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Compliance Tip of the Day

Compliance Tip of the Day – Compliance, Ethics and Your Supply Chain

Welcome to “Compliance Tip of the Day,” the podcast where we bring you daily insights and practical advice on navigating the ever-evolving landscape of compliance and regulatory requirements. Whether you’re a seasoned compliance professional or just starting your journey, we aim to provide bite-sized, actionable tips to help you stay on top of your compliance game. Join us as we explore the latest industry trends, share best practices, and demystify complex compliance issues to keep your organization on the right side of the law. Tune in daily for your dose of compliance wisdom, and let’s make compliance a little less daunting, one tip at a time.

Today, we will consider how compliance can improve your supply chain.

For more information on the Ethico Toolkit for Middle Managers, available at no charge, click here.

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Blog

Upping Your Compliance Game, Part 2 – Compliance, Ethics and Your Supply Chain

The Trump Administration has suspended FCPA enforcement for the foreseeable future. What does that mean for compliance professionals? Hui Chen has suggested this should be seen as an opportunity for compliance, but to do so, “It’s time to up your game . . . Instead of selling insurance for FCPA enforcement, become leaders that help your organizations perform.” Based on this challenge by perhaps the most imminent compliance commentator around, I am going to devote the next several blog posts to ways in which compliance professionals can indeed up their collective game and demonstrate the importance of not simply compliance but ethics and compliance. Today, it is in your Supply Chain.

Have you ever stopped to consider the human rights abuses at the root of the products you use daily? From solar panels to computer screens, the exploitation of the Uyghur minority in China is a painful reality that has been hidden from Western consumers for far too long. Compliance professionals must now confront this issue head-on, ensuring their organizations meet regulatory requirements and uphold ethical business practices.

The global supply chain, long enabled by forced labor and geopolitical complexities, faces a reckoning. The Uyghur Forced Labor Prevention Act (UFLPA), the shifting dynamics of global trade post-COVID-19, and increasing tensions with China all underscore the urgent need for corporations to re-evaluate their sourcing strategies. Let’s explore the key measures compliance professionals must take to mitigate these risks and establish a more ethical and resilient supply chain.

UFLPA represents a turning point in corporate responsibility. This legislation prohibits goods made wholly or partly in Xinjiang from entering the U.S. unless companies can provide clear and convincing evidence that their products are free from forced labor. Given the widespread exploitation in this region, achieving compliance is no small feat.

Xinjiang, home to the oppressed Uyghur population, is a major hub for materials like neon, steel, lithium, and silica, which are critical components in many industries. These industries, controlled by paramilitary organizations, thrive on forced labor, driving down production costs while manipulating global markets.

For compliance professionals, this presents a major challenge. Companies must:

  • Conduct thorough supply chain audits.
  • Require suppliers to provide clear documentation proving ethical sourcing.
  • Leverage technology, such as blockchain, to improve transparency.
  • Engage with third-party investigators to conduct independent assessments.

Taking UFLPA compliance seriously is not just a legal obligation but a moral one. Companies that fail to act risk hefty fines and irreparable reputational damage.

Diversifying the Supply Chain: A Risk Management Necessity

Over-reliance on China has long been a vulnerability, and recent geopolitical tensions have only magnified this risk. A diversified supply chain is an ethical imperative and a strategic advantage. Companies can mitigate supply chain disruptions and regulatory exposure by expanding sourcing beyond China.

Compliance professionals should advocate for:

  • Investment in Southeast Asia. Vietnam, Malaysia, and Cambodia offer alternative sourcing opportunities with fewer ethical concerns and growing industrial capabilities.
  • Nearshoring to North America. Mexico presents an interesting alternative because of its proximity to the U.S. and its established manufacturing sector.
  • Enhanced supplier due diligence. Companies must ensure that alternative suppliers comply with international labor and human rights standards.

The ability to pivot away from forced labor-dependent supply chains will help companies meet compliance requirements and enhance long-term business continuity.

