How can Europe’s midmarket supply chains prepare for digital product passports? As new EU regulations redefine transparency and traceability, compliance is becoming the driving force behind digital transformation. Carrie Tallett (pictured, below) of Forterro explains how Europe’s midmarket manufacturers and distributors can use ERP to prepare for the Digital Product Passport era.
Europe’s industrial midmarket is facing a new kind of challenge that goes beyond supply chain disruptions or rising costs. As the EU accelerates its push toward a circular economy, a wave of environmental and product data regulations is reshaping how manufacturers and distributors operate.
At the heart of this transformation lies the Digital Product Passport (DPP). This is a forthcoming EU initiative that will require detailed product information – from materials and emissions to repairability and recycling – to be digitally accessible across the entire supply chain.
For logistics and manufacturing companies, the implications are enormous. The ability to trace, verify and share product data seamlessly will soon become a licence to operate. And yet, Forterro’s 2025 European Industrial Midmarket Research suggests that many businesses are far from ready.
Regulation to Reality
The EU’s circular-economy strategy is designed to make every product lifecycle transparent, ensuring that materials, emissions and origins can be tracked from factory floor to end-of-life recycling. At the centre of this effort sits the DPP, a digital record that will accompany every product, containing verified information about its composition, carbon footprint, repairability and reuse potential.
For midmarket manufacturers and distributors, this represents both a challenge and an opportunity. Yet Forterro’s 2025 European Industrial Midmarket Research found that only 49% of firms are even aware of what DPP entails, and just half feel ready to comply. The main obstacles are complexity and a lack of compliance resources – each cited by 42% of respondents – followed by insufficient guidance.
This level of unpreparedness is concerning with enforcement just a year away for some sectors. DPP rollout will be a phased one, beginning in 2026/27 with batteries and metal products, and followed over the next few years by textiles, furniture, chemicals, ICT and construction products. DPPs will demand the integration of data from every part of the supply chain – materials sourcing, production, logistics, warehousing, and recycling – all of which depend on systems that can communicate securely and in real time. For most organisations, this will require a rethink of how data is captured, structured, shared and ultimately processed.
Compliance Backbone
Traditionally, ERP has been seen as an operational tool for managing stock, production schedules and orders. But today, ERP is becoming the compliance backbone of the modern industrial business. The same system that drives daily operations is now central to ensuring transparency and regulatory alignment.
Modern ERP platforms already hold much of the data needed for environmental and compliance reporting, from material inputs and energy use to production waste and emissions. When connected to the cloud, ERP becomes a secure, scalable platform capable of exchanging information with partners and regulators. This is increasingly essential as new mandates such as the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) come into play.
In the Forterro research, 33% of European midmarket firms listed ESG reporting as their top driver for digital transformation, followed closely by regulatory compliance. This marks a significant shift from efficiency-focused investment to purpose-driven digitalisation, where technology underpins not just productivity but sustainability and accountability.
Cloud and AI Increasingly Vital
Forterro’s findings also reveal that only 39% of European firms currently use cloud ERP, a figure that is expected to rise to 45% in the next few years. Many more use a hybrid solution. Cloud technology is vital for managing the complex, multi-party data flows required by DPPs. It enables secure data sharing, real-time visibility and faster environmental reporting across the entire supply chain.
The operational benefits extend well beyond compliance. Cloud ERP supports business continuity, scalability and security while making it easier to integrate new tools for analytics, automation and predictive maintenance. For logistics and supply chain teams, this translates to better visibility, fewer data silos, and more reliable reporting. All of which are prerequisites for meeting Europe’s growing sustainability demands.
For the industrial midmarket, cloud is no longer a nice-to-have; it has become a business fundamental. AI is gradually emerging as equally important. AI use in the industrial midmarket has been slower than elsewhere. Many industrial businesses emerged from factories and have approached AI with caution.
However, the Forterro research showed that things are changing. AI is regarded by many in the European industrial midmarket as an integral element of digital transformation. The areas where it is expected to deliver most value are cybersecurity and risk detection, business analytics and predictive maintenance. But compliance is also a significant factor, and midmarket firms that can adopt market-ready solutions will unlock new growth opportunities as well as helping address regulatory compliance requirements.
Bridging the Skills and Culture Gap
Of course, technology alone cannot deliver compliance. Even the most effective and efficient automated systems, that utilise the very latest AI applications, require human input and intelligence to function properly. But finding people with the right qualities is a challenge.
More than 40% of midmarket firms in the Forterro research reported shortages in ERP expertise and AI literacy, precisely the skills required to digitalise compliance processes. Meanwhile, resistance to change remains common: logistics, finance and production departments are among the most reluctant to adopt new systems or workflows.
To overcome these barriers, organisations need both leadership and collaboration. Combining hands-on experience with the right digital training allows teams to build the necessary skills without sacrificing operational capacity. Compliance and innovation are most successful when everyone understands their shared role in achieving them.
Building Circular Value Chains
Forward-thinking manufacturers and distributors are beginning to view DPP not as a burden, but as an opportunity to create value. Those who act early will gain much more than regulatory compliance. They’ll benefit from streamlined data management, lower administrative overheads and enhanced credibility with customers and partners who prioritise sustainability.
By embedding compliance into ERP and supply chain workflows now, businesses are laying the groundwork for the circular, transparent and efficient operations that will form the foundations of modern business. They will be better equipped to demonstrate environmental performance, trace product origins and adapt quickly to future regulations.
The DPP represents more than another compliance challenge; it is a catalyst for digital transformation across Europe’s midmarket industrial base. It’s a sector that hasn’t embraced digital transformation as wholeheartedly or rapidly as others, but it has a major opportunity to do so now.
As ERP evolves into the digital backbone of circularity, those who modernise early by embracing cloud integration, data transparency, and sustainability reporting, will not only stay compliant but thrive in a greener, more resilient industrial future.
