The importance of compliance is well known and understood. However, there are instances where loopholes in effective compliance enforcement have led to supply chain disasters thereby costing the company greatly. In order to delve further in the issue, it is imperative to address the basic question of what a ‘supply chain disaster’ actually is. To begin with, this can be described as a series of processes involved in the production.Hence, when there is a lapse in effective product delivery due to logistical issues, it translates to form a supply chain disaster. One instance was observed in the lead-up and during the Rio Olympics held in 2016. The glitch was in the slow Brazilian customs system. The issue is that imports are taxed at a high rate in Brazil aggravated by the fact that customs officers take the time to process the archaic paperwork. Hence, shipments were likely to be held up by standards and quality regulator Inmetro, by the agricultural department MAPA that demand articles of association among other paperwork, by health regulator Anvisa, and also by federal or state tax collectors. As supply chains invariably cross borders at some point, goods were often held up in customs. Shortcomings in effective compliance management, as well as the lack of coordination with officials, have proven to cause this phenomenon.
Why do Supply Chain Disasters occur?
Now that we have addressed the nature of supply chain disasters, one ought to answer the question as to why they occur. A recent report from the Supplier Ethical Data Exchange (Sedex) found inadequate controls and a lack of compliance with both local and international law among companies doing business in Mexico, Brazil, Colombia, and Peru. Sedex was of the view that the supply chain management in these countries is falling short in meeting the prescribed standards on the environment, health, and safety. CFO of Global Chain opines that the primary reason why supply chain disruptions are still so common among businesses point to their increasing complexity in the present day. However, the consequences of a faulty supply chain management can include regulatory fines, operational losses, reduced market position, reputation and brand damage, and legal action. But, such slaps on the wrist can be avoided by taking the necessary steps to ensure that compliance requirements are met with.
Features of robust compliance system
The definitive step in this regard is to set up a fault proof compliance system. There are certain features that set apart a robust compliance system from the rest. They are;
In order to mitigate Supply Chain Disasters, Your auditing system should allow for both internal audits and external audits from multiple sources.
Risk Assessment and Notifications
To make your auditing process efficient, ensure that the software you use allows for risk levels to be assigned to each and every area and then sorted by priority.
Simple, Real-Time, Mobile Assessments
Comprehensive compliance should include a simple-to-use mobile system that allows consistent audit that is easy to access and reports issues in real-time.
Collaborative Corrective Action Management
While undertaking the process of supply chain management, The communication between the auditor and facility must be clear and effective while resolving issues.