Investing in Alternative Sources of Supply

Beyond geographic diversification, businesses must rethink their sourcing strategies to ensure sustainability and security. Investing in alternative materials and innovative technologies can reduce dependence on high-risk supply chains.

Key actions include:

  • Developing alternative raw material sources. Lithium, silica, and other key materials can be sourced outside of Xinjiang, reducing exposure to forced labor risks.
  • Strengthening partnerships with ethical suppliers. Vetting and fostering long-term relationships with suppliers in ethical jurisdictions ensures compliance and reliability.
  • Investing in R&D for alternative technologies, such as researching new production methods and materials, can help reduce dependence on unethical sources.

Compliance officers must take the lead in integrating these strategies into corporate supply chain policies, ensuring that ethical considerations are embedded in procurement decisions.

Reshoring Manufacturing: Enhancing Security and Compliance

Reshoring, bringing manufacturing back to stable, free-market economies, presents an interesting solution to supply chain vulnerabilities. Companies that invest in domestic or nearshore production benefit from:

  • Greater regulatory oversight and labor protections.
  • Reduced risks of tariffs, sanctions, and trade restrictions.
  • Shorter, more resilient supply chains.

The U.S. and UK, in particular, offer untapped manufacturing potential with over 525,000 underutilized manufacturers in the U.S. alone. Reshoring can help companies mitigate the risks associated with China while bolstering domestic economies.

For compliance professionals, reshoring initiatives should be integrated into long-term corporate strategy discussions. While the initial costs may be higher, the long-term benefits—ethical assurance, reduced risk exposure, and supply chain resilience—far outweigh the challenges.

The Case for Investing in U.S. Manufacturing

Beyond reshoring, direct investment in U.S. manufacturing presents an opportunity to ensure both ethical and economic stability. Compliance professionals should advocate for:

  • Incentives for domestic production. Lobbying for tax incentives and subsidies can help make U.S. manufacturing cost-competitive.
  • Strengthening workforce training programs. Investing in a skilled domestic workforce ensures long-term manufacturing sustainability.
  • Leveraging technology to enhance efficiency. Automation and advanced manufacturing techniques can offset higher labor costs, making U.S. production more viable.

With 525,000 manufacturers in the U.S. currently underutilized, the potential for strengthening domestic supply chains is immense. Businesses willing to make this investment will gain ethical credibility and a long-term competitive advantage.

The Compliance Mandate for Ethical Supply Chains

The Uyghur Forced Labor Prevention Act, geopolitical tensions with China, and the need for supply chain diversification are not just news headlines but corporate compliance imperatives. Companies that fail to address these challenges risk legal consequences, operational disruptions, and reputational harm.

To navigate this evolving landscape, compliance professionals must:

  • Ensure rigorous UFLPA compliance through enhanced audits and documentation requirements.
  • Advocate for supply chain diversification to mitigate reliance on high-risk regions.
  • Invest in alternative sourcing and ethical suppliers to ensure business continuity.
  • Consider reshoring manufacturing to enhance oversight and security.
  • Champion investment in U.S. manufacturing as a long-term compliance and business strategy.

By taking these steps, companies can move beyond reactive compliance and become proactive leaders in ethical business practices. The future of corporate supply chains must be built on transparency, sustainability, and respect for human rights. Compliance professionals are uniquely positioned to drive this change, ensuring regulatory adherence and a more just and equitable global marketplace.

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12 O’Clock High-a podcast on business leadership

12 O’Clock High, a podcast on business leadership: Evolving Supply Chain Risks and Strategic Adjustments Post – COVID with James Gellert

In this engaging episode, Tom Fox welcomes back James Gellert, Executive Chairman of RapidRatings and Chair of Advisory Board at LogicSource.

They are to discuss the evolution of supply chain risk management post-COVID. They delve into how the pandemic accelerated existing initiatives, highlighting the increased focus on using data and new technologies to enhance supply chain resiliency. Gellert emphasizes the shift from ‘just in time’ to ‘just in case’ strategies, the heightened importance of managing indirect suppliers, and the impact of current inflationary pressures on middle-market and private companies. They also explore the critical role of communication between supply chain executives, board members, and shareholders in navigating these complexities. The discussion underscores the need for more proactive engagement from all stakeholders to manage supply chain risk effectively.

