Category Archives: Compliance

Have You Extended Your REACH?

If you haven’t, you might find that you’re shut out of European markets in 2010. You see, when January, only two short months away, comes around, another 15 substances must be reported under REACH. Furthermore, the EU is planning to add substances to the list every six months, possibly until the entire SIN List of 356 chemicals that have been identified as Substances of Very High Concern is on the table. If you can’t complete the necessary reporting, you can’t import into, manufacture in, or export from the EU. Right now, you just have 15 restricted substances that require mandatory reporting but the following 15 substances identified on the ECHA website will soon be restricted and require mandatory reporting as well.

Are you ready?

And are you ready for the Global RoHS initiatives? China, Japan, California, etc. … it’s not just the EU anymore.

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Some Tips on Formulating an FCPA Compliance Effort

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A recent article in CFO that noted that the “Feds (are) Oil(ing) Up Their Antibribery Machine” had some great tips for those of you looking to put a rigorous FCPA compliance effort in place — and minimize the chances that you, like Mr. David M. Pillor of Invision, will be slapped with a 65,000 civil penalty merely for being in charge of internal controls that failed to spot violations. (That’s right … you don’t even have to make, approve, or be aware of bribes to be charged! If you’re responsible for financials or compliance, and if the financials are found to be incorrect or your company found to be in non-compliance, thanks to recent acts, like SarBox, you can be prosecuted civilly.)

So if you want to avoid a dire, and expensive fate, be sure that your rigorous efforts to be compliant include:

  • background checks on business partners and third parties
  • a code of conduct for employees, suppliers, & agents
  • compliance training
  • effective internal controls
  • record-keeping systems that properly account for all overseas transactions
  • a hotline for whistle-blowers to anonymously report possible violations

And if a possible violation is discovered, working with your legal counsel, voluntarily disclose the violation as soon as possible. This will allow you to distance yourself from the responsible parties as soon as possible, avoid prosecution, and mitigate penalties. Considering that you could be slammed with a 1.6 Billion settlement, like Siemens AG, if the Feds find violations and prosecute, you want to do everything you can to minimize damages.

Corpedia’s Top Five Compliance Measures for Surviving Tough Economic Times

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Corpedia, a consulting and e-learning provider of compliance and ethics solutions and training, recently released its recommendations on what compliance measures companies can take to weather the storm, as reported in a recent article in Supply and Demand Chain Executive on “Surviving Tough Economic Times”.

Since the Justice Department is already investigating 120 companies for violations of the FPCA (Foreign Corrupt Practices Act), up from 100 last year, and the year is only half over, you should make sure you are heeding these points. The government needs money too … and if they think they can fine you millions, or billions, of dollars … now is the time they’re going to be banging on your door.

The five measures, which are very common-sense and easy to implement, are the following:

  • don’t wait until it’s too late
    even if you don’t have the budget for everything you’d like to do, you can start designing your program now and identify process improvements to improve your state of operations and implement your program incrementally (and if you happen to be unknowingly violating an act, the government will be a lot more lenient if they see you were taking measures to prevent accidental violations)
  • articulate expectations
    unless you effectively communicate a clear, comprehensive code of conduct, and reinforce desired behavior from time to time, you can’t expect that your employees will always know what to do
  • you can’t run or hide … so don’t try
    you must be organized, transparent, and accountable … because even if you have nothing to hide, you’ll look like you do … and that alone could trigger a costly investigation
  • work out the old, bring in the new
    review and modify existing policies and procedures as necessary and create new controls to insure they are followed
  • utilize available knowledge
    Take advantage of available research that sheds light on others’ successes and failures and outlines the framework for a bulletproof compliance program

Roll Out to Your Community with RollStream

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RollStream (acquired by GXS) is a new entrant to the emerging SIM-centric (Supplier Information Management – centric) subspace of Supply Chain Management that has taken a Web 2.0 inspired approach to its solution. At the core of its “Enterprise Community Management” solution is the belief that collaboration is the missing critical component in many of today’s supplier management solutions.

As a result, when it comes to ease of use and supplier on-boarding, it has developed one of the best, as well as one of the easiest to use, solutions for Supplier Information Management as many people today are familiar and comfortable with the Web 2.0 and social network like interfaces it has developed for supplier, partner, and contact profile management as well as for survey creation and information gathering. It’s scalability and ease of use has allowed one of its largest customers to on-board their roughly 13,000 suppliers and manage roughly 150,000 points of contact. The solution has assisted this customer in credentials capture, compliance, training and enablement, and new technology rollout.

