DIGITAL PRODUCT PASSPORT SOFTWARE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024 - 2031)
The digital product passport software market is estimated to be valued at USD 189.2 Million in 2024 and is expected to reach USD 991.8 Million by 2031, exhibiting a compound annual growth rate (CAGR) of 26.7% from 2024 to 2031.
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The market is expected to witness significant growth during the forecast period. The growth can be attributed to the rising adoption of Industry 4.0 and increasing focus of manufacturers on the digital transformation of supply chain and production processes. Digital product passports help track individual products throughout their lifecycle. They enable traceability by providing access to authenticated records and documentation. These passports also offer relevant attributes to both manufacturing organizations and consumers. With digitization becoming a global trend across industries, digital product passports are expected to play a key role in enabling transparency and building customer trust. Manufacturers are actively pursuing digital strategies to gain competitive advantage and optimize efficiency through real-time decision making based on data and analytics. This rising digital adoption and the need to ensure sustainability and ethics in supply chains will drive the continued demand for digital product passport software.
Greater Traceability Needs across Industries
As supply chains become more global and complex, industries are under increasing pressure to ensure product integrity and quality throughout the manufacturing and distribution process. A lack of visibility into critical details like component sourcing, manufacturing standards, testing, and certification can expose vulnerabilities. In some industries such as pharmaceuticals, medical devices, and aerospace, poor traceability can have serious safety consequences and even lead to recalls. The digital product passport software aims to address this by providing a shared, immutable record of a product's journey. By capturing each stage and transaction on a Blockchain-enabled platform, manufacturers gain immutable proof of compliance. Regulators can also more easily audit processes. For consumers, it builds confidence that the product adheres to the expected quality norms. The need for greater transparency and accountability is driving many industries to explore digital solutions to digitally trace products end-to-end.
For instance, in February 2021, iTrazo a traceability solutions provider and PSQR a track and trace software provider, collaborated to provide a global digital traceability solution for various industries, addressing the increasing demand for transparency and accountability in supply chains, particularly within the food sector.
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Supporting Sustainable and Circular Business Models
Beyond compliance, digital passports also allow organizations to develop innovative new business models centered around sustainability and the circular economy. By having comprehensive historic data on a product's materials, components, location and usage, companies can optimize design for disassembly and reuse. Manufacturers may offer refurbishment services or takeback programs, reintegrating parts or materials back into their supply chains. Digital passports also enable new rental, reuse, and resale models where ownership changes but the product’s identity and story persists digitally. For consumers, they help make more informed choices about what to buy, lease or dispose based on a product’s remaining useful life and potential for upgrading/recycling. Various initiatives by governments, industries as well as conscious consumers are placing immense pressure on brands to demonstrate sustainability commitments. Digital passports can demonstrate concrete actions towards minimizing environmental impacts and closing resource loops over a product’s entire lifecycle.
For instance, In January 2022, iPoint Systems GmbH a provider of software and consulting for environmental and social product compliance, and sustainability. and BASF a chemical producer partnered to establish a standardized approach for calculating product carbon footprints (PCFs) in the chemical industry. This partnership aligns with the European Green Deal and Circular Economy Action Plan, facilitating transparent product carbon footprint reporting to support sustainability goals through Digital Product Passports (DPPs).
Key Takeaways of Analyst:
The digital product passport software market is poised to grow significantly over the next decade driven by increasing customers' focus on sustainability, transparency, and traceability of products. The mandate for product sustainability standards by regional regulatory bodies is also driving more companies to adopt digital product passports to demonstrate compliance. Europe currently dominates the market owing to stringent laws around circular economy and is expected to continue leading the market demand.
While industries like pharmaceuticals, chemicals, and electronics have already widely adopted digital passports, their uptake in other verticals offers sizable growth opportunities. However, lack of agreed upon global standards and interoperability challenges inhibit faster market expansion. Data privacy and cybersecurity risks also restrain small businesses from investing in passport software initially.
Nevertheless, the market sees many opportunities from growing customer interest in sustainable products and investing in brands with transparent supply chains. As digitalization accelerates across industries, digital passports are finding broader acceptance as an effective solution to address these evolving expectations. Furthermore, the availability of passport software in local languages and compatible with Enterprise Resource planning systems could help expand their adoption beyond multinational corporations into small and medium enterprises. Collaboration between industry forums and governments would help address standardization challenges and speed up the software's global proliferation.
Market Challenges: Global Supply Chain Adoption Hurdles
One of the key challenges faced by the digital product passport software market is adoption across the global supply chain. As products often cross multiple borders and pass through many stakeholders during their lifecycle, getting every participant on board with using digital passports is difficult. There is also the challenge of ensuring data security and preventing unauthorized access as product passports would contain sensitive information. Maintaining compatibility between different software platforms used by organizations is another hurdle.
Market Opportunities: Meeting Regulatory Compliance Demands
Increased regulatory compliance requirements around the world are driving more companies to invest in digitizing their passports. Enhancing traceability, visibility, and transparency within complex supply networks is a major need for many industries like pharmaceuticals, electronics, etc. The market also benefits from the advancement of technologies like Internet of Things, Blockchain, and cloud computing that enable the next generation of digital passport solutions.
