In this five-part podcast series, sponsored by Assent Compliance, I explore supply chain data management. In this series, I visit with several members of the Assent Compliance team to introduce the topic, consider the synergies between several different types of compliance disciplines, the impact on organizations of compliance failures in this area and what are some of the drivers for continued legislation and regulation in this area. In this third episode, I visit with Travis Miller, General Counsel at Assent Compliance Inc. and Director of Assent Compliance USA Ltd. We consider the synergies between the emergence of supply chain risk and the compliance response.
Miller had a very interesting and, indeed, unique perspective on the origins of modern-day compliance programs. He draws the origins of compliance through the US environmental movements. The first of which began in the 19thcentury as the conservation movement. This movement began around the eradication of such animals as the buffalo and carrier pigeons. It also included the creation of our national park system, that started in an attempt to respond to those issues and similar.
Miller identified the second big environmental movement beginning with the publication of “Silent Spring” by Rachel Carson in the early 1960s. There was increased awareness of air and water pollution. This led to the formalization of an environmental movement and such events as Earth Day, which is still celebrated. It also led to US regulatory responses, beginning with the creation of the Environmental Protection Agency (EPA) under the Nixon Administration. Additionally, Congress passed several key pieces of legislation including the Clean Air Act, Clean Water Act, and Endangered Species Act.
All of these US and global environmental initiatives led the need for greater transparency in supply chains. Companies began to be required to disclose the chemicals and ingredients in their products. This type of transparency evolved into different directions to such areas as conflict minerals. Of course, consumers played a role as well through their purchasing power and decisions. Many purchasers of consumer products did not want to purchase products which contained dangerous chemicals or damaged the environment. Miller believes all of this is “really the background that led us to where we are today and what is driving a lot of action and what’s really kind of garnered the ethos of the population.”
All of the above led to supply chain risk emerging as a business continuity risk. From investments in physical plants and facilities outside the US, to other issues of sourcing, labor controls and business practices, have all become key risks in your supply chain. Yet when there is overseas manufacturing there may not be any way to regulate these dangers to consumers or end users. What Miller observed is that “in reaction to all of this regulators and policymakers started to think and they came to the conclusion that what we can regulate is the product and the supply chain which produces that product and the components that were used to produce that product.” It is from this perspective that a compliance response to “supply chain risk really started to develop and there has been a surge over the last 10 years.”
Miller said understanding industry standardization has led to a series of best practices for managing supply chain compliance, you can see not only where supply chain compliance derived but also see where it may well be headed. He stated, “Everything you can think of from the chemical itself, to chemicals which are mixed together, to every single thing is produced from chemicals. It also includes the nut that goes inside the washing machine as well as the washing machine itself and all have disclosure initiatives”. Miller used the following to illustrate this point, “you have a bit of a diamond shape in the supply chain. There are a few people that do extractive. Next are those who turn the extractives into chemicals, which is a larger group. From there it goes into component manufacturing. And then those component manufacturers (also known as the Original Equipment Manufacturers [OEM]) then have to provide information. Basically, anybody that makes anything out of that washer or that nut, and they have to give you all the substance information you need globally.”
This means that every one of those OEMs is going to ask for information in their own format. A company could spend an inordinate amount of time responding to these information requests in non-standardized formats. A key component of supply chain risk management is taking these disparate forms of information and standardizing them across an entire supply chain or even industry. In this manner, there is one document that everybody can ingest or agrees is acceptable. Now you can communicate that to everybody and it gives you a fighting chance to be able to meet the requirements of all these various companies and all of these various industry sectors in silos.
This approach resonates with the business community because it ties two disparate strands together. First, it allows companies to not only understand their legal obligations but respond to them as well. It also allows companies to move forward in a more business efficient manner. Miller concluded by noting the real advantage of effective supply chain risk management is “you are going to save a bunch of time, a bunch of money, a bunch of internal resources and that’s really what drives the business community to take these types of industry standardized approaches and these types of decisions.”
Join us tomorrow where we explore organizational impacts of compliance failures with Jared Connors. To receive more of the latest news and content on a variety of regulatory and supply chain data management topics click here and sign up for the Assent Compliance newsletter.