But, as you know, SIM is only the first component of Enterprise Management, whether you call it Supplier Central (CVM Solutions), Extended Enterprise Management (Hiperos), or Enterprise Community Management. There’s also, depending upon your outlook, risk, performance, compliance, sustainability, diversity, dispute resolution, initiative management, and collaboration for innovation.

The RollStream solution addresses, in its own words, basic Supplier Information Management in the form of on-boarding and profile management, Dispute Resolution by way of on-line collaboration, Compliance and Risk Management by way of task-managed projects and web surveys, and Performance and Feedback Management by way of a workflow-based community dashboard and collaborative scorecarding process.

The Supplier Information Management component, which is what they started with, is mature, and as I said above, one of the best and easiest to use solutions that you’re going to find for SIM on the market today, used by a number of global Fortune 3000’s to manage supplier bases of over 10,000 suppliers and 100,000 contacts in a number of verticals. The collaboration components, with complete conversation and audit trails, simplify the online dispute resolution process and make it much friendlier than the alternatives.

The Performance and Feedback Management is good for simple surveys and on-line discussions, but don’t expect to be able to build any complex scorecards within the system at this point in time. If you have a solution that generates your scorecards as spreadsheets or PDFs, you can automate the retrieval and attachment of the scorecards within the platform and then create tasks around the discussion of the scorecards with the relevant individuals at each of your suppliers, which could be quite helpful, but you can’t yet build complex scorecards within the system or attach comments to individual sections. This should not be an issue for most companies in most verticals, but if you are very metric-focussed or use collaborative scorecarding and need to retrieve inputs as well as send them and integrate all of the scorecards into a common collaboration tool, you’ll need to evaluate the solution carefully.

This brings us to the last component — Compliance, Risk, and Sustainability Initiative Management. Their solution, which allows you to build as many virtual sub-communities as you want within the application, and then create as many task-managed projects around those communities as you want, is quite powerful in its simplicity when it comes to the management of these projects, but most projects will require data collection and the degree of data collection will determine its fit within your organization. If you primarily do indirect sourcing or simple commodity sourcing, the solution should be more than enough for your needs as most of the regulatory requirements can be captured in simple yes-no questions. But if you do direct manufacturing, where you have to deal with RoHS, REACH, and or WEEE, the simple survey-monkey style web-form survey capability isn’t going to cut it when you have to capture not only whether or not thousands of chemicals are present in your products, but to what extent they are present. Similarly, if you have adopted, or foresee the need to adopt, complex carbon measurement calculations which depend not only on if-then logic (which the forms support) but also complex built-in calculations, then you’ll find their solution is not ready for prime time.

So what’s the verdict? I think many companies will find that the solution meets their SIM-Centric Enterprise Community Management needs, especially when you consider that even the best solution will take at least a year to roll-out to thousands of suppliers and get them proficient on the solution. In that timeframe, you’ll see more capability added to the Performance Management and Compliance, Risk, and Sustainability Management components as RollStream continues to implement their solution roadmap.

Spreadsheets are not a Global Trade Management Solution

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Hiring expert compliance professionals and sending them to training seminars and conferences to keep them on their edge is laudable, but it’s not a solution if they return to a workplace that relies on the totally inadequate compliance tool known as the spreadsheet. Spreadsheets, designed for simple accounting calculations, might be reasonable for forecasting and budgeting, but they were never designed for applications that required advanced data management activities, including trade compliance demands, especially when the mere act of sorting can corrupt all the data in the spreadsheet.

That’s why I was very pleased to see these facts echoed in a recent Industry Week article on Global Trade Management (GTM) technology that was “a call to action to importers and exporters”. Good GTM, which delivers tangible ROI, enhanced revenue, and more efficient internal processes, overcomes the failings of spreadsheets and greatly reduces the risks of non-compliance (which can include massive fines and penalties).

Furthermore, GTM can allow importers to maintain more control over the process. They can verify classifications, insure filings are made on time, and track VAT that your company may be eligible to reclaim. GTM also gives importers and exporters:

  • advanced cost-estimation capabilities,
  • a complete archive of electronic filings at their fingertips,
  • automated transaction processing, and
  • true global visibility, where real-time visibility and exception monitoring allows problems to be solved before they become catastrophic.

For more information on the importance of global visibility, see the Illumination on why you need trade visibility and the white paper on why you need to close the loop with entry visibility.