7 Common Compliance Mistakes Companies Make When Entering a New Market

Environmental compliance affects everyone across all industries. Regardless of what your compliance goals are or the industry you enter, here are some common mistakes that can disrupt market access and lead to hefty fines and dire outcomes. It’s important to recognize the underlying risks these compliance mistakes carry, regardless of if they have worked for you up till now. 

1) Lack of Awareness Around Market Regulations

The compliance landscape is both broad and in a relentless state of change. Last year alone saw several big regulatory changes in the European and North American markets. It can be easy to miss responsibilities that fall on your company. A common mistake is simply being unaware of rules and regulations you may face in various markets. It’s customary for companies to look at federal or national levels of compliance or stick to well known regulations such as REACH and RoHS. But it’s important to realize that each market is unique and will have different levels of compliance duties, from individual states and countries up to higher level governments and even beyond to international regulations. The scope of these compliance obligations may also contrast, and although an entire product may seem to be compliant, a singular part or homogenous material within that product may cause a non-compliance event depending on the rule or regulation. Despite the fact adhering to larger more well-known regulations may allow for protections with overlapping rules and regulations, it will still leave gaps that leave you at risk for violations to occur.

2) Missing Regulatory Updates

Compliance is not a one-time event. Failing to monitor rule and regulation updates can render your entire compliance strategy useless. While some regulations update on a regular basis, others are much less predictable. Not only should you screen the rules and regulations you currently adhere to, it’s important to keep an eye out for new ones to pop up or for the scope of existing ones to change and suddenly now apply to your company.

3) Having a Reactive Strategy

Some companies simply plan to deal with compliance as the need arises, pushing the responsibility down the road. While this may seem to work for rules and regulations with post market surveillance and enforcement, it’s a reckless plan that can result in expensive fines and loss of market access. Proactive strategies result in higher efficiencies and cost savings. While some companies find proactivity impossible in today’s markets, avoiding the first two mistakes will actively provide you with a good indication of how regulations will unfold and make you aware of deadlines in advance so you can be prepared instead of waiting to deal with the consequences.

4) Internal and External Miscommunications

Whether it’s between a parent company and various departments, within a product team, or with suppliers, miscommunication can derail the best of compliance efforts. It’s important to understand who is responsible for compliance at the product level and company level so that these details don’t fall through the cracks. It’s also critical that your team understands the importance of their compliance efforts (as well as the rules and regulations they must adhere to) so that flags can be raised and important information shared when discovered. Supplier communication is vital under due diligence efforts, and miscommunication can leave you with bad supplier relationships and missing documentation for parts and products. Miscommunications can also lead to weeks and months of wasted effort that take twice as long to rectify.

5) Bad Record Keeping

While this common mistake may seem obvious, there are key components of record keeping that are often overlooked. While most rules and regulations do require you to keep evidence of your compliance efforts for years, most of these records are often incomplete or inaccurate. Proving due diligence efforts to regulatory bodies can be difficult when the documentation associated with a part is wrong or outdated. But even completing due diligence efforts can be daunting when the purchasing records are also incomplete or wrong. It’s important to instill rigid record-keeping habits amongst all departments of product stewardship and that those completing those tasks understand the vitalness of every piece of information. During a non-compliance event, regulatory bodies who are auditing your records will simply deem wrong or missing information as a lack of due diligence on your end, and can add to the severity of consequences.

6) Lack of Good Data Organization Policies

Regardless of how many records you have, if you cannot find them or associate them to the correct parts, the information is useless. It’s important to be able to connect parts to higher level assemblies and products in order to determine compliance status on various scope levels. Evidence of non-compliance on one part may be easily identified in other products using that same part when your records are highly organized and mapped out. Silos of information can create more work and open up chances for miscommunication as well. Stagnant information will not be viable as due diligence for directives such as EU RoHS where they require evidence of living documents. When updates to rules and regulations occur, a well organized and mapped out system makes updating your records much more efficient in both time and cost and lowers your risk of compliance gaps.

7) Missing Integration

Any compliance strategy may be better than no strategy at all, but with the amount of effort, time and money that is required to obtain any sort of compliance, it just doesn’t make sense not to integrate your strategy to support your operations and avoid devastating consequences. Each of the mistakes above can occur on various levels, and trying to confine efforts to a final step can unravel years’ worth of work. Integrating compliance early on in development and throughout the entire process with aligned protocols, teamwork and clear communication and management can make compliance easier to achieve and improve profitability.

Environmental compliance is hard by itself, but these seven common mistakes can amplify the difficulty. By avoiding these mistakes, you can develop or improve compliance strategies and reduce compliance risks to your company. Compliance programs that consider these aspects can also improve market access, profitability, public reputation and efficiency.