How regulations trigger supply chain changes (and how to navigate them)

4 Minutes Read

It's no secret that regulations can significantly affect supply chains. Nearly every industry and sector has to comply with varying levels of legislation, both internally and externally, and it's no different when it comes to supply chains.

Regulatory changes can trigger several shifts in the way organisations manage their supply chains - from adjusting safety procedures and tightening compliance requirements to making sure they adhere to new laws and standards. This can result in large-scale disruption, especially for large organisations with complex supply chains.

But it doesn't have to be this way. With an outcome-driven approach and good supply chain management practices, you can ensure that you've got the best strategies and solutions in place for dealing with regulatory shifts and minimising disruption. In this article, we'll help you understand how these regulatory changes can impact your supply chain operations - as well as how an outcome-driven approach might help you navigate them successfully.

How changes in regulations impact supply chains

Changes in regulations can have a dramatic impact on supply chains, from the products and services that businesses can offer to the way shipments move through the global supply chain system. It's crucial for business leaders to closely monitor their industry's regulatory environment to anticipate potential changes and make adjustments accordingly.

Several complexities arise when regulations change, including modifications to the way global shipments are routed and tracked, changes in tariff codes and the shifting of trade compliance obligations on importers or exporters. It can be difficult for organisations to react swiftly while also ensuring they remain compliant.

Read more: What the EU’s new sustainability directive means for supply chain managers

Outcome-driven supply chains can make navigating regulatory adjustments easier by providing greater visibility into distributed networks and processes as well as more control over operations. They also provide better access to analytics so businesses can quickly identify potential opportunities or risks due to changed regulations. The resulting responsiveness means companies can more effectively ride out the waves of change regardless of their size or the scope of their operations.

Evolving supply chain management strategies

Regulations can significantly impact supply chain strategies. While some strategies remain constant, such as product delivery, others need to be adapted to the new requirements for compliance. Take, for example, the introduction of restrictions on the amount of carbon emissions from transportation vehicles. Companies must adjust their supply chains and transportation methods to meet these requirements, potentially incurring additional costs or changing their available options.

The good news is that outcome-driven supply chains can make adapting to these changes easier. By placing customer goals at the centre of planning and decision-making, companies are more agile in assessing and responding quickly to changes in regulations and customer demands. This means they are better able to raise performance levels while still reducing costs and maintaining compliance with standards without difficult trade-offs.

Ultimately, outcome-driven supply chain systems enable companies to achieve business goals with greater flexibility and efficiency when regulatory changes occur.

Challenges faced when adapting supply chains

The impacts of regulatory changes can be difficult to manage, as they often involve complex processes and require multiple stakeholder engagement. This is especially true if the supply chain is not equipped to make the necessary adjustments — but even when it is, certain challenges can still arise.

For instance, one way to adapt your supply chain is to focus on achieving desired outcomes rather than on traditional cost-cutting. However, this often requires significant investment in technology and resources to analyse data and identify areas for improvement. It's also important to consider the problem holistically, because new regulations may affect different parts of the supply chain differently — so a tailored approach is needed for it to be effective.

Additionally, supply chains must have a deeper understanding of their core business objectives if they want to leverage this approach successfully. That means taking factors like safety, sustainability, speed and efficiency into account — all while remaining agile enough to cope with rapid change.

The ultimate goal of using outcome-driven supply chains should be better decision-making — but, at times, it may feel like a balancing act between regulation compliance and cost control due to the added complexity that comes with it.

Best practices for navigating regulatory changes

Navigating the ever-changing landscape of regulation can be daunting, but it doesn't have to be. By following best practices for assessing, understanding and responding to regulatory changes, you can ensure your supply chain remains agile and compliant.

Assess the changes

The first step is to assess the changes in the regulations. Once you have a good understanding of how it will impact your supply chain, you can start to strategise how best to navigate the changes. Keep an eye on the news, supply chain-focused websites or magazines and check in with other parts of the business. For example, your head of sustainability might be interested in making sure you can achieve the new ISO 14083 accreditation. And that means new emissions targets will be heading your way. 

Read more: Net-zero for supply chains has a new ISO accreditation

Understand your supply chain

Understanding your supply chain is key— who is involved, what are their capabilities, what processes and systems they use, and any potential risks that could arise as a result of the new regulations. To get the best understanding, you need to make the most out of the data that you have. 

Outcome-driven supply chains

Outcome-driven supply chains help organisations anticipate and respond quickly to any regulatory changes. By identifying desired outcomes such as cost reduction or sustainability goals and building a strategy around these goals, organisations can stay ahead of any external pressures like changing regulations or market shifts. This approach facilitates agility while ensuring compliance with all relevant laws and regulations.

By following these best practices for navigating regulatory changes in your supply chain, you'll be able to ensure compliance while also responding quickly and strategically to any changes in regulation.

The supply chain industry is dynamic and ever-changing. With more regulations popping up all the time, it's important to stay on top of the changes and their potential impact. It can be overwhelming, but adopting an outcome-driven supply chain system can make managing the changes easier. 

Having a system in place that is agile, responsive, and able to adapt to the changing landscape of regulations is key to ensuring your supply chain stays running smoothly and efficiently. With the right processes in place, you can ensure that your operations remain compliant and that your supply chain thrives no matter how many changes are imposed.

Want to make sure your supply chain is ready for any new regulations that are on the horizon? Get in touch to find out how our platform can help you drive better outcomes through your supply chain.

You might also like...

4 critical supply chain trends from industry expert Graham Slack

Earlier this year, Philip Ashton, our CEO, sat down with Chief Economist and Head of Strategic... Read more

Why net-zero needs to be part of your supply chain resilience strategy

When you first think of resilient supply chains, going green is probably not your first thought.... Read more

'Supply chains will never return to normal'

‘Supply chains will never return to normal.Managing crises is the new normal.’ - Diego... Read more