Global supply chains and the role of procurement are becoming more complex every day. With increased complexity comes increased risk from a host of sources, including sanctions, human trafficking, cyber security, and sustainability. That’s why it is important to maintain a compliant supply chain. It used to be that companies only needed to satisfy regulators. No more. Now you need to also satisfy investors, suppliers, partners, customers, and even the media. And you need to keep it up: compliance is an ongoing job vs. a one-time task.
Beyond Brand Protection
The value of your brand and its influence on customers, prospects, and the wider marketplace is key. Knowing who you’re doing business with – and ensuring that your supply chain is compliant with both regulations and market expectations and free of misconduct, such as modern slavery and human trafficking – isn’t just a necessity; it’s good for the bottom line.
In addition, the lines are blurring between the compliance and procurement functions within organizations. Earlier this year, Dun & Bradstreet conducted a sentiment report surveying 600+ compliance and procurement professionals. The convergence between the functions exists when considering regulations, artificial intelligence and resources. In addition, the two functional areas shared the same top concerns:
- Customer/vendor due diligence
- Internal training to ensure understanding of regulations
- Ongoing supplier and vendor monitoring
- Implementing a risk-based approach
In our day to day conversations, these concerns are tied closely together with the desire to create a risk-based program that allows for increased screening before onboarding an entity based on the corporation’s defined criteria.
Managing and Mitigating Supply Chain Risk
As supply chains become longer and more global, they are exposed to a wider array of risks, such as Brexit, trade wars, bankruptcies, cyber security, extreme weather, and volatile foreign exchange markets.
That makes mitigating supply chain risk much more complex, but it can be done – if companies are willing to understand what’s really going on with their suppliers, versus what they’d like to think. There’s a trend toward visibility and transparency into the supply chain that is driving change, and organizations need to be vigilant and monitor risk using accurate, timely data on exactly who is behind the businesses they work with.
We’ve compiled a list of seven steps you can take to become compliant, along with links to a report and webinar created in collaboration with Supply Management Insider, containing solid tips for successful supply chain compliance.
Seven Steps to Supply Chain Compliance
- Recognize that the roles of procurement and compliance are converging and encourage collaboration between departments to gain efficiencies.
- Go beyond regulatory compliance and ask yourself: what are our customers, partners and investors’ expectations, and are we meeting them? While a supplier may pass the regulatory checks and balances, do they align to your overall brand and what your customers expect from you? Understanding supplier attributes like diversity indicators are worth considering.
- Adopt a common “Know Your Vendor” (KYV) process across the organization. That process would include ensuring the corporate policies and procedures for selecting and onboarding suppliers is understood and consistent across the various silos within an organization.
- Work with a third-party data provider to implement a common underlying data structure and ensure that you’re collecting all the relevant data.
- Make sure the data is accurate and up to date. Errors and outdated information can cost you time and money. They can also damage your company’s reputation.
- Develop deep, reliable global data to help you verify your suppliers are doing business ethically and mitigate the risk that, for example, forced labor is being used in your supply chain.
- Use data analytics to manage supply chain risk, identify potential areas of exposure, and protect your company’s reputation.