Trade Compliance

Last fall I introduced you to global trade data management (posts I and II), as well as Global Data Mining and the International Trade Bureau.

A few months ago, even though it only hit the on-line edition recently, the Supply Chain Management Review published Building a Strong Framework for Trade Compliance. In the article, they defined five components of trade compliance that can help companies operate efficiently in an international marketplace.

  • A Culture of Compliance
    The culture starts with management who must define internal controls, starting with a corporate policy issued by the chief executive. The policy must communicate management support, an insistence on the ethical and lawful transaction of business, and intolerance for willful disregard of regulatory requirements.
  • Risk Assessment
    Know where you could fall afoul of government regulations and develop methods for managing those risks. Start by conducting an internal assessment of your current compliance program. Evaluate each area of compliance to determine if its effective, documented, consistent, and, most important, current. No regulatory or business environment is static, so your compliance program will continually need to evolve.
  • Establishment of Control Activities
    Create policies, procedures, and organizational structures that will minimize risk to your company. The procedures must be effective, but should not be more burdensome then necessary. The goal is to achieve compliance, not bring operations to a halt. Document what you do, and do what you document, but keep it efficient.
  • Constant Communication
    Train, train, and train again. Higher awareness allows for effective maintenance of a compliant environment. Keep materials up to date and send communications to affected departments whenever regulations are amended.
  • Implementation of a Monitoring Program
    Institute an internal audit program and check your internal controls regularly for effectiveness. Develop a corrective-action program that you can implement when discrepancies are found.

Non-compliance can impact supply chain performance, bottom line profits, and, thanks to Sarbanes-Oxley, executive liability. Thus, its important to do everything you can to insure compliance.