Category Archives: Compliance

Stay Hip with the Program with Hiperos

Last year, I told you how you could Get Hip with Hiperos, an “Extended Enterprise Management” platform that allows you to manage your risk, performance, compliance, sustainability, and supplier information through a single portal that they dubbed R3. Knowing that you can’t stay still in the quickly evolving supply chain space (and knowing that there were lots of point players with deeper solutions in each), they’ve been hard at work on R4 since that time. Last week, I had the chance to do a detailed review of R4, and am pleased to say that they did a great job and that a number of significant improvements in R4 greatly increases the value the solution offers.

In particular, five improvements in the Hiperos R4 platform commanded my attention:

  • In-Line Collaboration
    It’s a pretty simple idea, but the fact that you can associate a discussion thread with any element of the system is quite powerful. No longer do you have to search separate discussion forums or, even worse, try to track down out-of-system e-mails to find out what happened, or why part of a questionnaire is still blank, or why a template was modified.
  • New Workgroup Capability
    Hiperos recognized that true performance, compliance, and sustainability is collaborative, that single-directional Q&A is not collaboration, and built in a new discussion-based workgroup capability that lets buyers, suppliers, and other involved parties collaborate through a centralized, integrated environment.
  • The Program
    Since compliance, risk management, sustainability, and performance all revolve around programs designed to satisfy a regulatory initiative, emerging threat, or a green goal in the real world, in the Hiperos platform, it’s now abundantly clear that everything revolves around the program, which is very easy to define and manage. There are three ways to create a new program. Instantiate it from a template, load it from a properly structured Excel file, or define it from scratch in the tool — which will walk you through its creation step by step in a simple 7-step process. (Outline Detail, Organizational Units, Questions & Documenation Requirements, Dates, Individual Organizational Unit Reqirements, Measurements, and Reviewers.)
  • Out-of-the-Box Compliance Programs
    They have over 60 compliance templates built in, with heavy support for the finance (BITS, etc.) and health-care sectors (HIPAA, etc.).
  • Supplier Focus
    The supplier portal is almost as extensive as the buyer portal. Suppliers get their own set of dashboards, which they can do deep reporting dives into to find out where the measurements came from and how they were calculated, relationships, which they can manage, programs, which they can track, and communities. Truly enabling the supplier on your platform goes a long way towards supplier adoption. The only functionality suppliers don’t get is Supplier Information Management (SIM) and Application Administration (unless, of course, they buy the platform themselves).

The system also includes a number of other improvements, particular in the area of SIM (where you can capture a lot more information in out-of-the-box templates and define your own data elements to be tracked), reporting (where, in addition to dozens of reports in each area that you can use out of the box, you can also create your own reports using an improved wizard that walks you though a simple 6-step report definition process), and built-in KPI and SLA templates available for your use (there are over 6,000 that can be accessed system wide). Furthermore, the dashboards are more than just pretty gages, they also contain a quick summary of your action items (open evaluations, pending approvals, etc.); the relationships you are responsible for; and current risk assessments, in-process supplier profiles and compliance controls. And while other providers might still go deeper in specific areas (though none go deeper in all areas), the breath of integrated capabilities put them in a fairly exclusive club as I have only seen applications displaying a similar breadth and focus in enterprise management from Aravo, CVM Solutions, Rollstream, and, in the healthcare and agency management verticals, Vendormate and Decideware.

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RollStream: Steamrolling Your Compliance Problems into Submission

Just before the last summer solstice, I introduced you to Rollstream, a provider of a new SIM-centric Enterprise Community Management platform you can roll out to your community. Since then, they’ve been hard at work extending the capabilities of their Enterprise Community Management platform to be more useful and solve new problems.

Specifically, after listening to their customers, they decided to tackle the recurring problems of dispute management and compliance management, the latter of which is becoming a big issue with the Consumer Product Safety Improvement Act that came into effect on January 15. (That’s right, if you’re importing consumer goods you have to worry about the 10+2 security filing and CPSIA because violations of either can result in six figure plus fines. That’s right, a single violation of either can result in fines in excess of $100,000!)

Building on their new workspace capability that was launched last fall, which is conceptually similar to Salesforce Chatter, Microsoft Sharepoint, and business-focussed social networks like Linked-In (but implemented in a manner more conducive to their unique ECM platform), these new applications allow these often difficult and time-consuming problems to be solved simply and efficiently in a collaborative on-line environment where all parties can participate.

