Product Compliance – The Hidden Tax on Innovation


Issue in Focus: Product Compliance – The Hidden Tax on Innovation: Enhancing Innovation in Formula-Based Companies through Real-time, Automated Compliance Monitoring discusses the need for early product compliance checking for formula- and recipe-based products. Explains how manual processes for compliance checking and documentation limit product innovation, and how PLM with compliance checking built in can help relieve this burden.

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Table of Contents

  • Introducing the Issue
  • Real-Time Compliance Monitoring
  • Digitizing Product Compliance Requirements
  • Developing a Material Knowledge Base
  • Know your Product and Formulas (at a Fundamental Level!)
  • Design for Compliance: Pulling it all Together
  • Automate Compliance Documentation and Registration
  • Summary
  • Recommendations
  • About the Research
  • About the Author

Introducing the Issue

Companies need to develop innovative products – the products that consumers “have to have” – and bring them to market quickly. This is the key to profitability in today’s challenging, global consumer markets. Those in highly-regulated industries not only have to innovate rapidly, but do so despite complex product compliance demands from around the world. Companies developing personal care, cosmetic, pharmaceutical, and food products must meet challenging demands from global regulatory bodies concerned only with regulatory compliance – with no thought on how the new regulations will impact product performance, customer appeal or time to market. The implications of noncompliance can be severe – ranging from being blocked from releasing a product in a country or region, to products being pulled from shelves, fines, and significant damage to the brand. In this environment, the successful innovator has to design for both the consumer and to satisfy the various regulatory bodies. World-class product development companies begin to address compliance “day one” of the product development cycle by defining requirements based on global distribution plans. Companies have found that the further into the new product development (NPD) cycle they wait to check compliance, the greater the negative impact that identified issues have on time to market, product performance, cost, internal efficiency, and their ability to roll the product out in multiple markets globally.

Leading companies are combating this by opting to “design compliance in” to get the product “right the first time.” Without checking compliance early in the lifecycle, products can get through stability and clinical testing before someone discovers they aren’t compliant, and designers have to go back to the beginning of the process, losing time and wasting money on testing that must be repeated once the formula is brought into compliance. Even more costly to the business, late compliance issues can put the product launch date in jeopardy.

Early compliance checking helps identify compliance problems earlier, preventing late changes due to undiscovered compliance problems. Unfortunately, the critical resources that are the source of innovation – chemists, formulators, flavorists, food scientists, process engineers, etc. – are the same people being asked to “design for compliance.” By shifting these resources to ensure compliance through brute force, many companies have simply diverted critical resources away from product innovation by placing inefficient and time-consuming compliance demands on their key product innovators. This solves one problem (early compliance), but replaces it with another problem (inability for designers to focus on innovation). In essence, this serves as a “hidden tax” on their innovation resources. Instead of improving product development performance, a poorly implemented, manual compliance strategy reduces development efficiency and innovation capacity – and often results in the development of uninspiring, “me too” products.