Perhaps one of the most persistent challenges that you, as a CFO, are facing is to master the complexity of compliance in today’s rapidly shifting regulatory environment. How can you keep your company up to date with increasing global and regional regulations – and even turn compliance into a competitive advantage instead of a financial drain and administrative burden?
Regulatory compliance is a very broad topic, ranging from financial reporting, tax and customs formalities and worker and product safety regulations through to mitigating risk related to privacy, (cyber-)security, sustainability, human rights, etc.
“Initially, most organizations see their compliance efforts as a matter of ‘checking the boxes’ to avoid the risk of penalties and reputational damage,” says Kristof Verbeken, SAP Compliance Manager at delaware. “However, that perception is changing. Businesses increasingly understand that anticipating risks and meeting regulatory requirements can help them boost the quality of overall performance, improve the customer experience, ensure worker safety, etc. So, step by step, organizations are integrating compliance into their business strategies. Technology can help them get there.”
“Compliance implies delivering numerous and diverse reports to all kinds of authorities, suppliers and customers. As the data is often spread across many siloes and functions, responses are mostly ad hoc,” Kristof goes on. “With an ERP system it becomes easier to enforce compliance in every process, as it helps maintain up-to-date regulatory content, collect compliance information from customers and suppliers, track registrations and substance volumes, etc. It can also automate product classifications and the safety data sheet distribution process and label, store and ship hazardous materials safely.”
“For example, to comply with European REACH regulation, manufacturers must register certain chemicals and their quantities before they can produce or import them to Europe. ERP systems will automatically track the required registrations and substance qualities.”
Having a centralized IT system and data landscape and incorporating compliance processes into your end-to-end supply chain will help you cut the cost of compliance by up to 80%.
Specialized software systems are useful to facilitate compliance processes in specific domains such as product stewardship, tax and customs. Compliance software can, for example, help track and check volumes of regulated substances and determine the compliance status of materials based on up-to-date regulatory content. Or it can automatically determine goods’ countries of origin, provide products’ customs codes, follow up on import licenses or generate customs declarations, in order to comply with customs regulations.
“It is important, though, that these solutions are closely integrated into other systems,” Kristof stresses. “Only when the transactional and master data of various business processes, such as R&D, procurement, manufacturing, logistics and sales are integrated will you be able to enable consistent, reliable and efficient compliance results.”
To ensure that compliance adds true business value, Kristof advises even more far-reaching integration: “Companies must connect their compliance processes with the corporate strategy,” he says. In other words: compliance is not solely the responsibility of the CFO or compliance officer: every single department has a role to play.
The following steps can help raise compliance awareness across your organization and enable business leaders in different departments to act according to compliance standards.
delaware has completed many successful compliance projects for big-name companies, making us an expert in compliance processes in the field of global trade as well as EH&S. We can help you take an intelligent approach to automating and optimizing your compliance activities.
Get in touch to discuss the opportunities for your company.