Firms today must have the ability to be compliant with numerous factors that were not present in the past. New compliance standards can have a high cost that would seemingly set a firm back financially. However, there are numerous advantages that come with compliance. Effective compliance strategies can be viewed as an investment in customer relations. What manufacturers need to realize is that through the efforts to be more compliant with regulatory standards, they can transform their manufacturing operations to be more competitive. In addition to the urgency surrounding compliance initiatives, when it comes to turning compliance into competitive strength, the highest-performing companies are transparently utilizing all of the company’s resources from C- level executives to compliance with suppliers. An effective team spearheading compliance objectives gives them quickly adapting leverage against competitors.
Best Manufacturing Compliance Practices
Cincom considers these to be an evolving set of best practices as they relate to manufacturers’ compliance strategies:
- Work with the Legal Department to have due diligence completed on your company’s potential exposure.
- Create a corporate-wide compliance team that includes C-level executives. This is another critical step in that for many manufacturers, the concept of how to change is just as important as the why of changing. The evolving best practices in this area include having a C-level executive spearhead the corporate-wide compliance team and staffing it with members of Engineering, Quality Assurance, Logistics, Marketing, and New Product Development.
- Qualify suppliers and validate their compliance plans. This is a critical step in the development of compliant supply-chain strategies and needs to be the focal point of the compliance teams’ efforts.
- Aggressively pursue a supply-chain material declaration process including the use of questionnaires to capture all needed information. This is another critical step as this requires manufacturers to be fully informed as to the substances in all of their products. Companies attaining best practices in this area are using material-declaration questionnaires and need to be tracked as part of a broader compliance management system.
- Perform statistically significant testing of incoming components and finished products to validate compliance efforts. The strategies defined by the corporate-wide compliance team need to center on sampling for each of the compliance substances and then tracking these results and publishing the results internally.
- Creating an enterprise quality and compliance management strategy differentiates those manufacturers that are attaining best practices. From the many steps toward creating internally synchronized, yet agile processes for staying in compliance, the highest-performing manufacturers are also aggressively pursuing an enterprise quality and compliance-management strategy to capture, organize, and quickly interpret and act on compliance-related knowledge gained.
Managing Customer Relationships to Compliance
Given the fact that most manufacturers are influenced by compliance standards relative to suppliers and channel partners, it’s a very good idea to share compliance statistics with your OEM and distribution customers. Companies attaining best practices in enterprise quality and compliance management practice sharing results extensively with all levels and types of customers. Consider this an investment in customer relationships and transparency of your operations aimed at serving them.
Compliance strategies are delivering stronger-than expected competitive advantages for those companies that are aggressively pursuing a company-wide compliance strategy. Compliance efforts pay off with competitive advantages that firms were not able to achieve in the past. Compliance strategies create innovation and new ways for a firm to operate which give opportunity for the firm to better adapt to the marketplace and better serve its customers. The competitive benefits of compliance are driving these companies to attain greater levels of inter-process integration and use investments to take on the more difficult integration and process redefinition tasks.
This is an edited excerpt of “The High Costs of Non-Compliance for Manufacturers.” To read the full paper click here.