How can a Chief Compliance Officer use 360-degrees of communication with compliance stakeholders who are outside your organization, such as those in the Supply Chain? Obviously, the communications with those third parties about your compliance evaluation is a critical element for compliance program’s success. Just as 360-degrees of communication is more than simply a two-way street of passing information, a more holistic approach is needed when dealing with third parties as they can also be a key to more than simply adherence to a compliance program but also providing back to you valuable information and modeling the culture you expect going forward. Yet how can you achieve such a more holistic approach?

This issue was explored by Jennifer Blackhurst, Pam Manhart and Emily Kohnke, in a manner in their piece “The Five Key Components for SUPPLY CHAIN”. They began by asking “what does it take to create meaningful innovation across supply chain partners?” Their findings identified five components that are common to the most successful supply chain innovation partnerships which derive from the 360-degree approach to communications.

It is almost universally recognized that third parties are your highest compliance risk. What if you could turn your Supply Chain from a liability under the FCPA to an area that brings innovation to your compliance program? This is an area that not many compliance professionals have mined. The authors set out five keys to successful innovation spanning Supply Chain partners. They are: “(1) Don’t Settle for the Status Quo; (2) Hit the Road to Hit Your Metrics; (3) Send Prospectors Not Auditors; (4) Show Me Yours and I’ll Show You Mine; and (5) Who’s Running the Show?”

Don’t Settle for the Status Quo

You should not settle for simply the status quo. Innovation does not always come from a customer or even an in-house compliance practitioner. The key characteristics are to be “cooperative, proactive and incremental”. You need to be leading the innovation change rather than catching up from behind.” If a company in your Supply Chain can suggest a better method to do compliance, particularly through a technological solution, it may be something you should well consider.

Hit the Road to Hit Your Metrics

To truly understand your compliance risk from all third parties you should get out of the ivory tower and on the road. This is even truer when exploring innovation. You do not have hit the road with the primary goal to be innovation but through such interactions, innovation can come about organically. There is little downside for a compliance practitioner to go and visit a Supply Chain or other third-party partner and have a face-to-face meeting simply to get to know the partner better and precisely identify that partner’s compliance issues.

Send Prospectors Not Auditors

While an audit clause is critical in any Supply Chain contract, both from a commercial and compliance perspective, “Too often firms use supply chain managers as auditors when they are dealing with supply chain partners.” This is wrong as you should consider these types of managers’ innovation partners and not auditors. Every third party should have a relationship manager, whether that third party is on the sales or Supply Chain side of the business. Moreover, the innovation partners are “able to see synergies where [business] partners can work together for the benefit of everyone involved.”

Show Me Yours and I’ll Show You Mine

If there has been one key theme throughout this chapter, it has been trust. In the Supply Chain and third-party arena “Trust plays an extremely important role in supply chain innovation. Firms in successful innovations discussed a willingness to share resources and rewards and to develop their partners’ capabilities.” Moreover, “Through the process of developing trust, firms understand their partner’s strategic goals.” I cannot think of a more applicable statement about compliance. Another way to consider this issue is that if your partner has trust in you and your compliance program, they could be more willing to work with you on the prevent and detect prongs of compliance regimes. Top down command structures may well be counter-productive.

Who’s Running the Show?

This really means what is each side bringing to the relationship, both in terms of resources and capabilities. In the compliance regime, it could well lead to your partner taking a greater role in managing compliance in a specific arena or down a certain set of vendors. Your local Supply Chain partners might be stronger in the local culture, which could allow it to lead to collaborations by other vendors in localized anti-corruption networks or roundtables to help move the ball forward for doing business ethically and in compliance with relevant anti-bribery/anti-corruption laws.

Finally, as a rule, utilization increases through innovation. Imagine if you could increase your compliance process performance by considering innovations from your third parties? From the 360-degree perspective, it could lead to (1) trust and culture alignment strengthened, leading to future innovations and improvement; (2) seeing what is needed in other partners to facilitate their role in compliance innovations; and (3) both sides reaping rewards in a low cost, low risk, highly achievable manner.  Your company’s Supply Chain is literally there at your fingertips, why not tap into them with a 360-degree approach.

Three Key Takeaways

  1. 360-degree approach to communication in compliance includes stakeholders outside your company.
  2. Remember the five keys to successful innovation spanning Supply Chain partners.
  3. Your company’s Supply Chain is literally there at your fingertips, why not tap into them with a 360-degree approach.

This month’s podcast series is sponsored by Dun & Bradstreet.  Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more.  For more information, go to dnb.com/compliance.

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