Gap Analysis in Supply Chain Management

In many industries, international trade is more of a necessity than a luxury. The ability of a company to compete and financially grow in a particular industry may depend upon tailoring a program to buy and sell goods and services from and to companies and consumers in other countries.

There are numerous laws (international, federal, state and local) that employees within the Supply Chain Management (“SCM”) Department are required to comply with in order to perform the responsibilities inherent in their jobs.

How does the Compliance Department make certain that the Supply Chain Management Department as a “risk center” and the employees as “risk owners” have a system in place to know, abide by and monitor the compliance of the laws under their domain?

Here are a few questions that the Compliance Officer may pose to the SCM department in order to perform a gap analysis regarding policies and procedures:

1. Does the SCM department have an inventory of policies, procedures, laws, and regulations covering supply chain related matters applicable to the company’s business?

2. If yes, do you have a specified person who is in charge of updating the inventory?

3. If no, what system does the SCM department utilize to ensure that it is aware of the various laws and regulations and has a process to comply with them?

4. What evidence would the SCM department be able to produce for the government to support a finding that the company has a solid compliance program for applicable supply chain laws and regulations?

5. What types of enforcement actions are predominate in the supply chain arena? How does the SCM department track such actions? (i.e. import and export requirements; customs; freight forwarding, port clearances, “deemed exports”, blocked persons; etc.)

6. Are employees within the SCM department specifically trained to understand compliance requirements applicable to the supply chain arena?

7. Does the SCM department provide senior management with periodic updates on the monitoring of results, key risks, and compliance violations within SCM?

8. Has the SCM department established some type of escalation criteria to ensure that high-risk issues are reviewed at the corporate level?

9. Does the SCM department have compliance monitoring standards in place? Does the SCM department perform periodic audits to ensure that the policies and procedures are being complied with?

10. Do any of the following laws impact the SCM department? Foreign Corrupt Practices Act; Embargo; Anti-Boycott; Anti-Money Laundering; Export Administration (such as ITAR, EAR, and OFAC or “deemed exports”?); Custom and Import laws?

These are only a few of the questions that you may want to ask to begin the process of assessing what laws and regulations applicable to the Supply Chain Management Department apply to your company.

The key to compliance, in my opinion, is having the proper structure to identify the issues, implement policies and procedures to address the issues, audit for compliance and document.

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