Should I? Or Shouldn't I? The Value Of A Compliance Program
Our industry seems to be struggling with the question of whether or not to commit time, effort and money to developing compliance programs. It's an oversimplification, but you can group our industry into five basic categories on this topic:
1. The early adopters: "It's the law. It's the right thing to do. My customers expect it. It's a good business decision. I'm going to embrace it."
2. The curious: "What do I need to do, and how much is it going to cost? When the ROI proves out, I'll probably develop a program."
3. Those who rationalize: "I test most of the time, and I do factory audits when my clients request them. Not all of my customers are asking for compliance. What I am doing is good enough."
4. Those that resist: "Compliance costs way too much. It doesn't apply to my company. It's someone else's issue; I don't make the product. Clients just want low costs no matter what."
5. The blissfully ignorant: "Huh? Never heard of it. I'm simply not paying any attention to compliance."
Outside of the early adopters and the curious, whom I believe will eventually come around as market share moves to those companies who demonstrate they have a compliance program to end-buyers, the position the majority of the industry is taking baffles me. Why wouldn't we want to raise our standards? Why wouldn't we introduce quality and safety into our solutions?
I get that product safety and compliance programs are hard. I get that you either have to put a sharp cookie on point for building these programs or go out and hire one. I get that you cannot have a compliance program for $500 a year. What I don't get is why people don't see the value of every company in our industry having one.
Maybe it should be required as an entry qualification for being in our industry? Most industries, after all, require at least some sort of minimum standard or certification to be met in order to do business in said industry. Why would we resist this? Aren't we supposed to be enhancing companies' brands rather than putting them at risk?
Being really good at anything is a good business decision; being better than your closest competitor at something will have a positive impact on your revenues. I spent more than 15 years at Nordstrom in various roles, ultimately ending up in regional merchandise manager and store manager roles. There are few people who do not know the relationship Nordstrom has with customer service. I had many, many opportunities to witness firsthand the value the company's commitment to service, which was evident in its loyal following and positive sales results. Providing great service was easy. Everyone else was doing it, and it worked.
Having said this, I recall one regional meeting when the GM asked the assembled leaders if "Nordstrom is in the customer service business." Most of us lemmings quickly agreed that Nordstrom is indeed in the customer service business. Wrong answer.
You see, Nordstrom sells shoes, pantyhose, lipstick, shirts and pants. The company's product is not customer service. Rather, its reputation for customer service is the vehicle through which Nordstrom's generates long-term, profitable sales. Maybe a comprehensive compliance program is your vehicle?
Sticking with the customer service theme, what happens if you blow it these days? Here is a pretty compelling YouTube video on what happened when United Airlines blew it.
As the story goes, United damaged a guitar from the band Sons of Maxwell when they were flying to a gig, and Dave Carroll, with whom I have spoken, tried valiantly to get United Airlines to repair or replace the guitar. After getting repeatedly blown off, he promised United Airlines that he was going to write a song and post a YouTube video on the experience. No big deal, right? The answer depends on whom you ask.
So far, there have been 11,638,453 views of this video. Put another way, there have been 11.5 million negative brand impressions for United Airlines. Some of the legible comments on the video will give you a sense of what kind of impact this has had on the company's business.
My question is, will your end-buyer clients be the next "United Breaks Guitars" example because you put their brands at risk by not taking the steps to ensure they were getting safe and compliant products? If you're not in the early adopter group mentioned above, the answer to the question is not a comfort either to you or your customers. You are missing an opportunity to provide a solution to them that few others can and you are also at risk of losing their business to someone who does have a compliance program to offer. Fortune 1000 companies expect us to protect their brands, are inserting compliance into RFP's and making this a requirement for the companies they are doing business with.
Just yesterday, I heard a comment from a Top 50 distributor whose client attended the PPAI Expo illustrating my point. She was disappointed to see little if any focus on product safety and compliance when walking the show floor. It is clear to me that those few companies who can deliver a comprehensive compliance program have the inside track for winning her seven-figure promotional products business and that is exactly the point I am making. Product safety and compliance programs as a part of a sound business strategy are returning value to your organization above and beyond doing the right thing for your customers, not unlike customer service moves the gauge for Nordstrom.
Brent Stone is executive director - operations for Quality Certification Alliance (QCA), the promotional products industry's only independent, not-for-profit organization dedicated to helping companies provide safe products. A Six Sigma Black Belt, Stone has more than 25 years of in-depth supply chain management experience with extensive expertise in process design, development, improvement and management. He can be reached at email@example.com or visit www.qcalliance.org for more information.