In this lesson, you’ll discover the integration of compliance checks in the value chain.
Because product compliance affects the complete product lifecycle, integration is essential. There are two major aspects of value chain integration:
- Integration with the product master, which somehow sets the beginning of the value chain:
- to identify compliance-relevant products;
- to keep track of changes in product master data, which affect product compliance.
- Integration with the central business processes, Procure to Pay and Order to Cash:
- Supplier checks;
- Compliance checks to ensure compliance with regulations and policies applicable to target markets;
- Automated provision of compliance documents, for example, safety data sheets or dangerous goods documents;
- In case of issues identified by compliance checks, product compliance experts are automatically informed by requests from logistics.
These integration aspects are relocated with the following functionalities:
- Automated processing of compliance checks in the supply chain;
- Automated processing of compliance documents;
- Automated creation of requests from logistics to inform product compliance experts of relevant changes to product master data, as well as issues identified by compliance checks.
The product compliance information in the Products app allows any user to easily access the compliance status of products.
The following illustration shows the list of product compliance checks.
Product Compliance - Supplier Check(only relevant for Purchasing)
Check that only approved suppliers assessed by product compliance are used to source the product. This ensures that the sourced products meet the expectations and requirements of product compliance.
Product Marketability (PMA) Check
Check that the product is brought only into those countries approved by product compliance. This ensures that all legal aspects have been verified and assessed, and no violation occurs.
Dangerous Goods (DG) Check
Check that the product is transported only in those countries and with those transport modes that are approved by product compliance. This ensures that the transport requirements of the dangerous goods regulations are met.
Safety Data Sheet (SDS) Check
Check that a valid safety data sheet (SDS) exists for the product and provide it to the recipient. This ensures the recipient can access the SDS in time for safe handling.
Looking at end-to-end business processes, we must look at product compliance integration in two major business processes with integrated compliance checks, Procure to Pay and Order to Cash.
The scope items with integrated compliance checks are presented in the following diagram.
Compliance Check Integration in the Business Process: Order to Cash
The order-to-cash process is the initial process for the integration of compliance checks. Your customer posts an order, and you deliver the products.
The selling entity is responsible for compliance obligations, such as checking whether the sale of the product is allowed or providing a safety data sheet.
This applies if another company processes the delivery and ships the product. Such intercompany sales processes are quite common, but it must be ensured that:
- The selling of the product is allowed.
- A safety data sheet is provided with the address of the selling company.
- Dangerous goods shipments are compliant.
In intercompany sales processes, dangerous goods checks, marketability, and safety data sheet checks are integrated.
Compliance Check Integration in Business Process Procure to Pay
Looking at the business process, Procure to Pay, you need to distinguish the following:
- Sourcing from external suppliers;
- Sourcing by transfers within or from a company of the same group.
When sourcing products from external suppliers:
- Supplier checks are applicable to ensure that compliant suppliers produce compliant products.
- In general, duties regarding product compliance are the responsibility of the supplier.
- In case transport responsibilities are also with the purchasing company, for example, to fetch the goods from the harbor, dangerous goods checks are required for organizing the transport.
When sourcing by stock transfers, the following happens:
- Supplier checks are not required.
- Dangerous goods checks are needed to organize the transport.
- Safety data sheet checks ensure the availability of documents, but automated shipment is not required.
- In the case of intercompany transfers, marketability checks are applicable.
A supplier check is key for purchasing compliant products when purchasing materials from external suppliers.
Product compliance responsibilities regarding marketability, dangerous goods, and safety data sheets are with the supplier.
If transport responsibility lies with the purchasing company, dangerous goods checks ensure compliant transportation.
Supplier checks are key in purchasing processes to ensure that relevant products comply. Dangerous goods checks are required if transport responsibilities lie with the purchasing company.
In the purchase contract, dangerous goods checks are unavailable since transport responsibility cannot be derived.
With the subsequent purchase order, transport responsibility can be derived, and dangerous goods checks are available.
Responsibilities lying with the supplier:
- Check the marketability of the sold product for the country/region of the ship-to party.
- Check if the supplier’s part of the transportation is possible regarding dangerous goods.
- Send a safety data sheet.
Therefore, no product marketability and safety data sheet checks are required on the purchase order.
In the case of your company's transport responsibilities, dangerous goods checks are required.
Danger goods and safety data sheet checks are integrated with stock transfer processes.
Supplier and product marketability checks are not required since the stock transfer is within one company.
For intercompany stock transfer, marketability checks, dangerous goods checks, and safety data sheet checks are also integrated.
Summary
Value chain integration in product compliance ensures products meet compliance requirements throughout their lifecycle.
Integration between product compliance and central business processes (Procure to Pay, Order to Cash) streamlines compliance activities.
Automated checks occur for supplier approval, product marketability, dangerous goods handling, and safety data sheet availability.
Integration facilitates compliance by automating checks, document provision, and expert notifications in case of issues.