Introduction

Retail supply chains face a multitude of challenges to maintain compliance with various national and international regulations. From environmental regulations to social and governance standards to labour practices, retailers must navigate a complex landscape to adhere to all relevant standards and regulations. To understand the gaps and evidence compliance, retailers and their supply chain partners need to utilise data.

The penalties for non-compliance include legal penalties, fines, and loss of brand reputation. Key compliance areas include labelling and documentation requirements, sustainability practices, human rights, and data laws.

Another driver for retailers to comply to regulation is consumer demand. Consumers and stakeholders are shifting to demand transparency into supply chain activities. It is not just about a label anymore; consumers want to understand that products are responsibly sourced, manufactured, and, eventually, disposed of. This is where data is critical for retailers, as to provide transparency, evidence compliance, make agile decisions, and to just understand their own supply chain, data is necessary to fill the gaps.

This POV explores some of the challenges, solutions, and best practices for supply chain compliance
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Challenges

There are multiple challenges that supply chain leaders face when it comes to ensuring they have the correct data to evidence compliance. These include a lack of standardised data formats and requirements, manual data entry and errors, and limited traceability.

Lack of Standardised Data Formats

Inconsistent data formats and protocols among suppliers and internal systems can pose a significant challenge to retailers in aggregating and analysing compliance related data. Without standardised formats, reconciling information across different systems can be error-prone and time-consuming. Furthermore, integrating information from disparate sources adds to the challenge, as multiple systems like ERP, CRM, and inventory management databases utilise different data formats for different purposes and regulators.

Another challenge faced by a lack standardised data formats is different levels of data quality. Standardised data formats are essential to streamlining compliance reporting, and without consistent data formats, retailers will find it difficult to generate accurate compliance reports, increasing risk of non-compliance. One example is product information across a supply chain. Where the information may be recorded differently across multiple systems, the format may not be the same. If not standardised, it can lead to discrepancies that can impact the reliability of the data.

Manual Data Entry

Manual data entry and other manual tasks are time-consuming and error prone. There are multiple common use cases for supply chain data collection including inventory management and requesting data from suppliers. Manual data entry is prone to human error as data is taken from one system and inputted into another. Remediating any incorrect entries is time-consuming and requires validation to even identify the issue.

Another drawback of manual data entry is inconsistency; if multiple people are involved, varying methods of input standards may be used, leading to confusion and incomplete or inaccurate datasets.

If retailers stay reliant on manual data entry efforts, there is a higher chance of inaccurate data sets that can lead to incorrect or incomplete records and delays in updating records. With compliance regulations requiring accurate data, errors can result in audit failures. Reporting on this erroneous data can lead to financial penalties, the lowering of stakeholder trust, loss of reputation, and legal action.

Limited Traceability

Supply chain traceability is the ability to track a product throughout the supply chain, from raw material to the completed good through to sale and sometimes even to disposal and recycling.

Aspects that are tracked include the original suppliers of the raw materials, the manufacturing processes, logistics and distribution methods, and more. Within each of these stages, regulations dictate best practices and legislate labour laws, environmental

impacts, transport standards and documentation required to ship goods internally and across borders that not only serves as a record of compliance but also traceability, as well as the responsibility for how items are supposed to be disposed of.

Read more about Supply Chain Traceability

Data is central to enabling traceability.

Low visibility into supply chains makes it difficult to trace the journey of a product, which can hinder compliance to sustainability and safety standards and increase the risk of sourcing from unethical suppliers.

In addition to this, compliance regulations often require verification of certifications such as ISO standards and environmental certifications. Limited traceability across a supply chain can make it difficult for retailers to verify compliance with these standards if they do not have access to the data needed.

Ensuring documentation has not been tampered with and that it conforms with the required standards is critical to error free reporting. Tracing the authentication and reliability of data is also important to accurately report on supply chain compliance, removing the risk of untrustworthy data.

Solutions

To ensure comprehensive and accurate data is collected in response to these challenges, retailers must focus on implementing effective solutions that may range from new processes and collaborating with partners to implementing new technologies.

Leveraging technology is a reliable way for retailers to ensure they are collecting and sharing the correct information with auditors and regulatory bodies. However, implementing any technology successfully relies on having defined requirements and success criteria before starting to understand user and business needs, technological gaps, and what problems need solving.

Compliance requirements necessitate the ability to locate, understand, and report on data associated with regulations. Organisations also need to produce the right data at the right time and ensure high quality, to make sure reports are up to date and accurate. This is why choosing the right technology is important; to ensure efficient and accurate data collection, analysis, and reporting.

Centralised Data Platforms

Identifying where regulatory data is stored is the first step in achieving compliance.

Centralised data platforms streamline the process of locating data sources as, ultimately, all the data flows through the platform to be used when required. Dashboards can simplify visualising data and reporting efforts whilst the data is kept securely.

This resolves the ongoing challenge of disparate data sources, as once the initial work has been done to identify and integrate these sources it does not have to be repeated. Staff and privileged users access one platform and the data they have permission to view and use instead of trawling for access to multiple systems and portals.

