Executive Briefings

Safety First: Seven Tips to Stay Supply Chain Compliant

Across industries, manufacturers pride themselves on quality but put top emphasis on reducing overall costs. And while these may seem like conflicting priorities, they can be explained by the concurrent demands of the internal economic drivers of an organization and the external customer requirements for quality and efficiency. As such, these priorities are here to stay, especially as the consumer becomes increasingly empowered and publicly vocal. In recent years, product quality and safety have become tightly integrated with traceability and supplier scorecards. But for manufacturers with foresight to proactively implement a comprehensive traceability system before a contamination problem occurs, there is an opportunity to provide their organizations with the ability to dramatically improve response time, implement corrective measures, and minimize repercussions to the bottom line and the brand, should a problem arise.

Safety First:  Seven Tips to Stay Supply Chain Compliant

A successful supply chain strategy is dependent upon implementing automated systems for tracking supplier credentials, certifications, and financial and operational performance. In what follows, I will outline some tips that can help your organization identify quality improvement and risk mitigation measures especially in the areas of regulatory compliance, accounts payable compliance and procurement compliance.

Regulatory Compliance: It goes without saying that some problems can't be predicted or even prevented beforehand.  Among these are issues stemming from environmental, political and socioeconomic events. To the unprepared, these issues can stop a supply chain in its tracks. However, having a plan in place for mitigating the risk of exposure to a variety of materials supply and supplier performance issues can make a significant difference in staying compliant and reducing risks.

From a regulatory compliance standpoint, there are a number of common strategies that can help keep an organization compliant while staying ahead of potential setbacks.  Note that the best long-term strategy is to design an approach that is scalable as well as proactive, with a commitment to invest in necessary processes and systems that will support your unique business needs before a crisis occurs.

Tip: Make sure your organization's traceability system allows for current and emerging global compliance regulations, meaning real-time tracking from supplier raw materials to finished product delivery.  Depending on your data systems, packaging equipment and processes, this can be a fairly expensive undertaking, especially when manufacturing and/or distribution is outsourced.  Fortunately, there are technology agnostic solutions available that can support item-, batch and lot level traceability, along with B2B communications to allow for chain of custody updates and management after your product has left your direct control.

"¢ Tip: Ensure someone in your organization is responsible for maintaining compliance requirements for varying and changing regulations such as serialization/ePedigree, RoHS, WEEE, REACH and others.  Some organizations also maintain a compliance committee with representation from all stakeholders to ensure upstream and downstream adherence to regulations and processes.

"¢ Tip: Have a compliance management system in place to ensure materials and supplier certifications are up to date.  Document management systems are becoming more commonplace with supply chain collaboration systems, which allows for supplier certifications to be stored and managed more quickly and easily.

Accounts Payable Compliance: The Sarbanes-Oxley (SOX) regulation of 2002 was enacted in the wake of the Enron scandal, and although there is still some debate as to its effectiveness in fraud prevention among other financial concerns, the guidelines remain relevant for reducing overall AP costs and errors.

For organizations looking to stay compliant in a way that provides increased efficiencies, automation should be a key consideration.  Not only does the automation of AP functions keep organizations compliant throughout invoicing, but it also provides the added benefit of complete traceability of every step and participant in each process to comply with audit requirements.  The intriguing fact is that despite the financial benefits beyond the avoidance of regulatory fines, adoption of AP automation lags.  Many companies still employ manual verification, which is not only labor intensive but costly in the form of delayed payment penalties and expensive errors.  One customer of ours had a decimal error in the supplier's favor to the tune of $36,000.  It was eventually resolved, but the time and cost required added up to another $10,000.

As your organization considers adopting automated AP functions, here are a couple quick tips for more seamless AP compliance:

"¢ Tip: Integrate your AP system with your procurement system to allow for automated matching.  Most AP automation systems can accommodate 3-way matching, with some now accommodating 4-way matching.

"¢ Tip: Make sure you're aware of manual AP processes that require additional oversight to correct errors or create a bottleneck when closing the books.  Some of our customers have experienced savings of up to 25 percent in transaction costs simply by increasing automation around management by exception.

Procurement Compliance: Even while retailers and manufacturers face a balancing act of increasing supply chain complexity and the need to reduce costs, there is still opportunity to improve visibility, collaboration and traceability systems and processes to meet both regulatory requirements and consumer demands.

If your company relies on third-party logistics providers to handle international transport of their products, be sure to take the following quick safety tips into consideration as you evaluate your procurement compliance strategies.

"¢ Tip: If your organization outsources any part of production internationally, make sure you employ a 3PL provider to mitigate risk, increase customer satisfaction, and reduce transportation costs.

"¢ Tip: Ensure that you have a system for tracking the variety of country regulations pertinent to your industry, and make sure that your products meet those standards.

