International Trade Resources Podcast: Supplier Audit Compliance - ESG, UFLPA, CTPAT
Navigating Complex Regulations and Supply Chain Compliance Audits
Today on the International Trade Resources Podcast, host Kim Kirkendall is joined by CEA’s Nicola Licata and Elaine Hou.
Nicola is a Senior Project Manager of ESG & Traceability based in Shanghai, China and works on traceability and chain of custody audits. Elaine is an ESG Project Manager, and is focused on financial analysis.
CEA is focused in the solar industry and they go deep into the supply chain to confirm information for their foreign customers.
They discuss the ins, outs, and issues with supplier compliance audits. Companies must be compliant with regulations and programs such as ESG, UFLPA (Uyghur Forced Labor Act), CTPAT, and others. The environment of increased regulation is currently impacting the international trade ecosystem, and Elaine and Nicola are here to offer insight into the steps your company can take to be compliant.
We begin the episode discussing the two biggest components of supplier audits: remote document review and onsite supplier audits. The geopolitical situation recently has become much more tense between China and the U.S. and that has complicated every company’s ability to perform supplier audits. Customer facing nodes of the supply chain will always be easier, but as you go upstream into the B2B suppliers (second, third, fourth, fifth tier sub-suppliers) it becomes increasingly difficult to obtain documents and schedule onsite audits.
Nicola talks about some of the Chinese policies that complicate audits - China Anti-Foreign Sanctions Law, PIPL (personal data privacy). Nicola stresses the importance of Supply Chain Mapping, appealing to the supplier’s self interest, and other tips to overcome their reluctance. Elaine and Kim discuss another way to solve this problem with public third party data and gathering indirect information from the supplier. Elaine also highlights how the information she gets from reviewing the supplier's financial information can provide insight into their company and how they can use the Altman Z Score for analysis.
Kim mentions that Supplier Compliance Audits are not only about meeting government regulations, many companies have programs that require the same standards. ESGs (environment, social, and governance), company values are a big movement and both Elaine and Nicola have seen this growing customer expectation. As more companies embed their values into their procurement strategy, suppliers are responding by shifting their own supply chains to meet heightened standards of accountability.
Finally, Kim, Nicola, and Elaine discuss the services Clean Energy Associates provides, the companies they work with. Listen now for all this and more on the International Trade Resources Podcast!
Things you’ll learn
U.S. regulations are increasing requirements for importers to document their supply chain - and Chinese government regulations have made it harder to comply with U.S. regulations
Recommendations for how companies can gather information on their full supply chain, drilled down to the smallest sub suppliers
How are Chinese companies adjusting (if they are) to these increased US requirements
