Can Digital Product Passports close the circular economy loop?

The shift won’t be easy: companies must rethink their strategies and how entire value chains operate. Yet, the increased transparency is a game-changer for circular economy, offering those who embrace the emerging business strategies not just the competitive edge, but the possibility to reshape the future of entire industries.

Michelin is one such pioneer. They have been actively involved in the EU-funded CIRPASS-2 pilot, which explores how DPP could transform the tire industry. But how does this plan work in practice? What can other companies learn from it?

In the new episode of our Data Insiders podcast, host Oona Ylänkö covers the complex and exciting topic with two experts at the forefront of the transition.

Claire Fioretti, Head of Standards and Regulations for Connected Mobility at Michelin, has played a central part in CIRPASS-2. With over two decades at the company, Claire shares the motivations behind Michelin’s early adopter strategy and its benefits across the various supply chains.

Stefan Novoszel is an Automotive and Manufacturing Principal at Tietoevry Create, helping companies reach both sustainability and business goals via smart tech solutions.

From the conversation, we learn how DPPs work in practice, the role of data spaces in enabling new forms of collaboration, and why this shift could turn circularity in material use into truly scalable business.

Claire Fioretti (Michelin), Stefan Novoszel (Tietoevry Create), Data Insiders host Oona Ylänkö

Beyond the barcode

How do DPPs work in practice? The idea is to give every product a standardized digital identifier that contains essential information such as origin, materials and recycling options. This data lives in the cloud and is updated at every phase of the product’s lifespan – and can be easily accessed by scanning a QR code, RFID chip or a barcode.

“This is much more than just a new digital label,” Fioretti emphasizes. 
“It’s a system to share information in the circular economy.”

For most companies, the issue with recycling has been the lack of control over the quality and origin of the materials. With DPPs, manufacturers, recyclers and other stakeholders all gain access to the same verified data – essential for making recycling a key part of a business strategy rather than an afterthought.

In fact, the introduction of the DPP might mark the first time in history that true circularity has been made viable for large-scale industries. 

We are convinced that digitization is the only way to close the circular economy loop, Fioretti states.

“As manufacturers, we currently have control over what enters our plant – but to recycle at an industrial scale, information about the end-of-life product is needed as well. The Digital Product Passport makes this possible.”

Additionally, the system is also an important step forward in combating piracy. Via DPPs, authorities can now reliably access relevant information during inspections.

 “You can be sure that this product has been manufactured at a certain place in a certain way,” Novoszel explains.

Data spaces: safe and efficient collaboration

Increased transparency across global supply chains naturally raises questions about security and trust. This is where data spaces come into play. These federated environments allow companies to maintain a high level of control over their data — adhering to governance rules while keeping sensitive information safe.

One way CIRPASS-2 has approached the possibilities of the data spaces is by improving visibility and collaboration between tire manufacturers and retreading companies. However, the same lessons could be applied to many other industries as well.

“The trust in data spaces comes from two important features,” Fioretti says. 
“Firstly, a digital identification assures us that a retreader, for example, is indeed a real company enrolled in the system. Secondly, the data space functions as an intermediary between the sharing parties, ensuring that the data can’t be misused.”

It is this mutual trust that can redefine the reality of what companies consider possible. 
“Companies that have operated within the same value chain in silos now have a way of exchanging real-time data,” Novoszel adds.

“That’s simply a completely new way of working together and can lead to business models that were previously unheard of.”

From compliance to competitive advantage

As DPPs move from pilot projects to regulation, companies face a choice: wait until the policy forces them to act or move early – and turn compliance into opportunity. 

If you wait until everything is specified, you will face problems because setting things up with your value chain partners can take a lot of time, Novoszel suggests.

A checklist for data points is long: companies need to know what the footprint of their products is, how much waste they produce, what the recycling options are, and so forth. 
“Even very advanced companies are often missing some information, and that’s normal.” 

This being the situation, companies like Michelin are considered true forerunners. They go beyond ticking regulatory boxes, building solid plans for how to gain value from the changing landscape.

A practical example of a business model DPP benefits is Michelin’s tire-as-a-service. Because of the RFID chips, both connectivity and traceability can greatly reduce the footprint of the tire and improve the end-user experience, Fioretti explains. 

Both guests agree that DPP also signals a wider shift in how businesses coexist with ecological requirements. Novoszel points out that sustainable practices will increasingly define which companies can afford to stay in the game.

“A high CO2 footprint already costs more money in many industries, and the financial impact will only increase in the future.”

In this context, digital product passports may well become a defining factor in how companies will compete – and win – in an increasingly circular economy. 

Want to learn more on how your organization should prepare for the DPP regulations? Our free Roadmap to EU Digital Product Passport whitepaper will get you up to speed. 

Want to hear how leading companies are preparing for the future? Listen to the full conversation on our Data Insiders podcast below!