Solving the Supply Chain Compliance Problem

  • Written by Peter Needle
  • Published on 15 August 2019
  • Our Voice

Compliance can refer to any ethical, environmental, financial or quality standards set in place, and these can often form the terms of a binding contract. However, secondary supply chain compliance can be tricky to achieve, as these suppliers are further removed from a company’s sight. Here are some tips to help you assess your organisation’s current performance and potential abilities.

Committing to secondary supply chain compliance

In order to achieve compliance in a complex supply chain, it’s wise to consider implementing a company-wide strategy.

Ideally, supplier compliance should form a central feature in all business activities, rather than being managed and monitored in isolation by a single department such as manufacturing, procurement or finance. A unified approach can enable vendor compliance to improve significantly and at speed.

It also helps to involve the top level of management in supply chain compliance strategies. This places some responsibility at the top of the company, and changes are more likely to be brought about by individuals with the power to delegate budget and inform new business processes.

Nurturing positive relationships with suppliers

What is your level of collaboration with primary, secondary and tertiary suppliers? How do you measure their performance, or is your relationship centred around penalties alone?

Rather than using reactive measures to address existing issues, some companies are moving for a more strategic and proactive approach. By identifying and addressing supplier issues on a continual basis, it’s possible to predict and prevent supply chain compliance problems before they ever occur.

In order to discover unique supply chain opportunities, carefully pick which suppliers you work with and monitor the movement of products through the supply chain. If any delays or issues emerge, you can address them before they pose a real problem, and identify any risky suppliers.

Following the paper trail

So how can you track sourcing activities through a complex and fragmented supply chain?

Purchase orders are commonly used as a contractual agreement, issued by a buyer to a vendor to indicate agreed details for procured products or services. Acceptance of a purchase order by a seller forms a contract with the buyer, effectively demanding supply chain compliance.

An invoice is then issued by a seller to a buyer, relating to the provided products or services and resulting sales transactions. By tracking these invoices, it’s possible to form a full picture of supply chain sourcing. However, compiling paper receipts can be a time consuming and painful process. It could be well worth investing in new IT resources to achieve the same result.

Segura allows orders to be placed and more importantly monitored throughout their life cycle within a pre-approved framework of compliant suppliers, who also use the platform for their own sourcing activities. Within this structure, companies can compete on the basis of cost and performance, and these indicators allow our customers to refine their supplier network to only the most compliant, efficient and affordable parties.

Segura also helps suppliers wishing to develop a compliant platform. Customers can generate a supply chain map by adopting Segura with their primary suppliers and contractors, and ensuring that every party utilises Segura to place orders with secondary suppliers and subcontractors. By enforcing this process, customers can achieve complete supply chain transparency.

Original Publish Date: 10/6/2015

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