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How Importers and Suppliers Can Get Compliant With Uyghur Legislation

Today’s supply chain complexities have made the importer-supplier relationship increasingly stressful. With new legislation cropping up, such as the Uyghur Forced Labor Prevention Act (UFLPA) which came into effect on June 21, both parties now have no choice but to align in order to comply with new regulations, as well as any policies yet to come.

Although supply chain stakeholders should have been preparing for the legislation in advance, a realist would understand that many businesses are still behind the 8-ball—thus, risks and vulnerabilities remain.

Import supply chain platform Mercado Labs wants to help mitigate these risks through its development of Mercado Plan, a solution built so that sourcing and purchasing teams can better maintain transparency and collaboration across the production lifecycle, and help hundreds of compliance-related issues that suppliers face daily.

With Mercado Plan, users can automate, simplify and maintain compliance across their international suppliers and vendors. The platform ensures that suppliers are connected and aligned to business standards all while automating the invaluable process of supply chain compliance through its suite of verification, education and informational courses.

The solution’s launch comes at a time when supply chain stakes have arguably never been higher. For example, importers that don’t meet the legal requirements established in the new regulations or unknowingly bring in goods from China’s Xinjiang Uyghur Autonomous Region (XUAR) could have their merchandise confiscated or have to pay a fine. Of course, this instance is just one use case of current concerns the Plan platform can help companies mitigate, especially when it comes to potential lead times and materials prices.

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On the other side, suppliers may also be unaware of the updated policies for products entering the U.S., with some lacking full visibility into the origin of their own raw materials. Both issues could potentially cost vendors long-term business. Suppliers, like importers, deal with risks of fines from governments and customs departments, ultimately cutting into profitability. They could also deal with consumer boycotts and put off brands and even investors from wanting to work with them.

Even though importers and suppliers understand these risks, Mercado Labs has found that they often struggle to align based on one major barrier: a lack of connection. The cloud-based supply chain solution provider says it is difficult for importers to stay on top of suppliers and ESG standards amid the evolving regulations, because the first mile is often analog and disconnected.

While digitization has been a hot buzzword for the supply chain at large, many firms still rely on analog processes to manage compliance. This involves cumbersome, manual procedures that often include paper copies, emails, or spreadsheets traded back-and-forth between multiple parties.

Of course, the drawback of analog processes is that they are often hard to monitor, lead to manual errors, and are difficult to track and maintain. It takes more time to find proof of an agreement immediately, and there is often no way of knowing or remembering who signed a specific document, or who needs to re-sign it if an agreement needs to be confirmed annually.

As a result, suppliers have to maneuver through a more complex environment where there can be unnecessary confusion. For example, a vendor may not know what immediate action they must take if they work with numerous importers, each with different requirements.

Three types of compliance you should know

Such an imbalance between the importer and supplier calls for a more automated and digitized approach to compliance. Importers today must be proactive in fortifying their compliance capabilities now that it is becoming so relevant across all departments.

There are three major types of compliance that importers and suppliers must stay on the same page with: regulatory compliance, social compliance and supply chain compliance.

As government intervention into supply chain policy becomes more commonplace, companies must now get a leg up on regulatory compliance. And as more consumers become unintentional activists and make buying decisions based on personal values, social compliance becomes even more pivotal. And with the supply chain experiencing seemingly endless bottlenecks across the first, middle and final mile, supply chain compliance is only going to gain more traction.

It all comes down to verifying, educating and informing

Mercado Labs has seen first-hand how aligning across stakeholders is only possible through a connected and digital experience. With that in mind, importers need to tackle three tasks in order to improve their internal compliance.

They must first verify their suppliers and align them with internal processes and systems through integrated onboarding. This way, an importer can ensure it only works with suppliers that are clearly vetted and therefore compliant with new legislation themselves.

Additionally, importers should then upskill and educate their vendors and partners on current supply chain concerns. Whether they inform them about a slowdown coming out of a specific country, or details regarding new laws (such as the UFLPA), importers can catch them up on relevant news. They can also help vendors remain knowledgeable on their business practices and operations.

Finally, importers can provide all partners with additional information and context on business-related areas, and track and measure adherence through on-demand online courses.

Mercado Labs is aiming to help importers tackle all three areas at once in launching Mercado Plan.

As importers more firmly establish their compliance standards and operate in lockstep with their suppliers, all participants involved will be better prepared for upcoming legislative changes on the horizon.

Learn more about Mercado Labs here.