Managing supply chain compliance and ensuring procurement best practices is hugely important. It can be complex though, especially when you have a large or global supply chain and intricate production flow involving multiple stages and business partners.
Risks relating to the environment, security, finances, health, safety and more can all be realised at any stage of your supply chain, jeopardising your compliance.
But when you take steps to implement a thorough strategy for supply chain risk management, you can protect your business and compliance status. And this is made easier with a robust supply chain compliance system.
End-to-end risk management and regulatory compliance is a big task, but supply chain compliance systems bring together tools, processes and personnel to simplify the challenge
Compliance management systems (CMS) can help you select contractors who share your commitment to risk management rather than threatening your status or daily operations. They can give you greater visibility into your supply chain operations and the partners involved, and they can provide a centralised system of support and data storage.
We’ve compiled everything you need to know about supply chain compliance systems, why you need one, and how you can build a robust system.
What Is a Supply Chain Compliance System?
A supply chain compliance system simply refers to the tools and processes you use to monitor, manage and mitigate risks throughout your product flow.
Your organisation’s supply chain compliance system can consist of internal processes, integrated tools, and a centralised system to store and manage compliance data.
But the specifics of your system will depend on your business’s operations and the regulatory requirements you’re obliged to meet.
Why You Need an Effective Compliance Management System (CMS)
Without a supply chain compliance system in place, you’re likely to be blindsided by active threats to your operations and compliance status. It can be difficult to identify issues and even harder to respond to them effectively.
And when risks are realised, they can affect your organisation’s compliance levels as well as your reputation, productivity and profitability. You could experience serious reputational damage, a drop in customer satisfaction and loyalty, and even face legal liability.
But when you have a robust system in place for monitoring, identifying and responding to supply chain risks, you can anticipate threats and resolve them quickly. You’ll reduce risks and compliance issues and ensure efficient governance of supply chain operations.
How to Build a Robust Supply Chain Compliance System
Your compliance management system should be tailored to the needs of your business. The processes, responsibilities, tools and resources you use to mitigate compliance risks will depend on the size and structure of your organisation and your supply chain operations.
Typical elements of a compliance system include risk assessments, policies and procedures, accreditation requirements, and your company’s code of conduct. You’ll also need to identify and utilise tools that support supplier and compliance monitoring, enabling you to take swift action if any issues arise.
So when it comes to building a robust supply chain compliance system, start by thinking about what your business needs. Then consider what your system needs to achieve and which tools you can take advantage of to minimise the stress, time, money and effort required to ensure compliance.
Make Sure You Understand What Your System Needs to Achieve
Your compliance system should aim to:
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- Enable Greater Visibility Into Supply Chain Operations — With greater visibility, achieving and maintaining compliance becomes a more straightforward process. You can remove the uncertainty surrounding the compliance of your supply chain operations and business partners and gain clarity on compliance issues.
- Prevent Misconduct within Your Own Business and By Your Business Partners — Part of your system should focus on ensuring that those involved in your supply chain understand how to remain compliant and the importance of meeting regulatory requirements. By making sure your entire supply chain is on board with your efforts to meet best practices, you can create a culture that prevents misconduct.
- Identify Compliance Issues Quickly So That You Can Respond without Delay — It’s vital that you’re able to identify and resolve risks as quickly as possible, so your CMS should lay out processes for monitoring your supply chain compliance. For example, by requiring contractors to hold valid accreditation, you can ensure that an external assessor regularly reviews their operations. Or by using tools that enable automated notifications of lapses in compliance, you can respond rapidly.
- Support Continuous Supply Chain Risk Management Improvements — Whether you need to introduce new processes, more advanced tools or specialist personnel to your compliance management system, you should be able to do so without too much difficulty. Your compliance system should be somewhat dynamic and scalable as your risk management and compliance approach will need to evolve with your business.
Take Advantage of Tools and Resources within Your Compliance System
Your system should include a set of standardised processes and it should take advantage of purpose-built tools, resources and schemes for supply chain management, like those below:
- CHAS Client Portal — This online gateway offers a simplified tool for responsible supply chain management, and it’s completely free to use. You’ll have prequalified contractors at your fingertips, all of whom will have demonstrated their commitment to the highest standards of risk management and supply chain compliance. Your portal will also provide an overview of your entire supply chain, making managing compliance easier. Rather than rifling through supplier related documents, you’ll be able to easily see which contractors are involved in your projects, which accreditations they hold, expiry dates and more.
- Accreditation Schemes — By requiring your contractors to hold accreditation, you can minimise risks throughout your supply chain and feel reassured that your business partners meet the highest industry standards. Accreditation schemes can also help you achieve, maintain and demonstrate internal compliance.
However you structure your CMS and whatever tools you use, your system should save you time, enable greater visibility over your entire supply chain, and simplify how you manage compliance.
Sign up for a free CHAS Client membership and gain access to supply chain management and procurement tools that can help you create a robust compliance management system.
