What is regulatory compliance in supply chain?

Regulatory Compliance in Supply Chain refers to local, regional and/or national Government laws written to ensure companies are ethically procuring and manufacturing products.

The fundamental building blocks of any working logistics company aren’t made when the ground breaks on the first new warehouse, or when the deed is passed to renovate an existing workplace. It all starts and must continue with paperwork. There are methods and practices that have become standardised so much that they have been written into law, to ensure that companies are ensuring the best practices from all ends and will therefore lack the responsibility for pushing unsafe or unwarranted threats onto their consumers.

Regulations are the guidelines and legal constraints which keep businesses capable of operating in a safe and publicly approachable way. They are made to ensure safety and succinct uniformity across many different outfits across the supply chain, to make sure things stay smooth and keep moving. Which, unfortunately, means that when one end of the supply chain fails to comply with regulations, everyone down the chain gets affected.

You need to ensure that your company is never the weak link, or else it will be replaced in the chain. A company that fails to measure up to regulatory compliance will not last, even if it has the highest efficiency, because they legally will lose the ability to run. Understanding what regulations are required and which are necessary for your company, varies by industry and by the current state of the supply chain against world affairs.

Understand What You Do

Logistics companies are required to comply with regulations based on the field of their expertise, or the best match to it. Different authorities and governmental branches are in charge of different industries. The FDA’s Safety and Innovation Act is one such newer regulation which calls for greater assessment and controlled procurement of medical products. Any company dealing with medical products will have to fit into the standards set by this regulation to ensure the goods they handle or store maintain a certain quality, and that they continue to be sourced from reliable and trusted locations.

For this regulation, it’s about maintaining the supply chain integrity by ensuring goods are sourced from reliable and known outlets. That means that anywhere down the line, any company that fails to ensure these records and assessments are being kept up could be seen as culpable for infringing on that reliability, or that they might be replacing the known, regulated goods with unknown, unregulated goods that were in storage or undergoing previous transit. It’s these exceptional cases which require strict regulation to keep the supply chain together.

Every industry has different regulations that it must adhere to. If a logistics supplier manages multiple companies with different industrial needs, they will need to be compliant to all of the regulations that those companies also have to follow. Storing medical products with toxic chemical products, food products or electronics is inherently dangerous and requires a system of safe storage solutions in place, but those individual storage solutions also must adhere to the various industrial regulations set forth by governing bodies. Even if the storage areas are fully separated, they may not be allowed to be in the same building or take part in the same transportation methods.

Knowing where you fit, and in which supply chain is the first step. Then, find whatever authorities on regulations apply to your industry.

Location and Other Factors

Global authorities are few and their regulations are sweeping across all entities. These encompass simple measures of safety that are generally regarded as common-sense practices. However, each country operates with its own laws, within its own borders, that are tailored to fit their unique cultures and geographies. Countries with a higher dependence on rail travel may be incentivised or regulated toward prioritising freight train shipping and logistics, while countries that are more reliant on over-road transport will lean toward that.

Understand what local regulations are in place from your country to the county. These can change on a state-by-state level, which is fine if all your shipping and management is centralised to one state. But larger entities will need to comply with other regulations away from the home office. A company with warehouses in California and New Mexico will have to follow not only their home state regulations but the additionally any of the regulations that are different in New Mexico. It’s not based on where the paperwork is done, it’s based on where the products themselves are.

New concerns are always rising in shipping industries regarding carbon emissions and climate change which leads to further regulations regarding over-the-road transport. These regulations must be followed by the drivers but must be clearly enforced and controlled by the upper management as well.

Eventually, all the regulations that come up become more than just a few forms to file away and renew each year. It can be a full-time job just keeping track of which regulations a company is or isn’t compliant too. It might not even be on purpose. Even a few broken lights in a warehouse can lead to a fine from a regulatory breach. That’s why all the data needs to be compiled and sorted easily. Databanks and software solutions can be used to relieve some of the burden. As long as, again, they fall into certain regulations. Using dangerous software can likewise lead to dangerous results.

Staying Up-To-Date

Yesterday’s key supplier could be tomorrow’s trade war target. The sanctions against China put a lot of pressure on the global supply chain as so much manufacturing has been dependent on Chinese production and shipping to stay competitive. Now that reliance on Chinese goods has slowed and more regulations have been put in place to ensure products and materials are not being sourced from unethical, illegitimate sources, compliance falls on the domestic transport and logistics companies.

It’s important to know why these regulations have to be followed so closely. It’s all down to the customer. If they get tainted goods, the whole chain gets rattled. If compliance isn’t followed and regulations are broken, it’s the customers who suffer, and everyone up the chain suffers most from that.

Need some help?

uTenant have years of experience in supply chain and warehousing. We can assist you with your supply chain and operational requirements, including compliance and regulations.