4 Product Compliance Challenges Faced by Organizations

November 29, 2016

Many organizations struggle with fostering a culture of proactive product compliance. Even though there are many benefits associated with taking a proactive approach to compliance, developing and executing such initiatives can be time-intensive and cumbersome without the right resources.

To achieve the benefits of taking a proactive approach to Environmental, Health and Safety (EH&S) regulations, organizations much first address a range of challenges.

1) Organizational Silos

Many organizations are still very fragmented with the Product, Quality, Manufacturing and Regulatory Compliance teams lacking a common, fluid compliance strategy. Integrating compliance as a function of the product development lifecycle is becoming increasingly important for product innovation. Best-in-class companies directly integrate compliance into their product development lifecycle and ultimately improve time to market, quality and customer perception and adoption of their products.

2) Dynamic Regulatory Landscape

New regulations are constantly emerging, making it increasingly difficult for organizations to have a holistic view of their obligations and requirements. Organizations must monitor current chemical regulations such as REACH, national adaptations of GHS, and RoHS but also new product standards, regulations, and other emerging initiatives. Furthermore, organizations also have to contend with NGOs, black lists and an assortment of social media pressures. Such pressures necessitate a clear compliance message to ensure brand resonance and loyalty. Organizations must also manage the many challenges throughout their upstream supply chain, including having transparency into their supply chain and ensuring that suppliers are in compliance.

3) Scope of Obligations

Another possible barrier to product compliance is the sheer size and complexity of applicable laws. Many chemical regulations directly impact products, specifying restricted or banned substances, posting lists of chemicals, and these regulations are continually expanding or changing. New chemical registrations also make it difficult to monitor lists to determine when new substances are added. Finally, classic environmental regulations around air, water and waste – among others – continue to be regulatory drivers for heavy consumption industries. Principally these regulations have come into more and more focus with concerns over global warming and the signing of the Paris Agreement.

4) Increased Regulation

In the last several years, organizational supply chains have become increasingly scrutinized. A variety of industries worldwide have been impacted by pieces of legislation like the Dodd-Frank Act in the United States, which has provisions for the monitoring and reporting of conflict minerals usage in products. The UK’s Modern Slavery Act is another example of legislation that significantly impacts an organization’s supply chain to prevent human forced and slave labor.

The consequences of not implementing a proactive compliance culture and program are incredible in today’s market. Not only are there real legal repercussions associated with non-compliance, but there is also the risk of human harm and brand damage.

The challenges of product compliance have never been so great; nor the costs associated with a lack of compliance. From existing to emerging regulations to new standards to new types of social pressure, the market is quickly moving to accommodate audiences with different needs. In the next post of the series, we will examine what organizations can do to navigate the regulatory landscape and execute a proactive product compliance program.

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