Supply chain rules and regulations are a minefield that even the best teams struggle to navigate. Failure to manage, record, and cross-border document legalities can result in delays that slow or halt the production process. One misstep—from tariffs to social responsibility to corruption—can result in cost increases and inefficiency.
The team that properly manages the global supply chain rules and regulations will mitigate these risks, especially when working with new supplier relationships or developing new business in a global market. These are some supply chain rules, and regulations supply should know when adjusting to trade and regulatory uncertainty, classifying products and components correctly and avoiding legal penalties.
Social responsibility
Social responsibility drives supply chain rules and regulations. Over the last decade, governments worldwide have attempted to crack down on illicit practices such as conflict materials, suspicious production processes, and human rights violations in the supply chain. Increasingly, the evaluation of a company’s collective conscientiousness—environmental, social, and corporate governance (ESG)—is used to identify risks and growth opportunities.
Variable taxes and tariffs
Tariffs and taxes vary widely by country, and it’s challenging to nail down when shipping across the globe. However, tools like the US Customs Info Database can help teams identify the tariffs and duties on supply chain goods in more than 170 markets.
The TARIC database is another tool that provides specific tariffs for the EU. Other helpful information in TARIC includes specifics teams need to know, such as agricultural measures, trade defense instruments, as well as prohibitions and restrictions to import and export. Just remember, the TARIC does not contain information relating to national levies, such as VAT rates and rates of excises.
Teams should have knowledge of which countries have free trade agreements (FTA), as some countries have very high duties and taxes, while others have relatively low ones. For example, a product made in the US could benefit from duty-free entry into the 20 FTA partner countries.
Targeting FTA countries is a good market entry strategy because foreign buyers pay fewer tariffs for goods made in the US than similar goods from countries without FTAs. The International Trade Administration (ITA) is a good resource for determining a specific tariff rate and taxes.
Additionally, the Association of Southeast Asian Nations (ASEAN) between Southeast Asian countries has several free-trade agreements with governments worldwide, which allow companies to pay reduced tariffs.
Human rights regulations
Workers’ rights championed worldwide have led to regulations that enforce them. For example, the International Labour Organization (ILO) sets globally-recognized labor standards to protect workers from sickness, disease, and injury.
Canada poses serious economic sanctions for supply chain rules and regulations that violate human rights. The country also monitors export and technology transfer controls, and there are stiff regulations against the use of modern slavery and products made with forced labor.
Food safety regulations
In the US, roughly 48 million people get sick, 128,000 are hospitalized, and 3,000 die each year from foodborne diseases, according to recent data from the Centers for Disease Control and Prevention. So the need for food safety regulations couldn’t be more apparent.
When transporting perishable goods or hazardous materials, supply chain leaders must take special care to meet the supply chain rules and regulations designed to ensure these goods stay safe. Compliance with multiple countries is more complex.
The FDA’s regulations regarding the sanitary transportation of food—the Sanitary Transportation of Human and Animal Food rule—prevents transportation practices that create food safety risks in the US. For example, failure to continuously refrigerate perishables or inadequate cleaning of vehicles between loads are a few of the risks covered.
In Korea, the Ministry of Food and Drug Safety’s food safety management system ensures the safety of all imported food and thereby improves the overall health of its citizens.
Corruption regulations
According to the Chartered Institute of Procurement & Supply (CIPS), 56% of companies in North America and 51% in Europe have a formal policy on corruption. Unfortunately, supply chains present opportunities for immoral, illegal, and corrupt practices. Activities such as manipulating invoices and processing fake invoices are opportunities to defraud companies.
CTSI-Global can help
Incorporating an ongoing risk mitigation strategy enables better adherence to supply chain rules and regulations, making supply networks more reliable. CTSI-Global’s HoneyBee TMS can provide complete visibility of supply chain management to ease the burden of compliance with various local, national, and international supply chain regulations. That means CTSI-Global can help supply chain leaders reduce risks, improve claims management, avoid non-compliance repercussions such as fees unethical sourcing, and enable timely and ethical delivery of goods.
Contact CTSI-Global to learn more about risk mitigation for supply chain rules and regulations.
