SCM and Global Sourcing: The Keys to Managing Compliance

SCM and Global Sourcing: The Keys to Managing Compliance

March 19, 2014

Getting products from the factory to the shelf is one of the most challenging processes fashion brands face daily. Consumers are fickle. Competition is tough. Every delay and inefficiency adds to the high cost and precious time it takes to meet the rapidly changing demands of the retail market.

A 2014 Retail Systems Research report reveals that one of the top three supply chain challenges is “the competitive pressure to get faster—faster order-to-delivery cycles, faster commit-to-ship cycles and even faster shipments.” While faster speed to market is a necessity, today’s supply chains are complex and have a network of components that go beyond effective pricing, quality assurance and on-time delivery. But before those products can hit the shelves, there are hurdles brands must clear. [[more]]

Compliance legislation and trade risks continue to challenge companies looking to stay ahead of the competition:

  • Vendor compliance and factory safety. Ensuring safe and fair working conditions in factories worldwide is a must. Recent devastating events, such as the tragedies in Pakistan and Bangladesh, have heightened the public awareness of these issues, which many consider as human rights issues. Companies must ensure strict vendor compliance and supply chain transparency or run the risk of a PR nightmare that can hurt people and severely damage their brand.
  • Regulatory compliance. Strict regulations, while designed with good intentions, can be a logistical nightmare. To comply with regulations such as SB657, CPSIA, Conflict Minerals Reporting, Maine Toxic Chemicals in Children's Products Law, and Washington Children's Safe Product Act, companies must ensure their products meet a host of governmental and social regulations. This adds another layer to already-burdened product development and supply chain operations.
  • Trade uncertainties. Companies with global operations are at the mercy of legislative trade initiatives, such as the Trans-Pacific Partnership (TPP). They’re forced to place calculated bets on where they think trade is going in next 5-10 years, without yet knowing the outcome.

Streamline Vendor Compliance with SCM and Global Sourcing
In addition to all of these challenges, companies must manage the complexities of working with dozens, hundreds or even thousands of suppliers around the world and ensure that they meet compliance standards at every step of the supply chain cycle. Manual processes, such as communicating by email and phone and keeping records on matrix sheets, are slow, outdated and contribute to costly mistakes. That’s why brands, retailers and consumer goods companies turn to supply chain management (SCM) and global sourcing software to meet industry compliance standards and improve their speed to market.

Brands need SCM and global sourcing software that enables them to evaluate vendors and ensure worker safety and compliance with regulatory and social mandates. Because brands could be working with hundreds of suppliers, these systems should include workflow calendars, exception management and global collaboration features that make it easier to schedule audits and tests, efficiently manage production schedules, and maintain all the necessary documentation to ensure safe, humane sourcing.

How Does Managing Compliance with SCM and Global Sourcing Look?
Critical information such as factory safety records and vendor scorecards are typically available in these systems through a Vendor Compliance portal.

First, companies must identify their standards-compliant vendors through running audits or reviewing audit test results. Then, companies should compile their vendor profiles. Vendor profiles can include each supplier's current compliance audits, performance and quality history, and other information, which can be easily accessed through a web-based portal.

A company’s Standards of Vendor Engagement should be housed and managed within vendor profiles in the supply chain system, helping to ensure that factories comply with sourcing standards and policies. Proactive calendars will send alerts for audit and re-certification dates and exceptions, and the system will typically document and store all related communications. If factories don't pass the audit, the system assigns a corrective action plan. The vendor profiles can be accessed throughout the global supply chain, for easy access at any time.

By working vendor compliance profiles into SCM and global sourcing systems, companies can ensure that POs are issued only to certified suppliers; exceptions can be created to alert management when POs are written to vendors that have not been certified in various areas, or whose certification has expired.

Don’t Let Compliance Slow Your Speed to Market
Some of the most successful fashion companies in the industry rely on our NGC SCM and Global Sourcing system, for example, as the key to not only improving speed to market, but managing all the requirements for Social and Regulatory Compliance as well. We help companies protect their brand and reputation by delivering quality products at the right time and price, with the assurance that they meet all regulatory requirements and were ethically sourced and produced.

Interested in learning more about using SCM and global sourcing to improve your speed to market? Read our latest white paper, Supply Chain Execution: Meeting the Need for Speed, Compliance and Brand Protection.”