Key Highlights:

  • Current Role and Responsibilities
  • Impact of COVID on Supply Chain Risk Management and Post-COVID Supply Chain Strategies
  • Inflation and Its Effects on Supply Chains
  • Labor Costs and Supply Chain Disruptions
  • Consumer Spending and Supply Chain Pressure
  • Procurement as a Service and LogicSource
  • Engagement of Boards and Shareholders in Supply Chain Risk

Resources:

James Gellert on LinkedIn

RapidRatings

LogicSource

Tom Fox

Instagram

Facebook

YouTube

Twitter

LinkedIn

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Daily Compliance News

Daily Compliance News: October 31, 2024 – The Happy Halloween Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network.

Each day, we consider four stories from the business world: compliance, ethics, risk management, leadership, or general interest for the compliance professional.

In today’s edition of Daily Compliance News:

  • Sri Lanka to probe corruption in tanker disaster. (Al Jazeera)
  • AstraZeneca China BU President under investigation. (FT)
  • Trafigura faces $1bn hit for corruption in Mongolia. (Bloomberg)
  • Supply Chain woes and compliance. (WSJ)

 

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FCPA Compliance Report

FCPA Compliance Report: Navigating Global Compliance and Risk – Lessons from The Pager Attacks

Welcome to the award-winning FCPA Compliance Report, the longest running podcast in compliance. In this edition of the FCPA Compliance Report, Tom Fox visits with Dr. Ian Oxnevad and Chris Mason from Infortal Worldwide about the Israeli attack on Hezbollah through its pagers and explores what all of this means for the compliance professional.

The podcast explores the compliance and supply chain ramifications stemming from pagers licensed by a Taiwanese company to a Hungarian firm which were subsequently used to disrupt Hezbollah’s operations. This incident serves as a springboard for discussing the broader implications for global businesses, emphasizing the essential role of due diligence in complex supply chains. The episode offers insightful commentary on how Hezbollah’s lack of scrutiny over their suppliers led to vulnerabilities that were exploited by Israel, acting as a cautionary tale for organizations everywhere. Key topics include the unexpected ways legitimate companies can be compromised, the pervasive nature of risk management, and the importance of vetting and verifying partners across all industries to maintain business integrity and reputation.

Highlights in this Episode:

  • Attack on Hezbollah
  • Compliance and Supply Chain Issues
  • Payment Anomalies and Red Flags
  • Lessons Learned and Risk Management
  • The Importance of Knowing Your Risk Profile
  • Unintended Consequences and Risk Management
  • Final Thoughts on Supply Chain Vulnerabilities

Resources:

Infortal Worldwide

Dr. Ian Oxnevad on LinkedIn

Chris Mason on LinkedIn

Tom Fox

Instagram

Facebook

YouTube

Twitter

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Everything Compliance

Everything Compliance: Episode 141, Tribute to Nick Gallo Episode

Welcome to the only roundtable podcast in compliance as we celebrate our second century of shows.

In this episode, we take up a potpourri of topics. We have the quartet of Matt Kelly Jonathan Armstrong, Jonathan Marks, and Karen Moore; all hosted by Tom Fox.

  1. Matt Kelly looks at the issue of what and who are in your Supply Chain after the pager attacks in Lebanon. He shouts out to Michaela Deprince for a life well lived.
  2. Karen Moore takes a deep dive into executive Clawback and Holdback provisions. She shouts out to Nick Gallo and asks all to keep him in their thoughts and prayers for a speedy recovery.
  3. Karen Woody reviews the Flyfish SEC enforcement action about NFTs as securities. She shouts out to pop culture and the great show on Apple TV Slow Horses.
  4. Jonathan Marks considers the imbroglio of PwC in China and what it means for audit firms trying to do business in China. He shouts out to eBay for providing authenticator services and briefs us on the Keeper Test.
  5. Tom Fox shouts out to Los Angeles Dodger Shohei Ohtani for having one of the greatest single seasons in MLB by a hitter.