Retailers should utilise platforms that securely collect, manage, and share data to relevant stakeholders. When utilised effectively, centralised data platforms act as a central repository of data by connecting to other systems and create a single source of truth that provides reliable information.

Centralising data also allows retailers to know where data is, have a clear oversight into compliance and privacy, get insight into how data is being used, and to find any bottlenecks.

Data Governance Policies

Accurately reporting on regulatory compliance requires high quality and reliable data. To achieve this, retailers need effective data governance.

Effective data governance ensures that data is consistent, trusted, and secure. Optimised data governance typically includes various roles working together to create standards, policies, and procedures to remove inconsistencies. For example, if products are listed differently in multiple systems and not addressed, it can cause data integrity, pricing, and stock issues.

Data governance also ensures that data is accessed, used, monitored, and stored properly to avoid errors and misuse. This includes outlining the permission rules for accessing and using specific types of data. Having these policies and rules in place streamlines the process of assigning privileged access to ensure data is consistently secure. Where rules are well defined, automation can be utilised to further simplify this access process.

Collaborating with supply chain partners to outline data standards and policies will also ensure the development of consistent data formats/models that can be used to meet regulatory requirements.

Automation

Regulatory compliance is more than ticking boxes, it is an ever-evolving environment and a continuous journey.

Automation can be used to simplify compliance efforts, enhance data accuracy, remove manual and repetitive tasks, and all teams to keep up with regulatory and other demands. Utilising products such as robotic process automation (RPA) to access supplier portals, extract and input data removes the need for a human to do so, and reduces the chance of errors and the need to remediate. This also increases security by reducing the number of users needed to access sensitive information and systems.

Automation can be used to create entire reports seamlessly by collating information from the necessary sources and inputting it into known report formats. They can do this efficiently for any defined report, reducing the time and effort spent by staff to do the same.

Best Practices

There are multiple best practices that retailers can follow to ensure their supply chain operations are compliant, such as:

    • Using a comprehensive compliance programme: developing policies and internal controls to ensure compliance
    • Conducting regular risk assessment and audits: identify potential compliance risks and be proactive in addressing them
    • Engaging with suppliers: ensure trust and transparency with the suppliers within the value chain

Compliance Programmes

Compliance programmes set guidelines and processes to ensure that supply chain operations meet regulatory requirements. Most compliance programmes must include:

  1. Clearly defined policies and expectations that are regularly updated
  2. Designated staff to oversee the programme
  3. Training to ensure all employees understand the guidelines

In addition to this, the programme should be monitored to measure effectiveness, ensure adherence, and identify risks that may arise.

Risk Assessments

A regulatory compliance risk assessment is an extensive review process used to identify if current processes are maintaining compliance or if there are any areas that need improvement.

The usual steps for building a comprehensive risk assessment include:

    1. Identifying and classifying risk types
    2. Evaluating the inherent risk
    3. Prioritising risk types
    4. Using mitigation strategies
    5. Continuously monitoring effectiveness

Risk assessments are pivotal to ensuring compliance measures go beyond meeting regulation as they address emerging threats, evaluate data-related risk, demonstrate due diligence, and ensuring continuous improvement.

Supplier Engagement and Compliance

Retailers are heavily reliant on a lengthy and complicated chain of suppliers, so it is critical that supplier engagement and compliance management is implemented to ensure clear communication and transparency. This ensures that they are meeting the necessary requirements and expectations. Without this, there is an increased chance of supply disruptions, quality issues, regulatory consequences, and ethical and social impact.

It is important for retailers to communicate policies and standards, carry out due diligence, monitor supplier performance, and ensure suppliers are transparent with their strategies, and uphold their ethical and social responsibility to maintain integrity.

Conclusion

Achieving and proving supply chain compliance is essential to mitigating risks, meeting stakeholder expectations, and conforming to best practices.

Compliance is not static; it is evolving. In such an environment, continuous monitoring and improvement is more important than ever. Embracing technology and utilising data can help navigate the complexity of supply chain compliance effectively whilst making resilient, reliable, and ethical supply chains.

By understanding the challenges, implementing effective solutions, and adopting best practices, retailers can ensure compliance across supply chains using data-driven insights and decisions. The knock-on effects of these changes can see impacts on overall brand reputation and operational execution.

Responsiv Supply Chain Insights Project

Working with Innovate UK and partners, Responsiv is developing a platform to gather and provide supply chain insights for the management of discarded textiles in the UK. This project will support the ideas of supply chain compliance, traceability, visibility, and where possible, transparency.

Around 1.05-1.75 million tonnes of textiles is thrown away in the UK annually, 360,000 tonnes of this is clothing that ends up in landfill.

Our goal is to create a body of information that can be used to support investment in UK recycling facilities and capacity. Responsiv will collaborate with partners to research improved ways of standardising data categorisations across textile sources for sufficient and valuable recycling supply.

Responsiv will be using its expertise in integration and automation to map out a previously undefined supply chain. A key part of our role in this project is making data secure and giving the consortium control of their data sharing.

Read more here!
Get in touch for more information about how Responsiv can support your supply chain data management and compliance!

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