The workspaces capability, which builds on their base platform that allows you to manage suppliers and partners, their profiles, and associated data, attempts to bring together the best capabilities of modern social networking sites to allow you to hold, manage, and keep track of online conversations that, without the platform, would need to happen offline. It incorporates forum capabilities that allow for conversations, multimedia — which allows you to include audio and video for training purposes, survey capabilities, task and project driven event calendars, file management capabilities, and activity state tracking capabilities. It enhances the supplier on-boarding experience as your supplier can feel like it’s part of the initiative and interact with your global team on-line, 24 hours a day.

Based on this new workspace capability, Rollstream has built it’s new dispute resolution management solution, which will hit general release in a month or two. Based on the repeated observation from their customers that there are millions to be saved if shortages, damages, and mis-shipments can be identified immediately on delivery and resolutions reached before an overpayment is made, Rollstream has developed a collaborative environment where a warehouse worker can raise an issue as soon as it’s noticed and kick-start a resolution process before a payment is made. While it won’t solve all overpayment issues (since off-contract pricing — especially in “best price” contracts, prohibited substitutions, and downright fraud can be difficult to detect at time of delivery), a number of their customers expect to save a few Million a year simply by preventing overpayments for short, damaged, or incorrect shipments. The solution is built around a configurable dashboard that allows you to automatically sort and prioritize issues according to your rules (which can be based on status, merchandise disposition, issue date, and / or value and other attributes) which can be searched on any attribute. All affected parties can query, see, and comment on issues until an owner or administrator determines that the issue is resolved. It’s quite simple in implementation, but getting an open dialogue on the issue started as soon as possible is a powerful tool in the quest for a successful resolution.

The new compliance solution, which will be released next quarter, is based on their new Certificate Exchange Network which solves the major problem with most current compliance solutions. In most SIM platforms, a buyer ensures compliance by having their supplier upload their compliance certificate. This sounds fine until you realize that large CPG suppliers have thousands of customers that need compliance certificates for dozens, hundreds, and even thousands of SKUs. With a buyer-focussed solution, a supplier needs a team of data entry clerks who do nothing all day but upload copies of compliance certificates until they start the process all over again when the compliance certificates are renewed. To try and solve this problem, some larger CPG suppliers have created their own compliance certificate portals that their customers can log into to search for compliance certificates on their own, but since CPG suppliers are not software companies, this solution usually isn’t any better. Customers don’t always know the right SKU or search term, the supplier’s compliance team is not automatically notified when a certificate expires, and poor processes often result in compliance certificates not getting included in a timely fashion. Customers waste time, don’t find anything, and still have to contact the supplier team to help them find, or, in many cases, upload the certificate. And since not all suppliers have this portal, the customer still has to maintain their solution, download the certificate from the supplier, and include it in their own portal to track status, receive expiry notifications, and generate accurate reports.

In the Rollstream solution, it’s a certificate exchange network and a buyer can simultaneously see, and search, all certificates from all suppliers it does business with (who only have to set a flag to give a buyer access) and a supplier has single-point access to all buyers it does business with (to which it can push updates or check the existence of any compliance certificates a buyer might need to import the product into a country). Like the dispute resolution management solution, it’s a very simple solution built on profiles and dashboards that is easily searchable at the global, supplier, and item level across all company, product, and component fields. But sometimes, that’s what’s needed.

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Highlights from the Preliminary Draft Regulation for a California Cap-And-Trade program, Part II

On November 24, 2009, California released a preliminary draft regulation for a cap-and-trade program, in accordance with the California Global Warming Solutions Act of 2006 (AB 32) for public review and comment. At 132 pages, it was a doozy. Most likely in an effort to minimize comments, the deadline for comments on the initial draft is January 11, 2010.

In this post, we’re going to review some of the important points from sub-articles 8 through 15 and summarize the draft.

SubArticle 8: Distribution of Allowance Value

Allowance value is the economic worth of allowances issued. This section has not yet been drafted. However, the discussion of concept notes that some allocation of allowance value may be justified to compensate those disproportionately impacted by the imposition of the cap-and-trade program, that allowance value could be provided to the public in the form of per-capita rebates or cuts in individual income tax rates, and that allowance value could be applied to targeted public spending programs deemed necessary to achieve the requirements set forth in AB 32.