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Insights, By Deployment - Scalability and Cost-Efficiency Drive the Cloud Adoption
In terms of deployment, cloud-based is expected to contribute the highest share of 68.3% in 2024, owing to its scalability and cost-efficiency. Cloud-based digital product passport software allows companies to scale their operations up or down depending on demand fluctuations. This alleviates the challenges associated with rigid on-premise infrastructure that requires large upfront capital investments. The cloud model transforms these infrastructure costs from capital to operational expenses, lowering the barriers for companies of all sizes. It offers instant resources and compute power on demand, eliminating costs associated with overprovisioning hardware. Cloud software is also optimized to support remote and distributed workforces through its internet-based, location-independent access. These gains increased significance amid the new hybrid workplace models emerging post-pandemic. Overall, the pay-per-use, utility-based pricing of cloud services makes it a more viable option compared to expensive on-premise licenses, installations, and maintenance requirements. This has contributed to wider cloud adoption even among price-sensitive smaller players.
Insights, By Enterprise Size - Accessibility Fuels SME Preference
In 2024, small and medium-sized enterprises (SMEs) are expected to contribute the highest share of the market at 64.81% in terms of enterprise size. SMEs have embraced cloud-based digital product passport solutions because these solutions address their unique needs for accessibility and affordability. Unlike large enterprises, SMEs typically have limited IT budgets and resources. The significant upfront investment required for setting up on-premise infrastructure poses a major challenge. Cloud software alleviates this barrier by offering an affordable subscription model with minimal upfront costs. It allows SMEs to start with basic features and flexibly scale to premium offerings as their business grows.
The web-based, mobile-optimized interfaces of cloud solutions also enhance accessibility for SMEs with dispersed locations and remote workforces. This capability helps them maintain compliance and oversight of product information across regions, even with limited internal support teams. Such accessibility and flexibility are critical success factors for SMEs operating with tight budgets and horizontal growth goals.
For example, in June 2023, Spherity a identity management solutions provider, announced a strategic partnership with RCS Global Group, a data-driven ESG performance, responsible sourcing, and responsible mining assurance and advisory company. This partnership aims to enhance battery supply chain sustainability intelligence and assurance.
Insights, By Industry Vertical - Compliance Needs Fuel Manufacturing Adoption
In terms of industry vertical, manufacturing is expected to contribute the highest share of 34.58% in 2024, due to stringent regulatory requirements. The manufacturing industry deals with complex multi-tier supply chains and faces significant compliance pressure, especially around product quality, safety, and traceability. Digital product passports are vital tools for manufacturers to digitally document every stage of the product lifecycle from sourcing to end-use. They help ensure compliance with global regulations like registration, evaluation, authorization and restriction of chemicals (REACH), Conflict Minerals, etc. and mitigate compliance risks that can disrupt operations. Manufacturers are also under pressure to improve supply chain visibility and transparency for end customers. Digital passports centralized access to authentic product information aids this. Their ability to track changes and audit records further strengthen compliance postures. These factors are driving wider adoption of digital product passport solutions across manufacturing units of all sizes to futureproof operations in regulated environments.
For instance, in March 2022, the European Commission proposed the Ecodesign for Sustainable Products Regulation (ESPR), which includes the introduction of Digital Product Passports (DPPs). These passports, mandated by the ESPR, will contain information about a product's sustainability, such as material breakdown, recycled content, and supply chain mapping, aiding in promoting environmental sustainability and circularity.
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North America has traditionally dominated the digital product passport software market. The region is expected to account for a market share of 34.81% in 2024, owing to strong industry presence and early adoption. The region is home to many large manufacturing companies that recognize the value digital passports bring in terms of efficiency, compliance and transparency across supply chains. With growing emphasis on sustainability and circular economy, major organizations are implementing product passports to record materials and components throughout a product's lifecycle. This allows them to track resources, facilitate easier repair/remanufacturing and achieve recycling targets. Further impetus comes from regulations around extended producer responsibility and ‘right to repair’ laws. The U.S., in particular, has seen proactive measures to standardize formats and encourage interoperability between platforms. Overall, the market enjoys network effects due to widespread familiarity with digital passports among industrial players.
In 2024, the Asia Pacific region is expected to be the fastest-growing market for digital product passport software, with a CAGR of 31.89%.. China has played a critical role as manufacturers look to digitize processes and comply with domestic regulations. However, other developing economies have shown high momentum as well. In India, initiatives like the National E-Governance Plan have fuelled technology adoption across segments like automotive and electronics. Electronics exports remain a major economic driver and trackability of components is important. Furthermore, overall ‘Make in India’ thrust and growing consumption of smart devices creates fertile ground. The pricing of passports also remains relatively affordable versus developed markets, removing entry barriers. This has allowed Asia Pacific to rapidly gain ground as global supply chains increasingly pivot towards the region.
Digital Product Passport Software Market Report Coverage
| Report Coverage | Details | ||
|---|---|---|---|
| Base Year: | 2023 | Market Size in 2024: | US$ 189.2 Mn |
| Historical Data for: | 2019 To 2023 | Forecast Period: | 2024 To 2031 |
| Forecast Period 2024 to 2031 CAGR: | 26.7% | 2031 Value Projection: | US$ 991.8 Mn |
| Geographies covered: |
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| Companies covered: |
Billon Group Ltd, CIRCULARISE, CIRPASS, Det Norske Veritas Group, iPoint-systems GmbH, Kezzler AS, LyondellBasell Industries Holdings B.V., Narravero GmbH, OPTEL GROUP, Protokol, PSQR, Qliktag Software Inc., Scantrust SA, Spherity GmbH, and THE ID FACTORY SRL |
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*Definition: The digital product passport software market consists of companies that offer software solutions to help manufacturers digitally track and trace products throughout the supply chain and product lifecycle. This type of digital passport software allows manufacturers to capture critical product information like materials, components, certifications and chain of custody in a shared database. It gives supply chain visibility and helps ensure standards compliance. With digital passports, manufacturers can improve sustainability, reduce costs and enhance trust with customers and regulators.
Digital Product Passport Software Market Report Snapshots
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