Analyst Insight: In order to support their sustainability efforts, industrial companies must learn to overcome three interconnected challenges: driving sustainability, ensuring compliance and fostering innovation. The digital thread, a consistent, seamless flow of information across the product lifecycle, can make it possible for companies to understand the impact their decision-making has on green initiatives, and empower them to use that data to make better decisions.

At the core of sustainability is data — how it’s captured, connected and leveraged. From enhancing sustainability initiatives to mitigating regulatory risks and improving cross-functional collaboration, the digital thread provides an authoritative source of truth that connects disparate data models and ensures visibility across the product design, supply chain and manufacturing lifecycle.

Data-Driven Decision Making

Sustainability has evolved from a corporate responsibility initiative to a business imperative – one whose value is understood by industrial companies across the globe. In fact, some consumers prioritize sustainability in their purchasing decisions, with many willing to pay a premium for environmentally responsible products. For companies, sustainability isn’t just about meeting consumer expectations; it’s also about driving profitability, efficiency and long-term resilience.

In the 2025 research report, “The Future of Product Lifecycle Management and Digital Engineering,” an overwhelming majority of respondents (92%) agreed that progress in sustainability is key to their organization’s economic success.

That said, achieving sustainability goals requires more than good intentions. Businesses must identify the correct sustainability priorities based on their data; track progress and adapt strategies in real-time, and foster collaboration with suppliers, partners, and customers across the supply chain.

Traditional approaches to sustainability often rely on static digitized documents stored in fragmented systems, making it difficult to analyze them or the data (and insights) they contain. By integrating sustainability data into a digital thread, organizations can capture, monitor and analyze key metrics, including carbon footprint, material waste, and energy consumption. This shift from digitized documents to dynamic data enables leaders to make informed choices, measure progress effectively, and optimize product designs for sustainability.

Consider a cookie manufacturer looking to reduce its environmental impact. Should it prioritize compostable packaging, transition to an electric delivery fleet, or reduce its factory’s energy consumption? By leveraging a digital thread, the company can compare sustainability metrics, assess trade-offs, and make data-driven decisions that align with both regulatory requirements and company goals.

End-to-End Traceability

In industries such as aerospace, automotive, or medical device development, compliance is not optional. Regulatory bodies require organizations to maintain meticulous records of product changes, testing procedures, and material compositions. Failure to comply can result in costly fines, legal risks, and reputational damage.

Bidirectional traceability, enabled by a consistent digital thread, makes regulatory compliance much easier for industrial companies. It allows them to track product data both upstream (back to design) and downstream (through supply chain, production, distribution and maintenance). This level of traceability ensures that:

• Regulatory requirements are met at every stage of the product lifecycle;

• Quality control processes are streamlined, reducing defects and rework;

• Recalls can be managed efficiently by pinpointing the exact source of failure, and

• A closed-loop feedback system between manufacturing and engineering can be established, improving product reliability.

In the medical device industry, for example, even a minor alteration in material composition can have significant implications for patient safety. With a digital thread, companies can document every decision, ensure compliance, and quickly trace the root cause of failures to prevent widespread recalls. By integrating compliance data across a digital thread managed by a product lifecycle management (PLM) platform, businesses can safeguard quality and maintain a proactive stance toward risk mitigation.

However, despite the recognized importance of a digital thread, in the 2025 research report, “The Future of Product Lifecycle Management and Digital Engineering,” respondents were asked if their company’s data or digital thread adequately supported relevant compliance initiatives at their organization. Only 37% of companies believed that their compliance initiatives were well supported, and almost 20% felt there was little to no support.

This data just goes to show that more work needs to be done within organizations to make their digital thread initiatives fully align with their compliance needs.

Fostering Seamless Collaboration

Innovation depends on breaking down organizational silos and enabling cross-functional collaboration. The digital thread facilitates this by providing seamless traceability across product-related data, ensuring that engineering, manufacturing and supply chain teams have access to the most up-to-date information, regardless of where it resides.

A key innovation enabler is the digital twin; a virtual representation of a product that evolves alongside its physical counterpart. The use of a digital twin can be tremendously useful in maintaining and improving sustainability initiatives. Digital twins allow companies to simulate product performance before manufacturing, track materials throughout the lifecycle to improve recyclability, and optimize maintenance strategies through predictive analytics

Returning to our cookie manufacturer example, the company may decide to transition to compostable packaging to support a green initiative. Using a digital twin, the business can verify that all packaging components and materials meet sustainability and compliance standards. Engineers can assess the impact of design choices on overall product performance, ensuring that changes enhance environmental benefits without compromising food safety or brand integrity.

A consistent digital thread can even enhance an industrial company’s collaboration by making it easier to share critical data with suppliers, partners, and regulatory bodies. It can help ensure that sustainability, compliance, and innovation initiatives are not pursued in isolation, but rather as part of a unified, strategic approach.

The digital thread is more than a technological upgrade; it’s a strategic enabler that empowers organizations to use data to understand the impact of specific decisions throughout the product design and manufacturing process. 

By incorporating a digital thread into their operations, industrial companies can transition from reactive decision-making to proactive strategy execution based on their data. This can help ensure they stay ahead of regulatory changes and support what actions make them more sustainable, living up to public and investor expectations around green initiatives, while improving their bottom line.