Working in the manufacturing industry, you must know how important compliance is in this sphere.
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What is compliance for manufacturing companies?
It’s important that manufacturing companies are aware of various legal, regulatory, technical and corporate governance requirements that they must comply with in order to operate as a successful business. These requirements are designed to protect both the business and consumers from risk so that they can legally manufacture and sell their products.
There are two types of compliance that manufacturing companies need to concern themselves with: these are regulatory compliance and corporate compliance.
Regulatory compliance refers to laws and regulations that the business must follow that are relevant to the ways it operates. These can include local, state, federal and international laws and regulations. Different industries will have different requirements.
Corporate compliance can also refer to some federal and state laws which ensure that your company is complying with corporation laws affecting how they run and are governed. It also covers it also includes compaliance with a range of internal policies and procedures.
Global manufacturing organizations will have to be aware of regulatory requirements across various jurisdictions that may have very different requirements.
Why is compliance essential for manufacturing companies?
Manufacturing compliance provides a layer of protection against risk for a business. It also exists to provide protection to employees, customers and clients, communities and other stakeholders.
Without compliance, there are various risks that the company can be exposed to. These include:
- Business continuity risks – operations can be shut down or paused because of non-compliance, which disrupts the company’s ability to carry out its business processes.
- Financial risks - compliance breaches can lead to fines, penalties, lost or cancelled orders and more.
- Legal risks - by not meeting regulatory compliance, businesses can face a range of legal issues, including being sued and fines and penalties and even criminal charges for business leaders.
- Reputational risks – when a company is plagued by compliance breaches it can also result in damage to its reputation, causing employees to leave and investors and customers and other stakeholders losing trust in the company.
Benefits of achieving compliance
A manufacturing company that achieves compliance will experience multiple benefits. These include:
- Reduced exposure to risk - a safe environment for employees to work in and delivery of quality and safe products for customers.
- Improvements to organizational communication – employees will be equipped to identify any potential compliance issues to management.
- A knowledgeable workforce – employees will have the knowledge and skills to understand how things should run in the organization.
- More profits – without the financial costs from legal fees and fines due to non-compliance there will be more left over for profit.
- Increased trust in your brand – customers have better perceptions of well-run, transparent companies that act as good corporate citizens.
12 main areas of manufacturing compliance
Specific legislative and regulatory requirements will differ for manufacturing companies depending on where they carry out their operations and what type of manufacturing they are involved in. However, these are the main areas of manufacturing requirements in compliance:
- Product safety
- Workplace health and safety laws
- Quality standards
- Environmental protection standards
- Export controls
- Data security and protection
- Employment laws
- Taxation and company finance regulations
- Securities and exchange regulations
- Anti-corruption laws
- Fair trading/competition laws
- Various municipal codes (eg: building and planning permits)
Top regulation and standards in manufacturing
Depending on the industry that your manufacturing operations are in, as well as the location of where these operations are carried out, there are many different specific manufacturing industry standards and regulations that you must comply with. In general, however, the most common are:
- Ensuring appropriate tax identification registration for federal and state regulators and lodging all taxation documents correctly and on time.
- Business licenses from the municipality where manufacturing will occur.
- Adhering to land use and zoning permits.
- Health permits if the company is manufacturing food and associated products.
- Building permits.
- Specific licenses for goods subject to extra regulation such as tobacco, alcohol, drugs or firearms.
- Compliance with the Health Insurance Portability and Accountability Act (HIPPA) if applicable, requiring the protection of sensitive patient health information.
- Compliance with the Payment Card Industry Data Security Standard - a regulation for companies that handle major credit cards to ensure the data is protected.
- Compliance with the Sarbanes Oxley Act that sets the requirements for companies that handle financial data.
- Compliance with International Organization of Standardization standards – this is the international peak body that sets standards globally.
- Compliance with the General Data Protection Regulation (GDPR) that governs data in the European Union.
