If you feel government regulations keep increasing, you’re not alone. Although the current administration has worked to roll back many of them, manufacturing businesses still face a complex set of state, national, and international regulations. Failure to monitor and comply can lead to violations and steep penalties.
Manufacturing companies need dedicated employees and systems in place to ensure regulations are followed and reports are completed. Compliance software and consultants can help ease the burden, but they add to production costs. In fact, the Competitive Enterprise Institute estimates that the hidden cost of regulations runs as high as $1.9 trillion on an aggregate basis.
Keeping up with the rapidly changing regulatory landscape requires manufacturers to adopt a different approach and mind-set. It means companies must remain flexible, use technology effectively to achieve compliance, and continue to look for opportunities to grow and innovate.
Focus on Flexibility
Manufacturing companies are wise to consider potential regulatory implications as they plan and make changes to their business models. New regulations frequently require companies to install compliance software and adopt procedures to achieve compliance.
Data privacy protection has gained considerable attention recently. Both the European Union and the state of California have enacted legislation that requires companies to protect the personal information of individuals who are customers or employees. Companies now must develop budgets for new processes, software, and technology in light of existing regulations as well as in anticipation of how laws may evolve over time.
Turn Compliance Into a Competitive Advantage
Data that is gathered and analyzed for compliance purposes can be repurposed for business planning by the company. The data collected may point to potential problems and lead your company to new ideas and solutions.
Software solutions and technology used for regulatory compliance also can serve to improve business outcomes and enhance the customer experience. To achieve compliance with national and international regulations, companies must have the proper controls and procedures in place to manage processes and handle data. These controls can help to ensure better operations management and instill greater confidence with customers.
See related blog: Internal Controls to Prevent Employee Fraud in Manufacturing
Take a Proactive Approach
Manufacturing companies can best manage the regulatory environment by adopting a proactive approach and an adaptable mind-set. Some ways to accomplish this include:
- Review your current business practices and assess the impact of regulations on your operations and facilities.
- Consider what areas may be vulnerable to increasing regulatory scrutiny and develop plans to address potential new regulations.
- Develop a system for monitoring new and evolving regulations, perhaps through involvement in a trade or professional organization.
- Invest in compliance software to ease data collection and streamline reporting processes.
- Enlist key team members to ensure employees clearly understand regulatory requirements and the negative implications of noncompliance.
- Draw on the expertise of subject matter experts such as your accounting firm or outside consultants to gauge the impact of new regulations. These experts have a broader perspective from dealing with other companies in your industry and can provide sound advice and insights.
Goldin Peiser & Peiser advises manufacturers on ways they can meet regulatory requirements while achieving their financial objectives. Learn more about the Manufacturing and Distribution Group and the services we offer at Goldin Peiser & Peiser. For more information, please contact Jason Cope, CPA, at 214-635-2508 or fill out the form below.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.