Regulatory Compliance

Regulatory compliance in CPG manufacturing ensures companies meet all product regulatory compliance requirements for safety, labeling, packaging compliance and traceability. It also plays an important role in supporting sustainability efforts, with laws such as the EU Packaging and Packaging Waste Directive (PPWR) and the Green Claims and Digital Product Passport (DPP). These rules are set in place to ensure businesses maintain consumer trust and demonstrate long-term responsibility through sustainable and transparent manufacturing practices, thereby protecting the public interest.

The key regulatory agencies and types of compliance laws governing CPG products in major markets include:

1. Food Safety Modernization Act (FSMA): Regulates companies involved in manufacturing food products. Shifts the focus from responding to contamination to preventing it, requiring hazard analysis, preventive controls, and supply chain verification.
2. Nutrition Labeling and Education Act (NLEA): Governs mandatory food product requirements for nutrition labeling, allergen labeling, and ingredient declarations on food and beverage packaging.
3. FDA Cosmetic Regulations (21 CFR Part 700): Requires that cosmetic products are safe for use, properly labeled, and free from adulterated or misbranded ingredients.
4. Dietary Supplement Health and Education Act (DSHEA): Mandates good manufacturing practices (GMPs) and involves compliance efforts to restrict misleading health claims for supplements.
5. GRAS & Additives Regulation: Covers ingredients that must be either approved food additives or classified as “Generally Recognized As Safe (GRAS).”
6. General Product Safety Regulation (GPSR): Ensures that all consumer products placed on the European Union market are safe under normal or reasonably foreseeable conditions of use.
7. Registration, Evaluation, Authorization and Restriction of Chemicals (REACH): Regulates chemicals used in products, including packaging and cosmetics, to protect human health and the environment.
8. Food Information to Consumers (FIC) Regulation: Governs food labeling, nutritional declarations, and allergen disclosures to promote transparency and consumer protection.
9. Cosmetics Regulation (EC) No. 1223/2009: Ensures that cosmetic products are safe, properly labeled, and supported by safety assessments before reaching the market.
10. Packaging and Packaging Waste Directive (PPWR) (94/62/EC): Aims to reduce packaging waste and increase the recyclability and circularity of materials used.
11. European Union's Green Claims and Digital Product Passport (DPP): New initiatives aimed at reducing greenwashing and increasing traceability of sustainability data.

Dassault Systèmes supports CPG manufacturers in managing various legal regulatory compliance requirements on the 3DEXPERIENCE platform by ensuring regulatory compliance and traceability on a fully integrated platform powered by virtual twin technology.

CPG companies can ensure product labels comply with current regulatory laws by using the 3DEXPERIENCE platform and virtual twin tools that centralize and automate the entire labeling process from design to production. These tools assist by analyzing ingredients, allergens, nutrition facts and formatting against the latest regulatory requirements to detect compliance gaps early. By simplifying label validation and regulatory submissions, companies can reduce manual errors, accelerate label reviews and manage multiple market-specific requirements effectively. This approach also helps maintain clear version control and audit trails, ensuring timely updates and minimizing risks of recalls and penalties.

The main compliance challenges for CPG companies during product development include:

1. Complexity and volume of regulations: Navigating numerous overlapping regulations across product categories and EU member states adds compliance complexity.
2. Sustainability and packaging reform: Meeting strict targets for recyclability, biodegradability and reduction of single-use plastics requires significant innovation and supply chain restructuring.
3. Chemical compliance and reformulation: Adhering to REACH and other chemical regulations often forces companies to reformulate products and replace restricted substances – an expensive and time-consuming process.
4. Labeling and multilingual requirements: Complying with EU labeling laws, including mandatory translations and ingredient disclosures, increases operational and packaging costs.
5. Digital and traceability demands: Upcoming rules such as the Digital Product Passport and green claims verification require new systems for data management, traceability and transparency.
6. Constant regulatory evolution: The EU regulatory landscape evolves frequently, meaning companies must continually update their processes, packaging and formulations to stay compliant.

Regulatory compliance can delay a CPG company’s go-to-market timeline due to required testing, documentation, certification and ongoing updates. It forces companies to reformulate products and replace restricted substances, leading to costly delays and increased expenses. Industry insights state that CPG companies could face extended launch times from up to 10 to 12 months, due to increasing compliance audits and product formulation standards.

Organizations often have a dedicated compliance team responsible for monitoring and enforcing regulatory requirements, which include internal controls, risk assessments, training, audits and ongoing reporting to regulatory agencies.

According to EY, proactive strategies are required to successfully manage regulatory compliance and optimize resources in the changing regulatory landscape. Leveraging AI-powered solutions on the 3DEXPERIENCE platform for horizon scanning and documentation mapping simplifies the management of legal regulatory compliance. Additionally, by utilizing integrated technology and data tools, CPG manufacturers can gain up to 15% to 30% cost savings in operating their compliance processes.

CPG companies that fail to comply with industry regulations can face severe consequences, including substantial monetary fines (ranging from hundreds to millions of dollars), legal actions and criminal penalties in extreme cases. Companies may face operational disruptions, license revocations, or restrictions on market access. Additionally, non-compliance often results in costly product recalls, brand reputation damage, loss of customer trust and exclusion from markets. For example, failure to comply with Extended Producer Responsibility (EPR) regulations can result in hefty fines and banning products from key markets, directly impacting revenue and market share.