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Navigating compliance in a changing retail landscape

by maria
gawdo

By Vijayanta Gupta, Senior Vice President Salsify

This year is set to be one of big change for retail. The first anniversary of the implementation of Brexit is fast approaching, and UK retailers are facing a raft of legislation either previously unenforced or soon to be ratified.

The breadth of industries impacted is vast, with food and beverage, energy, electronics, and manufacturing all having to comply with new rules. Such changes include stringent rules on allergens under Natasha’s Law for all prepacked food, the sourcing of timber under new UK Timber Regulations, and the high fat, sugar, and salt (HFSS) legislation that’s expected to have the biggest impact on UK grocery sales since rationing.

Given this impending shift, how prepared are UK retailers for the change?

Are you ready?

Preparedness is a mixed bag. There has been clear evidence of industries scrambling to catch up and, in some instances, not being aware at all. Take Natasha’s Law as an example. It has been in effect since October 2021, yet research conducted by GS1 – the international organisation developing and maintaining standards including barcodes – found that at the time the law was ratified 4 in 10 businesses hadn’t heard of it*. There have been multiple stark warnings from trading bodies that food packaging is still not compliant**.

In the context of HFSS, it’s a category that’s already seen significant reformulation ahead of the law even coming into effect. A pivot from cereal manufacturers last year now means that many of these products can be classified as non-HFSS. However, industry experts warn of the impact on manufacturers of products such as chocolate bars, where suppliers may struggle to ensure compliance without undermining consumer acceptance.

Clearly, the implications are far-reaching, and this new legal context is complicated. The above examples raise the question of with whom does the responsibility fall?

From a retailer’s perspective, previously, compliance would have been the suppliers’ responsibility, but now it falls to them to ensure both they and their suppliers are compliant. This is because retailers are the part of the supply chain that are in direct contact with the consumer and the most legally tangible to ensure these standards are met.

Now, ensuring supply chain due diligence when it comes to the sourcing of products, the listing of ingredients and associated record-keeping is a challenge that’s become a legal necessity. In many cases, this can prove extremely difficult. For instance, a large industrial retailer recently came to us having keenly felt this when looking to report on the chemical compounds in paint only to discover that none of its suppliers’ records were digital. Retrospectively proving compliance would take weeks of work – exhausting both labour and resources.

So, how can retailers address this moving forward and bypass the disruption to business?

Collaborate , Identify Risk, Report, Prevent, Manage, Counteract

Despite these challenges, there are six clear steps that retailers can take to prepare for this new and complicated UK retail legal landscape and to avoid conflict with the law.

Firstly, retailers should take this opportunity to revisit their collaboration model with their suppliers. This is not the first regulatory change that retailers and suppliers have had to manage and this is certainly not going to be the last, either. Establishing a flexible, frictionless, and automated collaboration model will go a long way in making retailers ready for not only this but also the future regulatory changes.

Secondly, retailers need to create internal responsibilities for compliance to ensure that reporting such intricacies becomes of interest to C-level management, and supply chain due diligence becomes a management issue.

Thirdly, businesses should look to better formalise reporting obligations and documentation throughout the supply chain, submitting reports annually that prove compliance.

Getting ahead of the issue is equally as important since prevention is better than cure. This can include developing and implementing sourcing and purchasing strategies, training employees and defining quality standards, as well as control mechanisms when it comes to the supplier relationship.

The fifth key point is the effective management of complaints if non-compliance is revealed – this is where the introduction of an escalation level for when infringements are unveiled along the supply chain will be essential.

Finally, should retailers become aware of non-compliant practises they must have productive counter measures that can be initiated to serve both retail and supplier interests. The focus here being on ending an illegal practice rather than on ending the business relationship.

Digital collaboration and the power of master data

One way to make all this possible is through extended master data management. Master data allows retailers to understand exactly where and how a product has been manufactured and where each of the individual components come from. This type of data will mean compliance with laws such as Natasha’s Law, HFSS and UK Timber Regulations, to name a few, can be done with ease.

For retailers, this means they can easily monitor where difficulties with a supplier may arise and are thus able to respond proactively. Master data is not an easy thing to achieve, requiring a lot of information from retailers, manufacturers, and suppliers alike, and it has often been a burden for IT departments.

This is where extended collaboration capabilities for retailers as well as their suppliers is key. Here, using a commerce experience management platform is essential for mapping master data models that go far beyond previously established standards, allowing open communication between the two parties. With such evidence, this platform data can be used for all aspects of supplier management. In the case of chemical compounds, complex paper management becomes easily accessible data points.

There is no denying that the organisational burden of this raft of changes is immense and will affect businesses in varying ways, but it is achievable with a strategy that puts collaboration between retailers and suppliers at its heart.

* https://www.foodmanufacture.co.uk/Article/2021/10/01/Natasha-s-Law-comes-in-effect-but-concerns-raised

**https://www.itv.com/news/meridian/2021-12-23/sesame-found-hidden-in-bread-despite-food-allergy-law-after-pret-baguette-death, https://diabetes-resources-production.s3.eu-west-1.amazonaws.com/resources-s3/public/2021-11/Position%20Statement%20-%20nutritional%20labelling%20november%202021%20update.pdf  https://inews.co.uk/news/uk/natashas-law-new-allergy-legislation-food-outlets-putting-lives-at-risk-1239978

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