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JANUARY 2017
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13
INNOVATE
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:
1
Are you asking about
regulatory compliance?
2
Are you asking about
customer compliance?
3
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:
1
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
personmust 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.
2
How do we measure customer
compliance?
Your customers (should)
require that your company is compliant
in regulatorymatters and order accuracy.
Every company should have a resolutions
team that receives customers’ concerns
and inquiries about regulatory and order
compliance.This teambecomes 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 originmarking)
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 dowe need a quality
control team (person)?” Inmy 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.Theymay 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 reviewproducts for customer and
regulatory compliance.
Resolutions teams and quality control
teams are hardmeasurables used to
determine compliance.
3
How do we measure internal policy
compliance?
In a recent CFO.comblog
post, Lucy Skelton lists five ways tomeasure
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 tomake
compliance decisions and help employees
understand 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 createmethods to turnwhat may be soft
measurables into hardmeasurables.
All compliance is really about ethics:
We all knowwhat’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 youmust determine
where you are not compliant. If the CPSC
or FDA shows up, and you get fined, or shut
down, because youwere in the chain of
custody for a non-compliant product, you
have received a hardmeasurable. 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 tomeasure it.
RICHARD D. MASSEY, ESQ.
Director of Legal and Regulatory Affairs
SnugZ USA, Inc. / PPAI 112982