SubArticle 9: Auction Design and Mechanisms for Distributing Auction Proceeds

The Executive Officer may serve as auction operator or select an entity to serve as auction operator. Entities that want to participate in an auction, which will be announced with at least ninety days notice, must register at least thirty days in advance.

SubArticle 10: Free Allocation Mechanism

This section has not been drafted and does not include a discussion of concept.

SubArticle 11: Trading and Banking

Trading will be somewhat restricted and trades can not be made:

  • if they are to a party whose identity is not disclosed to the Executive Officer,
  • if they manipulate the value of a published market index,
  • if they corner or attempt to corner the market for a regulated instrument, or
  • if they are fraudulent or attempt to defraud another entity.

There will be a holding limit for each registrant or group of registrants. Furthermore, the number of compliance instruments a covered entity is allowed to own may be restricted to an amount sufficient to cover its emissions.

A GHG allowance may be held, or banked, for a future compliance period, subject to the holding limits.

SubArticle 12: Linkage to External Trading or Offset Crediting Systems

Compliance instruments issued by an external greenhouse gas emissions trading system (GHG ETS) or a greenhouse gas offset crediting system may be used to meet the requirements of this article only if the GHG ETS or GHG offset crediting system has been approved by the Board as provided in this sub-article. In other words, you might not be able to buy off the CCX (Chicago Climate Exchange), the ECX (European Climate Exchange), or the ACX (Australian Climate Exchange) to meet your requirements.

SubArticle 13: Offset Credits

An offset credit used for compliance purposes must represent a reduction or avoidance of GHG emissions or a GHG sequestration that is real, additional, quantifiable, permanent, verifiable and enforceable. An offset credit will (only) result from an approved offset quantification methodology that is standardized, replicable for any offset project of that type, and that includes plans for monitoring and reporting consistent with an offset project of that type. There are a number of requirements for the methodology, including the requirement that it ensure that the offset project type does not cause or contribute to adverse effects on human health or the environment.

SubArticle 14: Enforcement and Penalties

Penalties may be assessed pursuant to the Health and Safety Code, Section 41513.

SubArticle 15: Other Provisions

Each provision of the article is deemed severable.

 

So what does this mean? Essentially, if you produce, or cause the production of, CO2,

N2O,

CH4,

SF6,

HFCs,

PFCs, and

NF3, you will likely be affected by the act. If you produce less than 25,000 MTCO2e of GHG annually, you might be exempt until 2015, but as of January 1, 2015 you will be required to track, report, and independently verify your emissions. If you do not have enough allowances, you will have to either effect a trade, which will be restricted, try to acquire more through an auction, or try to get offset credits approved. If you are unable, you will be subject to as yet undefined penalties, which may be assessed pursuant to the Health and Safety Code, Section 41513.

In a nutshell, carbon cap and trade is coming, within 5 years and one month you will be affected, and if you’re not ready, it will cost you. How much will be determined as the key sections are finalized over the next six months. If you’re a major producer of GHG emissions in California, you should probably attend the workshop to discuss the proposal being held on December 14, 2009 to get a sense of what the final draft is likely to look like, as it will likely be law in less than two years.

Highlights from the Preliminary Draft Regulation for a California Cap-And-Trade program, Part I

On November 24, 2009, California released a preliminary draft regulation for a cap-and-trade program, in accordance with the California Global Warming Solutions Act of 2006 (AB 32) for public review and comment. At 132 pages, it was a doozy. Most likely in an effort to minimize comments, the deadline for comments on the initial draft is January 11, 2010. However, if you are really interested, a workshop to discuss the proposal is being held on December 14, 2009.

The goal for the cap-and-trade program, which is being designed to be consistent with the Western Climate Initiative, is to establish a cap covering at least 85% of California’s GHG emissions and allow trading to ensure cost-effective emission reductions. The goal is to start the program in 2012 with approximately 600 of the state’s largest GHG-emitting stationary sources (including industrial sources above 25,000 MTCO2e) and electricity imports and expand the program, which would include industrial sources under 25,000 MTCO2e and transportation fuels, until it covers up to 90% of the state’s GHG emissions.

The current design is slanting towards three compliance periods — 2012 to 2014, 2015 to 2017, and 2018 to 2020 — and sets a cap for each. In each compliance period, a covered entity would be expected to surrender a portion of their current emissions until the 2020 target, which is to reduce GHG emission to 1990 levels, is hit.

