Complex manufacturers face mounting pressure to showcase due diligence in their compliance efforts. In an Assent report, "Supply Chain Sustainability in 2023: Evaluating Program Maturity in Complex Manufacturing," findings analyze how companies are progressing toward achieving supply chain sustainability. The analysis showed that 70% of companies with mature supply chain sustainability management programs have supplier and part-level data connected across programs. Later-stage program maturity, with connected data, is the key to greater transparency and visibility in the supply chain.
Centralizing Materials Compliance for Greater Efficiency
Complex manufacturing companies are often made up of multiple businesses or product groups, and each of these groups may run its own product compliance programs. While this structure may be practical for compliance topics that require specific product performance knowledge, like electrical safety, it may not be the best approach for less function-specific composition regulations like EU REACH, which include a heavy supplier-engagement component.
Separately each division managing supplier-provided compliance data can create inefficiencies and lead to supplier fatigue. For example, a company with a lighting division and a motors division may share some common suppliers but operate their compliance programs, including materials compliance, separate from each other. Besides being a waste of resources, it can frustrate suppliers as they receive multiple requests for the same information from the same company.
The solution is to create a corporate-level materials compliance program. Creating one consistent program to address product composition requirements specifically will eliminate duplicate efforts and strengthen supplier relationships.
Building an Effective Compliance Framework
An effective framework for your product compliance program is one key way to boost the transparency of your supply chain. To get there, focus on three main areas:
First, you need to define your expectations for your suppliers. Lay out a clear set of requirements, often in the form of a restricted materials policy or specification that lets suppliers know what you expect regarding the materials you purchase. Be sure to include requirements for suppliers in this policy, such as the requirement to provide material declarations.
Second, the policy should be built into legal obligations. Incorporate these policies into supplier-facing documents like Purchase Terms & Conditions or Supplier Code of Conduct. Likewise, incorporate it into supplier selection, onboarding processes, change management, and drawings. Suppliers are now obligated to meet these policies or face the consequences.
Third, hold suppliers accountable by including materials compliance performance in your supplier management program. Many manufacturers think that if their suppliers don’t respond, there’s nothing else they can do — short of exiting the supplier, which is not always easily done. But there are many other ways to incentivize suppliers to be better partners in your materials compliance program. These include incorporating responsiveness in supplier health scorecards and audits as a condition for preferred supplier status or even in decisions about awarding new business.
Building a materials compliance program requires developing an infrastructure that is similar to other programs. Once you have a solid basis, legal obligations, and incentives for suppliers, they will be better partners to your organization and provide you with the data you need. Ultimately, this data will give you better visibility into your parts and suppliers.
Design For Compliance
A mature product compliance program will incorporate technical compliance requirements into the product development process. "Design for Compliance" ensures as new products are developed, market access requirements are identified for each intended market, and the product being designed are qualified to meet those requirements. This proactive approach ensures your product is compliant down to the parts level before it’s released for sale.
Continuous Compliance: Beyond Product Launch
Product compliance is more than just a one-and-done task. A mature compliance program ensures the product meets regulatory requirements not just at lunch but also addresses changing regulations, standards, and codes for as long as the product design is still being placed on the market. This level of maturity is only possible when it goes hand in hand with monitoring regulatory requirements and adapting products to changes as they occur.
Integrating Compliance Into Corporate Culture
A mature program integrates compliance into every corner of the organization, with the understanding that the responsibility of meeting requirements does not fall on the product compliance or development teams alone. For example, if your company engages in mergers and acquisitions, you can build product compliance criteria into the due diligence process to understand the program maturity of the company that is acquired. This process helps you understand the work required to bring new businesses up to your level of product compliance. Many other functions may have policies and procedures that should incorporate elements of product compliance, and a mature program integrates compliance into the fabric of these different functions.
In essence, it’s about finding ways to embed a culture of compliance throughout the company.
Proactive Planning: Anticipating Compliance Challenges
Mature compliance programs don’t react — they anticipate challenges in advance. Like other quality or safety programs, product compliance teams should plan for scenarios in advance, so they have clear action plans when needed, for example, when a supplier delivers non-compliant parts. By preparing for these types of incidents, companies do not have to make decisions about responsibilities or action plans in the heat of the moment. Instead, they can focus on remediation.
Global Market Access Through Enhanced Visibility
Product compliance ensures products can legally enter and remain in global markets. However, this type of compliance requires a proactive mindset that enhances visibility into parts and suppliers across the supply chain to anticipate and mitigate risk that could harm market access. It also means compliance needs to be embedded into every facet of a company, from product design to supplier management to acquisition strategies and policies. Doing so creates an advantage in a competitive global market and insulates your business from disruption.