Across the board, best practices for addressing the challenges that can come with an unpredictable global economy and complex regulation issues come down to planning ahead.  Whether your organization is automating processes, using workflows and score carding to ensure compliance or implementing complete track-and-trace systems, obtaining and managing the right data is critical to meeting a wide array of financial, environmental and traceability regulations.

Source: TAKE Solutions


Keywords: supply chain management, 3PL, third party logistics, logistics management, logistics services, global logistics, transportation management, sourcing solutions, supplier network, international trade

A successful supply chain strategy is dependent upon implementing automated systems for tracking supplier credentials, certifications, and financial and operational performance. In what follows, I will outline some tips that can help your organization identify quality improvement and risk mitigation measures especially in the areas of regulatory compliance, accounts payable compliance and procurement compliance.

Regulatory Compliance: It goes without saying that some problems can't be predicted or even prevented beforehand.  Among these are issues stemming from environmental, political and socioeconomic events. To the unprepared, these issues can stop a supply chain in its tracks. However, having a plan in place for mitigating the risk of exposure to a variety of materials supply and supplier performance issues can make a significant difference in staying compliant and reducing risks.

From a regulatory compliance standpoint, there are a number of common strategies that can help keep an organization compliant while staying ahead of potential setbacks.  Note that the best long-term strategy is to design an approach that is scalable as well as proactive, with a commitment to invest in necessary processes and systems that will support your unique business needs before a crisis occurs.

Tip: Make sure your organization's traceability system allows for current and emerging global compliance regulations, meaning real-time tracking from supplier raw materials to finished product delivery.  Depending on your data systems, packaging equipment and processes, this can be a fairly expensive undertaking, especially when manufacturing and/or distribution is outsourced.  Fortunately, there are technology agnostic solutions available that can support item-, batch and lot level traceability, along with B2B communications to allow for chain of custody updates and management after your product has left your direct control.

"¢ Tip: Ensure someone in your organization is responsible for maintaining compliance requirements for varying and changing regulations such as serialization/ePedigree, RoHS, WEEE, REACH and others.  Some organizations also maintain a compliance committee with representation from all stakeholders to ensure upstream and downstream adherence to regulations and processes.

"¢ Tip: Have a compliance management system in place to ensure materials and supplier certifications are up to date.  Document management systems are becoming more commonplace with supply chain collaboration systems, which allows for supplier certifications to be stored and managed more quickly and easily.

Accounts Payable Compliance: The Sarbanes-Oxley (SOX) regulation of 2002 was enacted in the wake of the Enron scandal, and although there is still some debate as to its effectiveness in fraud prevention among other financial concerns, the guidelines remain relevant for reducing overall AP costs and errors.

For organizations looking to stay compliant in a way that provides increased efficiencies, automation should be a key consideration.  Not only does the automation of AP functions keep organizations compliant throughout invoicing, but it also provides the added benefit of complete traceability of every step and participant in each process to comply with audit requirements.  The intriguing fact is that despite the financial benefits beyond the avoidance of regulatory fines, adoption of AP automation lags.  Many companies still employ manual verification, which is not only labor intensive but costly in the form of delayed payment penalties and expensive errors.  One customer of ours had a decimal error in the supplier's favor to the tune of $36,000.  It was eventually resolved, but the time and cost required added up to another $10,000.

As your organization considers adopting automated AP functions, here are a couple quick tips for more seamless AP compliance:

"¢ Tip: Integrate your AP system with your procurement system to allow for automated matching.  Most AP automation systems can accommodate 3-way matching, with some now accommodating 4-way matching.

"¢ Tip: Make sure you're aware of manual AP processes that require additional oversight to correct errors or create a bottleneck when closing the books.  Some of our customers have experienced savings of up to 25 percent in transaction costs simply by increasing automation around management by exception.

Procurement Compliance: Even while retailers and manufacturers face a balancing act of increasing supply chain complexity and the need to reduce costs, there is still opportunity to improve visibility, collaboration and traceability systems and processes to meet both regulatory requirements and consumer demands.

If your company relies on third-party logistics providers to handle international transport of their products, be sure to take the following quick safety tips into consideration as you evaluate your procurement compliance strategies.

"¢ Tip: If your organization outsources any part of production internationally, make sure you employ a 3PL provider to mitigate risk, increase customer satisfaction, and reduce transportation costs.

"¢ Tip: Ensure that you have a system for tracking the variety of country regulations pertinent to your industry, and make sure that your products meet those standards.

Across the board, best practices for addressing the challenges that can come with an unpredictable global economy and complex regulation issues come down to planning ahead.  Whether your organization is automating processes, using workflows and score carding to ensure compliance or implementing complete track-and-trace systems, obtaining and managing the right data is critical to meeting a wide array of financial, environmental and traceability regulations.

Source: TAKE Solutions


Keywords: supply chain management, 3PL, third party logistics, logistics management, logistics services, global logistics, transportation management, sourcing solutions, supplier network, international trade

Safety First:  Seven Tips to Stay Supply Chain Compliant