The distribution industry is not alone – all businesses face quality management and compliance regulation. The reality for distribution with quality and compliance management is extensive regulation which significantly complicates processes, increases the cost of doing business and, if not maintained properly, could result in crippling financial penalties. This is a tall order for the entire industry but for the smaller organization with finite resources, these requirements to audit processes, document changes and potentially make sizable investments in training and systems often means an endless uphill battle to stay ahead of these ever-changing rules and regulations.
What will be tested here is the level of preparation an organization has in place. It always comes down to a companies’ business systems, the number of regulations they manage, and the complexity of those regulations.
One way to stay up-to-date is with a modern ERP application which can provide a contemporary business framework while facilitating compliance even with the most comprehensive regulations.
Compliance Need-to-Knows
The global supply chain faces six broad regulation categories—business and finance, information technology, industry compliance, labor regulations, trading partner requirements and government regulations. Taking a peek at each:
- Business and Finance – Some of the more prominent regulations include Sarbanes-Oxley financial reporting, IFRS and GAAP accounting standards, tax management for sales tax, use tax, and value-added tax (VAT), fixed asset depreciation rules, costing and inventory valuation regulations and anti-trust laws. Your systems ultimately will need native support for many of these standards and localization where applicable.
- Information Technology – The list is long and includes credit card regulations, cybersecurity restrictions, data security and numerous localized requirements. Most important in partnering is the proper accreditation of selected advisers/vendors as well as the ability to demonstrate multiple levels of security.
- Industry Compliance – Each industry has their own though ISO is the first to come to mind for many. Though not always mandatory, adherence to ISO is an asset and an advantage. Vendors here will need to showcase a native framework that can support the appropriate industry regulations.
- Labor Regulations – Some of the most common includes the Occupational Safety and Health Administration (OSHA), Health Insurance Portability and Accountability Act (HIPAA), Fair Labor Standards Act, workers’ compensation, trade union requirements and the Family and Medical Leave Act (FMLA). Here you need to make sure employee records can be extended or connected to some type of human capital and payroll management application.
- Trading Partner Compliance – Most mentioned are Electronic Data Interchange (EDI), label specifications, packaging requirements, product quality tolerances and allowances for breakage. Primary needs are EDI hooks for document transmission, preferably with low or no-code customizations.
- Government Regulations – No shortage of rules and regs here. The Environmental Protection Agency (EPA) and the Food and Drug Administration find their way into huge numbers of business operations. Most useful are low and no-code customizations and healthcare marketplace applications.
Quality Management Need-to-Knows
There are six elements across federal and industry compliance regulations. These elements are documentation, training, security, reporting, accuracy and process control. Let’s take a closer look at each.
- Documentation– Most organizations will need to document standard operation procedures, safety protocols, employee training materials and various work instructions. Look for an embedded document management solution.
- Training– Quality and compliance programs will likely include the management of employee skills and certifications. Embedded CRM and connected marketplace applications are very useful.
- Security– Security will require multiple layers of protection against cyber-attacks. Companies will need to perform a balancing act with their internal controls to allow for both the necessary limits access to sensitive information without restricting employees’ ability to get work done. Seek role-based security.
- Reporting– Businesses will need to effectively be able to report their Quality Management information. The proven technologies here are modern ERP systems with business intelligence tools and real-time dashboards.
- Accuracy– The goal here being ongoing and extensive efforts to reduce human error. Bad data leads to data corruption. Effective tools include modern ERP systems, Artificial Intelligence, Barcoding and Machine Learning.
- Process Control– Automating business processes, by its very nature, will have a large positive impact when it’s time to report on Process Control. The elimination of manual data entry and the introduction of change control and traceability measures will result in major gains in your process control.
If this sounds like a lot – it is. But it is manageable with a modern, cloud-based ERP. Acumatica ERP handles these tasks with ease (and a little planning).
Distributors of all stripes face thousands of compliance and quality management regulations. Companies running on entry-level accounting applications or a legacy ERP system, with all the disconnected processes and manual workarounds, are poorly equipped to meet these challenges. A pronounced competitive advantage lies with the distributor equipped with a modern, cloud-based ERP application- with all its requisite tools- allowing them to manage the moving target that is compliance and quality management.
Are you ready to effectively manage this weight of quality reporting and compliance? Parallel Solutions has been down this road many times, and is here to help. Email us at sales@parallelsolutions4u.com or call us at 440-498-9920.
Check out these additional resources:
Solution Brief Quality Compliance Final
Quality Compliance Playbook Final
