If you work in product safety compliance you have likely received these types of questions increasingly over the past few years:
“Can you send me a copy of a third-party social audit performed in the past year?”
“Has the factory been audited to standards equivalent to FLA, QCA, SMETA, etc?”
“What test reports do you have to ensure compliance to CPSIA, Prop 65 and CPSA?”
These types of questions have not only grown more frequent over the past few years but also more comprehensive and targeted. Compliance has taken hold in the promotional products industry and it’s now firmly in the spotlight. If you have not yet had a compliance officer sitting next to you at a customer meeting, you soon will. It’s now fair to say that a well-run compliance program has become a necessary element to being a successful player in the industry for both suppliers and distributors.
For most compliance and quality professionals, this is long overdue. It’s not an easy profession; we are used to being the “wet blankets” in our organizations, as most days we go around telling supply chain and salespeople what the company can’t (or shouldn’t) do. Now we finally have our moment in the sun as end users drive transparency up our supply chains and put us front and center.
You would think the compliance community would be happy about this, but we’re as nervous as we are excited. Every company has a corner of its supply chain that keeps them up at night, and now customers want a spotlight on them. People are now looking at the promotional products industry as they looked at the toy industry in the early 2000s—we are expected to know our vendors and our vendors’ vendors, and we have to be able to prove that each player is compliant. As the bright light of transparency shines on our industry, compliance teams are scrambling to ensure we have the systems in place to show we’re compliant, responsible and safe.
This focus on transparency is being driven by the same force that transformed other industries—the customer. From a customer’s perspective, you are responsible for the entire supply chain to the end user’s doorstep—and your customers will not allow you to point to your upstream suppliers if something goes wrong. Instead of blindly inheriting the risks of your supply chain, customers want documented compliance before the sale and expect to be treated as a partner.
Twenty years ago, the footwear and apparel industries were similarly forced to transform their sourcing strategies following organized protests by student and consumer groups. It took Nike almost 15 years to release the names of its suppliers since the first protests against sweatshops began in 1992. Apple released its supplier list in 2012 and Disney just released its list last year. Now, more distributors and end users are making similar demands to promotional products suppliers. How long will it be until transparency becomes the norm in our industry like so many others?
This transparency movement is causing significant changes in an industry that just five years ago hardly mentioned compliance and was typically secretive about its supply chains. Also, our industry has unique challenges: Many of us offer a wide range of products, including many low-cost items, and we are continually being pushed to new sourcing areas around the world. On top of this, we place one of the most valuable possessions a company has—its logo—front and center on the products we sell.
How Companies Can Meet The Expectations
Keeping a compliant supply chain while controlling costs and meeting an increasing need for transparency is no easy task, and companies that can find the right balance will likely be the future industry leaders. Having an experienced compliance officer on staff and taking part in PPAI’s Product Safety Aware program (see box) is a vital first step, but much more is needed to stay aligned with our customers’ expectations.
How can you be accountable for your supplier base while protecting your business? Below are a few guidelines that can help:
Develop robust compliance document control. As transparency grows, the need for accurate documentation that’s available on-demand grows with it. A company needs a system capable of organizing all the (current) test reports, audit results and quality records to allow a good compliance system to function. Some distributors and end users are already pushing their version of systems up their vendors’ supply chains, so one needs to be prepared.
Set the company compliance policy and make it customer-facing. Once you decide what information to share or not to share, make sure your customers know. This will likely require answering some hard questions, such as “How do we document subcontractors?” and “When is it appropriate to share audit corrective action plans?” Your suppliers will respect and appreciate your leadership in determining what is and is not an appropriate level of transparency.
Make compliance a conversation. Many times requests for transparency are limited to filling out a document or sending a single test report. However, a company should look deeper at each request and determine the reasons behind what is being asked by discussing it with the customer. Often companies need assistance to ensure what they are asking is relevant to the issue or product they are trying to address, and providing the wrong information can do more harm than good.
Qualify each request. Requests for information need to be justified as being applicable to the customer or the product being sold. You may have to deny a request because it is irrelevant or potentially proprietary information. Deciding what information is okay to share is not always simple and usually requires a conversation with your customers and the senior management of your organization.
Become product (quasi) experts. Compliance people are a strange breed. Where else can you find a person who knows as much about color migration of 210D polyester as they do about lithium-ion battery safety certifications? It is important that as your product line grows you have a deep understanding of the regulatory, safety and sourcing challenges that apply to each type of product. This knowledge is crucial to enabling you to provide informed answers to your customers later.
Take a hard look at your supply chain. Some areas of the supply chain may need additional investigation. How do you ensure that your company’s Code of Conduct is spread to every corner of your supply chain, and how do you document that? Boots on the ground in the places where you source are invaluable when it comes to truly knowing your suppliers.
Don’t go it alone. As the industry transforms, there are many opportunities to collaborate. Increasing trust between companies is one of the easiest ways to promote meaningful ways to be transparent. Also, we can learn a lot from other industry organizations that face similar challenges and help to make transparency easier and more standardized, such as American Apparel & Footwear Association (AAFA), International Consumer Product Health and Safety Organization (ICPHSO), Supplier Ethical Data Exchange (Sedex), PPAI, Quality Certification Alliance (QCA) and others.
The good news is that the increased calls for transparency are an indicator that our industry is maturing, just like the toy, footwear and apparel industries did a decade ago. As the demand for transparency grows, companies will start to discern themselves by their approach to it. With that demand and transparency, the health and safety of the products (and the people who make them) grows as well. The companies that provide leadership in this space will ultimately lead our industry to a safer and more successful future.
Josh Kasteler is the manager of quality assurance and compliance for Lawrence, Massachusetts-based supplier Gemline. He currently serves on the PPAI Product Responsibility Action Group and the Compliance Committee for the Quality Certification Alliance (QCA). Kasteler lived in Asia for several years while working in the footwear and apparel industry. He can be reached at firstname.lastname@example.org.
“Sunlight is the best disinfectant.” —William O. Douglas
>>Deadline Looming For Product Safety Aware Status
Beginning at Expo East 2015 on March 12-15 in Atlantic City, New Jersey, all industry companies who want to access the PPAI marketplace through trade-show exhibit space, sponsorships and advertising must obtain Product Safety Aware status. Hundreds of industry companies have already attained the status—has yours? Getting there is easy:
- Designate a roster employee to serve as your Product Safety Ambassador.
- Have the employee complete four hours of product safety education from a required list of three one-hour webinars, plus one elective.
All the sessions you need are offered free at The PPAI Expo in Las Vegas this month. Get started at www.ppai.org/productsafety.