Compliance Elements and Supplier Management

When Spend Matters surveyed 36 companies during Q4 2011 on their interest in substance and materials centric compliance as part of supplier management and supply chain risk programs, a number of compliance elements emerged that were of keen interest to corporate procurement and supply chain leaders. Materials conformance was noted by nearly 70% of survey respondents as being a compliance element “when selecting and managing vendors and materials.” Somewhat similarly, the importance of adherence to a proprietary set of internal or adherence to a set of industry criteria was noted by 62% and 56%, respectively.

Interest in environmental health and safety (EHS) was lower. But nevertheless, 41% responded that they were interested in the following types of compliance elements in the supply chain on both a vendor and materials level: REACH, RoHS, WEEE, classification/labeling/packaging regulations, restricted substance lists. The same percentage (41%) also noted an interest in denied party list and import-export documentation compliance.

Overall, compliance would prove important to the majority of respondents when it comes to the broader challenge of assessing supply chain risk. 53% of respondents considered compliance “highly critical” to evaluating supply chain risk. And 24% thought it was of “high importance” but not critical. It’s important to keep in mind that nearly 90% of respondents to this survey came from a corporate supply chain or procurement function – not EHS, finance, risk management or another area of the business.

It is perhaps not surprising that trust levels at the time for chosen software solution partners were higher for best-of-breed suite and targeted solution providers rather than for internally developed or ERP-led solutions (see chart below). Ironically, at the time of our research SAP supplier InfoNet was one of the early-stage products furthest along in providing an aggregated view of part-level risk and related compliance information.

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Also read the first and second installments of this series:

The Vanguard of Ingredient/Materials Centric Supplier Management: Nike
The Vanguard of Ingredient/Materials Centric Supplier Management: Compliance Elements

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