The Benefits of Using Supplier Compliance Software Solutions

Using supplier compliance software to track the relationships and transactions that take place between vendors and their customers is a critical part of keeping food safety regulated. According to the FDA Food Safety Modernization Act (FSMA) of 2007, manufacturers and suppliers must work together "in an effort to reduce any risks to public health or safety." The act also established the National Supplier Compliance Program (NSPC), which is a nationwide, intergovernmental effort to promote compliance among suppliers. The NSPC helps to identify gaps in current standards and encourage suppliers to participate by developing a code of practice and other tools.

According to the NSPC, improving the quality of the supply chain can reduce costs and improve customer satisfaction. By participating in the NSPC, manufacturers can reduce paperwork and administrative burdens, which can be time-consuming and costly. Moreover, the suppliers are able to improve their marketing and public relations strategies, while at the same time improving their ties with key customers. Ultimately, participating in the NSPC and its activities can help food manufacturers gain competitive advantage by ensuring consistent supplier compliance.

Food providers who choose to participate in the NSPC need to ensure that they fully comply with all of the requirements set forth in the Code of Practice. One such requirement is NSPC approval. According to the FDA, to meet supplier compliance, suppliers must apply for an initial supply-chain NSPC approval. The FDA defines NSPC approval as "a written assurance from a supplier that the activities of the company to satisfy all the requirements of the Code of Practice for food safety and that the company has implemented and plans to implement a system that demonstrates reasonable confidence in the ability of its suppliers to provide NSPC accredited products and services to its customers."

Another requirement of the FDA's revised Code of Practice is NSPC approval for suppliers that wish to participate in the voluntary National Suppliers List (NSL). According to the NSPC, a company wishing to participate in the NSL must first submit an application, which the FDA will evaluate. If the evaluation of the application indicates that the supplier is reliable, the agency will then determine if the company's activities meet all the safety and quality criteria required by the FDA. Once the evaluation is completed and approved, the company will be placed on the list.

In order to be considered on the NSL, food product suppliers need to meet certain standards set forth in the Code of Practice. When submitting an application for inclusion on the list, suppliers must include all of the information that the FDA requires in order to determine whether or not they are reliable and whether or not they can provide the products and services to their customers. In addition to the information submitted directly to the FDA, food product manufacturers should submit documents such as marketing brochures, invoices, receipts, and letters from previous suppliers attesting to their quality control policies and practices. According to the FDA, food manufacturers should use quality management software to submit the necessary information. Quality management software solutions can help food manufacturers compile and present quality management data that they need to make informed decisions about which vendors to contract with.

Some manufacturers question the need for supplier compliance software. According to Mark Zuskind, founder of the NSDI (National Supplier Development Institute) Supplier Compliance Expert Panel, there are several reasons why using suppliers' compliance systems may be a good business practice. First, using a compliance system allows companies to identify suppliers that may not be as reputable as others. By making it possible to easily see the type of vendors that a company uses, companies can avoid partnering with suppliers who do not follow standards, which can put their own products at risk. Furthermore, using this kind of information allows companies to make changes in their supply chain activities even after they've formed contracts with suppliers.

Using supplier management software solutions can save time, which can lead to increased profitability. According to Zuskind, reducing the amount of time that it takes for a company to sort through supplier applications to determine which vendors to partner with can lead to increased sales and productivity. The National Supplier Development Association (NSDIA) says that time is one of the biggest factors behind the lost revenue in the food, beverage, and supplement industry. According to the association, a lack of time can lead to missed opportunities, lower profits, and, ultimately, reduced business growth. In addition, using supplier management software reduces costs because it provides suppliers with access to information that they would previously have had to purchase in order to conduct supplier checks.

According to the MSCS Solutions Brochure, suppliers can save a lot of money by implementing continuous improvement programs and increasing their knowledge about products and services. Continuous improvement helps companies reduce costs by removing the guesswork from supplier decision making. The MSCS report also says that companies that use supplier compliance software solutions "show an increase in profitability over two years." MSCS consultant Bill Parks believes that improved supplier decision making can lead to "improved customer satisfaction and, ultimately, increased sales."