Know your vendors and apply consistent policies and procedures.
Compliance is an ongoing challenge for businesses today. True corporate responsibility involves more than just your products and internal operations; it’s incumbent upon you to ensure compliance across the supply chain. Lack of supplier insight can result in your organization violating government regulations; working with providers who don’t share your company values; or getting caught up in trade embargoes, sanctions, and labor and social justice issues.
As global supply chains and procurement scrutiny become more and more complex, risks increase and the range of stakeholders who demand a compliant supply chain has increased from simply regulators to investors, providers, partners, consumers, and the media. This means having a resilient supply chain strategy that includes visibility, transparency, clear communication, and collaboration.
The Costs of Non-Compliance
It’s all about mitigating risk. While the cost of compliance increases, non-compliance impacts finances as well as company reputation and ultimately your bottom line.
Risks are dynamic, affected by everything from climate change to human trafficking to politics. For example, governments may enact new laws that affect worker rights. Supply chain disruptions such as these may force a business to find new inshore or offshore suppliers, all of whom must be thoroughly vetted for compliance with regulatory and corporate standards.
Accurate data you can use to assess and mitigate risks up and down the supply chain is critical. Global businesses need complete supply chain visibility to fully understand activity and respond rapidly to risk and disruption. It’s important to remember that in today’s digital age, your company’s reputation can be undermined in mere minutes through negative social media activity.
Here’s how to get a handle on your supply chain to safeguard against unintended harm and brand risk.
Assess Your Current Process
Do you know how your current compliance process is working?
Businesses have a responsibility to ensure their products not only move smoothly through the entire supply chain network, but also that all vendors are in alignment.
A software solution for managing compliance should be centralized to make sure that vendors comply with your standards, provide the information needed for good decision-making, and enforce accountability for all suppliers throughout the entire supply chain. It must also enable continuous improvement programs and Good Manufacturing Practices (GMP) by helping to identify areas that need improvement and create and manage corrective action plans.
In addition, your supply chain processes should align with your customers’ expectations, and exception management should drive action to avoid fines and keep customer relationships positive. Your overall process should be efficient, with integration between trade compliances and supply chain processes.
If you do find gaps, inefficiencies, or negative impact in your supply chain processes, there are corrective actions that will go a long way to ensure compliance and mitigate risk.
Know Your Vendors to Ensure Supply Chain Compliance
A digital platform for centralizing compliance management simplifies the complexities of both supplier compliance and management of corporate responsibility. Real-time data on vendor compliance means decision-makers have the information they need, when they need it, to mitigate risks to both corporate responsibility and regulatory compliance.
In addition, your supply chain teams should work to improve transparency and threat-detection skills:
- Internally, it’s important to recognize and understand that the areas of compliance and procurement are converging. To gain efficiency and build resilience, collaboration between these departments should be encouraged.
- Accurate and up-to-date supplier data is required to verify all sources supplying raw materials, components or finished goods throughout all supply chain tiers.
- Erroneous or out-of-date data costs time and money, as well as posing risk to your reputation. Make sure all your data is accurate and timely.
- Verify your vendors are ethically and otherwise compliant by digging deep into reliable data to find vendors that fit your levels of certification. Maintain a vendor scorecard with profiles and performance statistics.
- Use advanced analytics to manage risk while predicting possible areas of exposure; scenarios and simulations can help to assess the impact of disruptions and recommend optimal alternatives.
Maintaining supply chain compliance also means going beyond mere regulatory compliance. It’s important to know the expectations of customers, investors, and partners and to look at brand alignment. Your suppliers may meet all regulatory requirements but have undesirable attributes like a poor human rights record. Having a 365-degree view of every vendor in your supply chain is imperative.
Watch this short video to quickly see how real-time vendor visibility enables full collaboration with the vendor ecosystem to promote discovery, evaluation and the communication of issues, thereby turning challenges into opportunities.