What’s Your Company’s Compliance Report Card?
A Distributor Asks: How do you measure the success of your internal compliance and product safety programs?
It’s really a negative metric that you look for:
No legal actions against the firm for defective products.
No factories fail to meet the code of conduct.
Director, Global Compliance
Compliance programs should be seen as a key part of every organization’s foundation of providing quality products to the marketplace. In terms of identifying quantifiable metrics, this will always be a challenge, as end-user clients will have different reasons for desiring the information. Essentially, doing the right thing through product testing, having the information readily available and meeting applicable community regulations and laws is the core value and outcome of compliance efforts.
ADG Promotional Products
A big part of the value of a good compliance program can be measured by the increased sales and better customer satisfaction that it brings. It also brings market access, as you need a good program to participate in the programs of most brands these days. Other benefits include better product quality, reduced business risk and safer products for the people that make and use what you sell.
Director of Product Integrity
Bamko Promotional Items
At Terry Town, we measure the success of our compliance program by the ease with which our distributor partners can utilize and depend on us—especially when they may not know all the answers themselves.
If you don’t have a dependable compliance program in place, it can be very challenging for a distributor to count on you when they’re dealing with clients that have large compliance needs. It doesn’t matter how much they love to work with you or how much business they’ve done with you in the past.
If you cannot deliver the information they need in a timely manner, they will go somewhere else. We get a lot of distributors that reach out that have never used Terry Town before, but have heard how dedicated we are to compliance or have run into us at a PPAI Product Responsibility Summit.
When they can call us up and ask to see product testing results or a children’s product certificate and we can deliver that information immediately, they know they are dealing with a supplier that has a solid compliance program in place.
National Account Manager
& Director of Compliance
At Proforma, we have more than 500 supplier partners in our Preferred Limited Partner program and each one has undergone a full review of their quality and business practices to ensure they meet our high standards of social and environmental responsibility. By having stringent safety, health and ethical standards for our preferred suppliers, our owners know they have a reliable and trustworthy network of vendors for all their project needs.
We also regularly attend PPAI’s Product Responsibility Summit and encourage our owners to stay educated on the latest standards for safety and quality in our industry. Should an owner run into a safety compliance issue with any of our suppliers, the situation is thoroughly reviewed by Proforma’s Strategic Partner Development Team to fully understand the situation and determine if the supplier should be removed from the network. Because of our deep commitment to excellence, Proforma is in the process of instituting a supplier rating system. This system will motivate our suppliers to uphold their high product and service standards to maintain a high ranking, while also reinforcing the trust our owners have in our network.
Product safety and quality is a priority for Proforma, and our industry, because it is the benchmark by which many of our clients measure the value and reputation of the products and programs we provide. By creating a safeguard for our owners through our Preferred Supplier Network, we can ensure their success in providing the highest quality products available.
A Compliance Conversation
Is compliance a hard or a soft measurable? In discussing this question with others, I received responses like, “You are either compliant, or you are not.” One co-worker responded with three questions:
- Are you asking about regulatory compliance?
- Are you asking about customer compliance?
- Are you asking about internal policy compliance?
I believe those are appropriate questions; and the response to each gives us the response to the subject question. So, let’s take these in order, as asked above:
- How do we measure regulatory compliance?
I believe this is the easiest to answer. Many third-party certifying bodies require a company to have on staff a regulatory/compliance professional. This person must understand the regulatory landscape and the plain language of the statutes, regulations and standards. If there is no person in your company who has this ability, your company is playing with matches in a hay field. Having a person on staff who knows and understands implementation of the law is your company’s regulatory and compliance insurance policy. Pay that person now or take the chance of paying the government later. In short, you’re compliant with federal and state law, or you’re not. There is no “sort of;” “we’re close;” or “I think so.”
How do you measure that? Your regulatory compliance specialist performs quarterly, unannounced inspections of your facilities—and even the facilities of your suppliers—using the standards that apply to products you offer, or you require records of such compliance (testing, internal and external audit reports, SDS, etc.). Documents and observations are hard measurables used to determine compliance.
- How do we measure customer compliance?
Your customers (should) require that your company is compliant in regulatory matters and order accuracy. Every company should have a resolutions team that receives customers’ concerns and inquiries about regulatory and order compliance. This team becomes the liaison between the customer and the supplier in determining whether an order was out of regulatory compliance (improper labeling, no tracking number on a children’s product, no country of origin marking) or customer-expectation compliance (wrong flavor of lip balm, wrong logo, logo smeared or off-center). These are measurable by the number of “resolutions” a company records.
Every distributor should have a quality control team (or person). Every distributor should require its suppliers to provide proof of quality-control mechanisms. Most federal and state regulations, as well as third-party certifying bodies, require manufacturing facilities to document quality control processes. The FDA has a clear code for quality control. Now, a distributor may say, “No product comes to our facility. Why do we need a quality control team (person)?” In my experience, distributors ask for sample products from suppliers before adding any product to a catalog or brochure or booth. Every distributor should closely review these samples. They may be “golden samples,” however, it is a good practice to have a supplier (every once in a while) send you a sample of a product they are sending to one of your customers. Thus, you can carefully review products for customer and regulatory compliance.
Resolutions teams and quality control teams are hard measurables used to determine compliance.
- How do we measure internal policy compliance?
In a recent CFO.com blog post, Lucy Skelton lists five ways to measure internal compliance:
- Proper training and compliance campaigns;
- Employee surveys of internal policy compliance standards and requirements;
- Bringing in outside experts or utilizing other resources in the drafting and implementation of internal compliance;
- Empowering your managers to make compliance decisions and help employeesunderstand compliance issues; and
- Closely reviewing and observing compliance breaches and successes; keeping records of your observations and findings.
Using your staff to develop, implement and uphold clear internal compliance standards (codes of conduct, mission statements, company values, etc.) allows you to create methods to turn what may be soft measurables into hard measurables.
All compliance is really about ethics: We all know what’s right. You either do the right thing, or you don’t. If customers are staying, and you’re growing, then you are at least compliant to customers (price is a customer compliance issue). If you are losing customers, then you must determine where you are not compliant. If the CPSC or FDA shows up, and you get fined, or shut down, because you were in the chain of custody for a non-compliant product, you have received a hard measurable. If you can’t keep employees, your internal compliance (including pay standards) may need to be evaluated. So, soft or hard, compliance is measurable. Your job is to ensure that you have the data, understanding, policies and ethics in place to measure it.
Richard D. Massey, Esq.
Director of Legal and Regulatory Affairs
SnugZ USA, Inc.
We measure success by the satisfaction of our clients. Many of our high-profile brands have increased their spend with HALO specifically because of the security they have with our compliance protocols. We share our compliance protocols with every client and use them to differentiate HALO in a crowded marketplace. Clients that trust your close monitoring of your supply chain will ultimately buy more from you.
Supplier Relations Administrator
HALO Branded Solutions
Do You Have An Answer?
A Distributor asks: I have faced the same problem over and over for the past 10 years: How do you design the perfect “professional” ad for print media? I think we all do a great job at interactive and social media but it is very difficult to come up with a truly classy magazine ad or flyer. Any ideas would be appreciated.
What’s Your Answer? Email answers along with your name, title and company name by January 20 to Question@ppai.org for possible inclusion in an upcoming issue of PPB magazine.
Julie Richie is associate editor for PPB.