The Cost of Compliance in Product Manufacturing & Development


Consumers nowadays pay attention to minute details. Due to their close watch, manufacturers should keep all the compliance and regulations in mind while making the product. In order to be reliable, they make high-quality products that loyal consumers expect. Manufacturers and retailers of textiles, personal care, FMCG, and accessories need to anticipate regulations that govern the manufacturing of these items. One of the major cost components is the cost of compliance

Cost and risk are the major concerns for product safety compliance. There are quite a few products that are hazardous to health with varying degrees of risk, ranging from non-hazardous products with low risk to high-risk products that expose their users to severe health risks. In order for these products to be easily and affordably manufactured, the manufacturers and sellers need to comply with the regulations.

There are typically many cost components associated with product safety compliance. These cost components may fall under lost revenue, short-term crisis mode costs, or long-term capability-building costs.

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COST 1: Revenue Loss

Lost revenue is the most critical cost of product safety compliance, as it is the biggest loss that a manufacturer will incur if a product fails to meet safety requirements.


COST 2: Lost Customer Loyalty

A company’s customer loyalty is often its most valuable asset. Since a company’s revenue depends on customers, the loss of one customer will seriously affect the company’s revenue. The number of customers thought to be very loyal to a certain product or brand due to their experience with it so far. To the extent that customers are willing to pay more money for items associated with a specific brand name because of their high quality, reputation, and/or dependability


COST 3: Short-Term Crisis Mode

A short-term crisis mode is necessary in order to resolve a safety issue of any kind. This mode allows a company to stop selling the product immediately and avert potential problems that may arise. This mode also allows a company to establish the proper procedures for handling these problems in the future.


COST 4: Developing a Product Safety Plan

“A safety plan is the process by which a product meets its requirements for safety compliance.” Product safety plans must be written, reviewed, and continuously updated. A written document that describes who would have access to the product, what type of protection they would have, and what procedures they would be using before using the product.


COST 5: Product Replacement and Recalls

A product recall is one of the most expensive forms of product safety compliance, as it requires a company to stop selling a current product and replace it with a different one. Product recalls are among the most serious issues that companies face, especially when they are dealing with hazardous materials. In this case, companies must invest in extensive testing in order to determine whether or not the materials are safe for use.


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COST 6: Deal with Non-compliant Items

The process of addressing non-compliant items can be a bit dangerous. Furthermore, it is not always perfectly clear whether an item is safe or not. Since non-compliant items are often sold in the marketplace before the actual test results come in, the recall may be too late for the manufacturer to address this issue.


COST 7: Data Collection, Documentation, and Reporting 

More and more companies are finding that they need to spend money on product safety compliance as they attempt to meet a new set of regulations. The process of taking data from items that have been tested or purchased in order to document their safety compliance. Through the data, a company is able to determine if items are safe or not. If an item passes the safety test, it goes through the final stage where it is labeled “safe”. If an item does not pass the safety test, it is deemed null and must be recalled for correction. It is important for products to be labeled “safe” in order for them to remain in the marketplace.


COST 8: Short-Term Process Improvements

This process deals with changes that are made in order to keep a product compliant. If an item is being recalled, the changes may be permanent or temporary. This change allows companies to remain compliant and continue selling items to consumers. Companies will have a more efficient way of handling problems by implementing these changes.


COST 9: Long Term Processes

This long-term process deals with repairing and improving the system so that it can avoid the same problems in the future. Companies must make sure that they are following all of the regulations and laws when dealing with product safety issues. It is important to address these issues in a timely manner so that a company can avoid any lawsuits or further recall notices.


COST 10: Product Recall Administration

Product recall management is important for keeping costs down by preventing widespread recalls from occurring. It also serves to minimize brand damage. A product recall management program can be established with the help of a consultant.


How Product Life Cycle Management Software Can Help Manufacturers with The Cost of Compliance

Product life cycle management (PLM) is one of today’s most popular tools for creating products and managing manufacturing companies. PLM enables manufacturers to improve quality and reduce costs by providing a single view of their supply chain, from design to production.

The tool also helps firms manage the physical lifecycle of each product, including its storage, inventory control, and distribution. It helps firms comply with regulations set forth by regulatory committees or maintain proper records for trade compliance purposes.

The Product Lifecycle Management software for the manufacturing industry shows a complete view of your supply chain, from design to production. The graphical interface is taken care of by the software and gives an overview of what you are working on. The timing and costing in the product life cycle management software make it easy for all departments, from design through manufacturing to distribution, to work in tandem as one integrated entity.


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What Does Product Life Cycle Management Software Offer? 

  1. Consolidated documentation reduces the amount of paperwork created, stored, retrieved, and searched for during the various production stages.
  2. Automation of issues related to non-compliance of regulatory bodies will result in a real-time warning when compliance is getting delayed. Additionally, it will also provide the ability to track what has already been done. And what still needs to be completed.
  3. The ability to create custom checklists and create automation rules during the product development stage makes it possible for an organization to push and pull information from various PLM systems with ease, along with the ability to consolidate the same.
  4. Reduce rework and waste in the supply chain and throughout the product lifecycle.
  5. Improve usability, and quality, and reduce manufacturing errors
  6. Improve efficiency and productivity (reduce the cost of goods).
  7. Reduce risk by getting a better understanding of your company’s supply chain.


Reduce Cost Compliance with KloudPLM

The Industry’s First Comprehensive Cloud First Product Lifecycle Management Platform, KloudPLM, offers a wide range of features for compliance and regulation implementation.

  1. KloudPLM will help you reduce risk and complaints by helping you improve all the processes that comprise your quality management and compliance implementation.
  2. Implement closed-loop quality processes through design, inventory, manufacturing, sales, and service to ensure quick detection and resolution of any quality and compliance issues.
  3. Detailed issue capturing helps reduce risk by improving product quality by allowing access to all the necessary information across the product life cycle.
  4. Integrated issue management and resolution: Respond to issues quickly and prevent them from recurring. KloudPLM integrates product development according to regulations, compliance implementation, enterprise change, and document management. This helps you enforce closed-loop corrective action processes.

KloudPLM provides seamless integration concerning quality processes, product compliance, product regulations, product realization, and client complaints. Thus, KloudPLM provides an easy-to-operate quality and compliance management system that includes;

  • Detailed problem identification
  • Easy issue analysis
  • Improvement track
  • The standard-issue resolution process
  • Flexible and simplified approvals
  • Corrective action preventive action (CAPA)

Start your new journey of modernized product development with KloudPLM. Schedule a demo today.

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