The members of the Everything Compliance are:

The host and producer, rantor (and sometime panelist) of Everything Compliance is Tom Fox the Voice of Compliance. He can be reached at tfox@tfoxlaw.com. Everything Compliance is a part of the award-winning Compliance Podcast Network.

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Daily Compliance News

Daily Compliance News: September 23, 2024 – The That Old Time Religion Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network.

Each day, we consider four stories from the business world: compliance, ethics, risk management, leadership, or general interest for the compliance professional.

In today’s edition of Daily Compliance News:

  • How Binance found that old time ‘compliance’ religion. (WSJ)
  • Is your supply chain weaponized? (WSJ)
  • Are Zombie Directors stalking US Boardrooms? (FT)
  • Michael Lomas extradited to South Africa. (BBC)

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Compliance Tip of the Day

Compliance Tip of the Day: Using Your Supply Chain to Enhance Compliance Communication

Welcome to “Compliance Tip of the Day,” the podcast where we bring you daily insights and practical advice on navigating the ever-evolving landscape of compliance and regulatory requirements.

Whether you’re a seasoned compliance professional or just starting your journey, our aim is to provide you with bite-sized, actionable tips to help you stay on top of your compliance game.

Join us as we explore the latest industry trends, share best practices, and demystify complex compliance issues to keep your organization on the right side of the law.

Tune in daily for your dose of compliance wisdom, and let’s make compliance a little less daunting, one tip at a time.

In this episode, we explore how external stakeholders, such as your supply chain, can enhance your compliance communications.

For more information on the Ethico ROI Calculator and a free White Paper on the ROI of Compliance, click here.

To check out The Compliance Handbook, 5th edition, click here.

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Innovation in Compliance

Innovation in Compliance: Anne van de Heetkamp – Exploring Global Trade Intelligence and AI Integration in Supply Chain Management

Innovation comes in many forms, and compliance professionals must be ready for and embrace it. In this episode, Tom Fox visits Anne van de Heetkamp, Vice President of Product Management at Descartes, and discusses global trade compliance and the integration of AI in supply chain management.

They discuss Anne’s extensive career in global trade, Descartes’s comprehensive suite of supply chain management tools, and Anne’s specific role in the Global Trade Intelligence pillar. Key topics include the challenges companies face in regulatory compliance, the role of AI in mitigating supply chain disruptions, and the importance of data quality in leveraging advanced technologies for risk management. The conversation spans current automation levels, future AI evolution, and practical approaches to enhancing data transparency and compliance processes within the supply chain framework.

Key Highlights:

  • Anne’s Professional Journey
  • Global Trade Intelligence at Descartes
  • Microservices and Data Privacy
  • AI and Supply Chain Disruptions
  • Data Quality Issues in Compliance
  • Future of AI in Supply Chain Management

Resources:

Anne van de Heetkamp on  LinkedIn

Descartes

Tom Fox

Instagram

Facebook

YouTube

Twitter

LinkedIn

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Compliance Tip of the Day

Compliance Tip of the Day: Managing Risk from China

Welcome to “Compliance Tip of the Day,” the podcast where we bring you daily insights and practical advice on navigating the ever-evolving landscape of compliance and regulatory requirements.

Whether you’re a seasoned compliance professional or just starting your journey, our aim is to provide you with bite-sized, actionable tips to help you stay on top of your compliance game.

Join us as we explore the latest industry trends, share best practices, and demystify complex compliance issues to keep your organization on the right side of the law. Tune in daily for your dose of compliance wisdom, and let’s make compliance a little less daunting, one tip at a time.

In this episode, we consider some strategies you can utilize to manage business risks in the current competition with China and the potential conflict with China.

For more information on Ethico and a free White Paper on top compliance issues in 2024, click here.