supply chain. The Digital Product Passport brings this same capability within reach of any manufacturing company with suitable products, automatically and at the level of each individual item.
It is Caterpillar’s 1973 approach made accessible to everyone.
And then there is authenticity. A verified and traceable product record can protect value against counterfeiting. A small wine producer on Mount Etna has been placing a chip inside the label of its most valuable bottles since before any legal requirement existed, not because it had to, but because that data protects the product’s market value among collectors and acts as a barrier against counterfeiting.
Three different functions, one common logic: the Digital Product Passport can either remain a document attached to a compliance file, or it can become a new channel for value creation.
It depends on who builds it, and with what purpose.
A Question to Keep in Mind
From now on, whenever you hear about a new deadline, keep one double question with you:
When will the law require it? And when will the market ask for it first?
The two answers rarely coincide, and the second one almost always comes earlier.
Be careful, because market demand is rarely an explicit request. With e-commerce, large companies that have been using these tools for years can identify suppliers online who already offer products with a complete Digital Product Passport. They do not need to ask many questions: the passport already contains the information they need, and the purchasing process becomes faster.
Companies that do not have a Digital Product Passport will first of all be excluded from major tenders. Then, little by little, they will be pushed to the margins—quietly, without even realizing it.
The Digital Product Passport only becomes a cost if you choose to simply endure it. Minimum compliance keeps you in the market only as another player, while valuable data and opportunities go to your competitors.
Before deciding how much to invest in it, ask yourself this question:
Which of the three approaches do you want your strongest competitor to take?
