There will always be a need to comply with local laws and regulations. Always. So let’s get to it.

Expounding the Pounding

Regulations abound (especially in Europe), and the products/services you sell and buy need to conform to all of them. These regulations relate to the materials, production methods, human resources, carbon and waste production, storage and transport, packaging, and even labelling.

And the severity of non-compliance can be severe. For each violation, your punishment for violations can range from fines to seizure to criminal charges! Even for the most innocuous aspect of product management: labelling. If the labels are incomplete, you can be fined. If the labels are not in the required language, your products can be seized and held indefinitely or destroyed. And if the labels are intentionally inaccurate, because you are trying to skirt regulatory requirements by not reformulating your production to exclude banned materials or meet the maximums for potentially dangerous materials, you can be criminally charged.

Moreover, regulations and requirements can be different in every single country you source from, ship through, and ship to and your organization needs to be aware of all of them so a “gotcha” doesn’t put your organization in a difficult situation without supply but with regulators breathing down your neck and threatening large fines, product destruction, and/or criminal charges.

Reducing the Risk

There’s no easy, or even, complete answer here, but what you need to build is:

Compliance 360.

You need a solution that

1. tracks all of the relevant human resources, health & safety, production/(hazardous) material utilization, carbon/GHG production, packaging, labelling, and transport regulations for each country you build in, ship through, and sell in that can also
2. match that regulation to each product/component/material you buy so that you can ensure that your supplier, carrier, or risk management department is aware of, and conforms to, the regulations as appropriate

This is much easier said than done. This requires

1. providers who track the appropriate regulations in each country and how they translate into specific requirements that companies need to meet
2. the capability to merge all of this regulatory insight into a common framework
   (often through a specialized platform)
3. the capability to match these regulatory requirements to specific products … and this requires a system that maintains complete harmonized product (and product related) information from design and manufacturing through packaging and labelling to transport and storage along with countries of production/transport/sales to match to the regulations. Guess what? Unless you’ve harmonized all of this data into a common, integrated data model for multi-level planning (as you would if you integrated direct sourcing with supply chain and logistics, as per the series the doctor and Bob Ferrari did on why Direct Sourcing needs to be integrated with Supply Chain, summarized in Part 7), your chances of matching requirements to products are quite low. Not good!

This is one of the most extensive, and most involved risks, because there can be dozens to hundreds of requirements you need to adhere to in each region in which you do business, depending on the product (line) in question, but it is one you need to get a good grip on or supply assurance is going to become significantly harder as time goes on.