Depending on the requirement that you need to comply with, you may be issued certification – for example a certificate of compliance in manufacturing – by your regulator.
5 steps to achieve compliance
Implementing appropriate policies, procedures, protocols and oversights within your organization will ensure that you can achieve production compliance.
1. Understand your operating environment(s)
Look at where your business is located and establish what the legal and industry regulations are for it within those jurisdictions. There may be different regulations in different places, particularly if you are operating in multiple companies. You should also be aware of other regulations such as trade laws when you are selling your product in other countries.
2. Delegate responsibility for compliance
Having an organizational lead on compliance will help to ensure that the various compliance activities are carried out, and any risks can be identified or mitigated before they become a problem. Backed by a team of professionals, the Chief Compliance Officer can set goals and targets for organizational compliance and create any appropriate internal documents such as policies and procedures, codes of conduct etc. This team also needs to stay up-to-date with compliance requirements and changes in the regulatory landscape to ensure that you don’t miss any new rules or regulations that can affect your business.
3. Conduct a risk assessment
Identify any potential or actual risks that pose a threat to your compliance efforts by conducting a detailed risk assessment across the breadth of your organization.
4. Develop appropriate compliance strategies
You should have an overall compliance strategy to ensure that your company is able to manage all of its compliance obligations. Based on the results of your risk assessment, you may need to devise other strategies to address any risks and bring them into line.
5. Train employees in manufacturing compliance requirements
Your employees are your greatest strength – but can also be the greatest weakness. In order to ensure compliance measures are met, they need to understand what these are, why they are important, and what they need to do in order to meet compliance. It should form part of your onboarding process and should also be delivered annually to ensure employees remember what to do. When there are regulatory changes that affect your organization, get on the front foot as soon as possible and train your employees in the new procedures.
How effective internal communications can help compliance
Having sound internal communication practices in place will help to ensure that compliance for your manufacturing company is adhered to.
Without communication, people are in the dark. You can’t expect people to do what you need them to do if you don’t tell them about it, explain it, and give them the instructions they need.
- Ensure your communications are clear and easy to understand
- Send all information in a timely manner
- Communicate regularly
- Use a multi-channel approach to communications, sending information in a variety of formats
- Send reminders about important deadlines
- Create appropriate training and information materials when there are new compliance requirements and regulatory changes.
Using DeskAlerts will help with all your compliance communication needs to ensure that your employees are accountable and knowledgeable.
DeskAlerts is an internal communications software system that is installed on desktop computers and mobile devices and sends notifications to employees without relying on the email system or intranet.
You can use DeskAlerts to:
- Send pop-up notifications to computer screens to announce new compliance initiatives
- Send push-notifications to mobile phones to those employee who are not in the office
- Send reminders about due dates
- Send notifications with reading acknowledgments that requires employees to accept that they have read the information, so they can be accountable
- Use corporate screensavers and digital signage displays to reinforce compliance requirements in a visual, eye-catching way
- Send surveys to test your employees’ knowledge of compliance requirements
- Send training material, such as video content, to those who need it
- Send information to the entire organization or just specific groups of employees: eg: only send taxation compliance reminders to your finance team.
- Schedule content in advance so you can be sure your compliance communications will go out at a future date, when you need it to.
Compliance for manufacturing companies can be incredibly complex. Anything you do to make the task easier is a good thing. Find out how DeskAlerts can assist by getting in touch with our internal communications experts today for a free demo.
What is regulatory compliance in manufacturing
Regulatory compliance in the manufacturing industry refers to the state, federal and local laws and requirements that the company must meet in the course of conducting its operations.
What are three examples of compliance
Three examples of compliance include:
- Meeting workplace health and safety standards
- Legal and corporate governance compliance
- Manufacturing standards compliance
What are manufacturing standards?
Manufacturing standards are manufacturing compliance requirements and refers to the specifications that must be adhered to in terms of manufacturing, storing, packaging and labeling products.