With so many business cases highlighting the consequences of not having proactive compliance plans, it’s easy to see why many companies are fearful of the topic.
Whether it’s out-of-conformance operating procedures or non-compliance with new regulations, the impact can be extremely costly and can do long-term damage to the reputation and viability of an organization.
The most common questions on the subject of regulatory compliance and risk management are:
- How well can an organization handle being under the government microscope?
- Is the organization prepared from a business standpoint for a worst-case scenario?
To answer these questions, decision makers must have answers to some other difficult questions: Do we have procedures in place to ensure product compliance? How do we know we are within regulatory guidelines? What new legislation is coming that we need to plan ahead for?
When companies are proactive with risk management and compliance, they can enhance the corporate reputation and create a competitive advantage. One way successful companies have adopted a proactive stance on compliance is by establishing a senior level position responsible for developing and maintaining an enterprise-wide strategy to stay ahead of new requirements. Whether it is an executive vice president of compliance and risk, or a chief compliance officer, manufacturers must make someone accountable for driving the effort.
Manufacturers should expect their compliance chief to be a step ahead of regulators. This can be accomplished by actively managing compliance with the eventual goal of designing compliance into every initiative. Systems and operating procedures play a critical role in achieving this goal. Repeatable and auditable systems and processes improve a company’s ability to mitigate regulatory incidents. These systems and operating procedures allow a company to identify issues, assess the risk and resolve the problem quickly.
There was a recent manual-based compliance/document-based process failure at a major North American food plant. The company’s HACCP program, which was document-based with manual procedures, failed to detect frozen materials that were moved from cold storage to a cool storage area with a temperature above 40F for thawing. The materials were thawing in the cool storage for about 10 hours and at risk for bacteria growth.
A quality issue, line down or change in demand caused this material not be used within four hours, but the document and manual process did not detect this HACCP failure. If the material had been used and were contaminated, the company could have had a significant crisis on hand – brand damage, declined consumer trust, reduced sales, and high recall-related costs.
Another way organizations can be proactive with compliance is to adopt a software solution to ensure that compliance and risk management factors are built into the design of products, the business processes, and each department’s business plan.
From Product Lifecycle Management (PLM) to sourcing and Supply Chain Management (SCM), Enterprise Resource Planning (ERP), and Enterprise Asset Management (EAM), continual feedback and integrated compliance processes ensure that organizations do it right the first time and every time.
With active compliance using these solutions, you get improved brand protection essentially for free. By minimizing costs and reducing risks, how can you afford to ignore the opportunity?