When passed, the act, which is currently 65 pages in length and broken into 15 sub-articles, will become sub-chapter 10 climate change, article 5, sections 95800 to 96550, title 17, of the California Code of Regulations. Here are some of the important points in sub-articles 3 to 7.

SubArticle 3: Applicability

The article applies to the following greenhouse gases:

CO2,

N2O,

CH4,

SF6,

HFCs,

PFCs, and

NF3.

The article applies to industrial entities with recognized GHG producing processes, electricity deliverers, transportation fuel deliverers, natural gas deliverers, and deliverers of natural gas liquids.

SubArticle 4: Compliance Instruments

The Executive Officer will create GHG allowances and offset credits. Each compliance instrument issues represents a limited authorization to emit up to one metric tone of CO2e.

SubArticle 5: Registration and Tracking System

Any entity covered as of January 1, 2012 must register by March 31, 2012. Any entity that becomes a covered entity must register within 90 days of becoming covered. An entity must maintain a current and valid registration in order to receive compliance instruments (allowances and offset credits).

SubArticle 6: California Greenhouse Gas Allowance Budgets

A base budget of allowances will be created for each fiscal year. These allowances may be adjusted to account for voluntary investment in renewable sources of electricity generation.

SubArticle 7: Surrender Requirements for Covered Entities

The program will require all annual emissions reports to be verified by an independent accredited verifier. It will also require the relevant records to be maintained for at least 10 years.

In part II, we’ll cover sub-articles 8 through 15 and summarize the draft.

SupplierSoft and its Supplier Process Management Solution

Last year, the Sourcing Maniacs introduced you to SupplierSoft, a provider of Supplier Data and Process Management solutions as part of their vendor tour.

SupplierSoft is a unique solution not only because they’re one of the few companies that understand the importance of centralizing all of the supplier process management solutions in a common platform (because supplier management is more than just supplier information management and supplier risk assessments, two prominent directions that their competitors are moving in), but because they decided to build their solution on the #1 CRM platform, SalesForce.com. As noted in the previous post, there is a lot of similarity between CRM and SRM, since both require extensive information management and the ability to capture and organize the data against relevant business processes.

Despite its recent market entry, the SupplierSoft platform is one of the most extensive Supplier Relationship Management (SRM) and Supplier Information Management (SIM) platforms on the market with supplier management, audit management, corrective action management, product compliance management (PCM), environmental compliance management (ECM), bill-of-material (BOM) analysis, and end-to-end reporting modules.

Over the past year, they have significantly extended their regulatory compliance capabilities in their PCM and ECM modules with extensive customizable BOM and (PDF & web) forms support. You can collect data at any level of the BOM, which rolls up into higher-level components and reports, which can then be drilled into as required. This allows you to focus only on exceptions and non-compliance, which is a must when you have thousands of parts that collectively use thousands of compounds that you need to track to maintain compliance with RoHS, WEEE, and REACH (which is about to get a lot more involved as it works its way through the SIN List). The solution allows you to define custom forms, with defaults, that allow you to only collect the regulatory data relevant to you, which can then be (automatically) customized (by the system) for each supplier with respect to the products they supply you (and the declared components and/or raw materials). SupplierSoft’s clients have found that by creating easy-to-use custom forms, they get better responses to their regulatory compliance efforts with less work on their part. In one customer’s case, the compliance manager was able to free up half the staff to work on initiatives more important than just ensuring the supplier provides all of the necessary information.

A good compliance management solution, which SupplierSoft provides, is becoming very important because:

  • it significantly reduces data collection, review, and reporting costs
    which are becoming more and more significant as a flurry of global regulations are forcing many companies to keep electronic mountains of data
  • it reduces time to market for new products
    which can get delayed due to regulatory reporting requirements if you can’t fill out all of the forms and provide the necessary supplier documentation on-demand
  • it reduces risk
    as manual processes can allow non-compliant raw materials and parts to “sneak” through, which can result in forced recall and significant revenue losses; it also provides you with a “due diligence” defense should you be accused of recklessness in your regulatory compliance efforts
  • it contributes to a 360° view of suppliers
    which is very important to your SPM program

So if you’re looking for an SRM solution and you’re looking at Aravo, CVM, or another big name SIM/SPM/SRM solutions vendor, you might want to give SupplierSoft a look as well. Like their competition, they’re currently getting a lot of attention from a couple of Fortune 100’s and I expect they’ll be getting more attention as time goes on. You won’t know what option is truly right for you unless you look at all of the relevant ones.

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