In our last blog on this subject, we delved into the overall concept of third-party compliance management and primarily endeavored to comprehend and define what is third party compliance and its’ relevance for organisations. We also determined the importance of third-party compliance and the main challenges faced in implementing strategies/structures to have better visibility and effectively manage such compliances.

It is extremely critical for organisations to be aware of the risks that non-compliance by third parties can play or how they can impact their business and also to understand what can be done to mitigate such risks. In this Part II of the blog, we continue in our endeavor to learn about the various methods/processes you can use to implement appropriate third-party compliance management system/solution at your organization and the important aspects to be kept in mind during such implementation.

Implementing appropriate 3P Compliance Management:

The various steps to be kept in mind while intending to implement a third-party compliance management solution are as follows:

1. Identify and define the risk: It is extremely critical that one firstly identifies and defines those main risks associated with such third parties. It is pertinent for an organization to set the parameters basis which the compliances applicable to their third party vendors are monitored. The categories of laws to be monitored including having a defined comprehensive checklist with assigned responsibilities are crucial in better managing the compliances of third parties. The risk associated with non-compliances should also be clearly defined to inform the vendors of high, medium and low risk parameters.
2. Communicate to vendors including trainings: It is pertinent to explain to the vendors how important compliance is to the reputation of one’s business. The weightage one gives to compliance and risk management can be best explained by the company itself. Organisations should communicate the importance of compliance, risk of non-compliance, list of items to comply with (one-time, ongoing), penalties, assessments etc.
3. Maintain checklists of applicable laws/compliances: Keeping a record of the vendor compliances in the form of defined checklists with assigned responsibility within the organization is of supreme importance so that it can be accessible to all the vendors as well as the employees of the company responsible for monitoring vendor compliances.
4. Stay Vigilant: Not taking any non-compliance lightly, raising an objection when one sees a deviation at the very first instance is crucial. Having a direct one on one communication explaining why such a deviation is not acceptable is also very important and also taking strict measures to ensure that such non-compliances are not repeated. Proper steps should be taken to ensure that in situations of non-compliance, a proper remedial measures plan is put in place to address such situations. Vendors should also be explained on a periodic basis on the culture of compliance and its importance to the survival and smooth running of both organisations.
5. Stay updated: The legal world is an ever changing landscape and to keep up with the pace one must stay updated about all the changes happening in the laws, rules and regulations involving compliance. Being updated is just one part of the process as it is important to communicate such changes and ensure that they are effectively implemented by such vendors.
6. Track and remind vendors: Maintain a record of the compliances which the vendors need to follow and remind them on a regular basis to do their tasks under such compliance and seek a confirmation from them on a periodic basis to get the desired comfort.

Anything overlooked in the above steps can make an organization fall prey to penalties or other unforeseen losses. Does this appear to be cumbersome and time consuming? Well, it is, but not when you have a vendor management solution.

Benefits in using a software solution:

One of the most efficient methods to overcoming the above challenges and to implement and monitor a robust 3rd party compliance program, is to use a software driven solution for this. These help an organization to focus on critical business matters as 3Ps compliance risks are taken care of by the solution itself. To list a few among the many advantages of using a vendor compliance management solution:

1. Getting a list of all compliances: Getting a comprehensive list of all the compliances applicable to vendors is a boon as in a country with such myriad laws and regulations as India it is next to impossible to know all the laws applicable to all the vendors a company is dealing with. Thus, through a software backed by an experienced battery of lawyers, an updated centralized repository of compliances and a place where all policies can be maintained, this issue is largely mitigated.
2. Cost-effective: When a software is there to automatically raise alerts and escalations and to track whether the various third parties have been compliant or not it gets very cost-effective as there is lesser manpower and time involved in managing a particular compliance or monitoring non-compliance of a vendor.
3. Increased efficiency: A vendor compliance management software will make the job of managing compliance easier as it will be more efficient due to automation and technology.
4. Easier analysis of data: The data as to compliance or non-compliance can be analyzed automatically and reports be generated. With the data driven approach it is easier to know if a company wants to continue doing business or tell a particular vendor or supplier to mend their ways and be more cautious and proactive towards managing their compliance.
5. No risk to reputation: Being compliant is a very important aspect of saving oneself from unwanted risks and losses. As a company becomes certain that it is not missing out on any critical compliance through the tool itself, it is assured that the reputation of the company is not at risk in any way due to any misses by its vendors, contractors, etc.

The way forward:

The future of 3P compliance management solution in India is going through a massive transformation. When the number of vendors, contractors and suppliers increase, so does the compliances linked with them and the associated risks. Having an easy-to-use vendor compliance management solution which allows all the vendors to have a separate workspace is all one can ask for. Adopting an effective vendor compliance management solution not only reduces cost but also increases profit and saves the hard-earned reputation and goodwill of a company.

With the transition of compliances from a manual mode to an automated one where most regulators are slowly and steadily adopting an online approach with the aim to ease business functioning, it is extremely pertinent for companies to adopt automated solutions to monitor and interact with various regulators.

Slowly but surely, organisations are acknowledging the need to better monitor and have hawk-eye visibility over the compliances applicable to their vendors. Accountability is often shifted on the principals since regulators under myriad laws have made the principals primarily responsible for the non-compliances of their vendors.

In this current day scenario, businesses don’t work in silos anymore and are collaborative in their approach towards all aspects of their operations, including their relationships with their vendors. This welcome change works for the overall benefit and sustainable growth of organisations whereby they take responsibility and ensure that their partners are working in sync with their overall business and compliance goals.

Komsight- A third party vendor management solution:

When it comes to 3P compliance management solution you don’t need to look any further. Komsight is an easy-to-use vendor/contractor compliance management software. Komsight makes it easy to identify and track the critical compliances of the vendors, suppliers and contractors that affect you. Komsight helps manage and monitor both statutory as well as internal compliances. Keeping an eye on your vendor compliance status also becomes easy as real time granular reports are generated to help you have better visibility and control over the compliance obligations of your vendors. The value of staying compliant is something which gives a return in the long run and Komsight can turn out to be the dark horse and be truly beneficial in transforming your vendor risk management structure! This tool has been developed by Lexplosion Solutions to provide the best vendor/supplier/contractor compliance management solutions to organisations.

Written by: Ayon Chakraborty, Amala Halder, Saikat Mondal
Edited by: Agnishwar Banerjee

Disclaimer

All material included in this blog is for informational purposes only and does not purport to be or constitute legal or other advice. This blog should not be used as a substitute for specific legal advice. Professional legal advice should be obtained before taking or refraining from an action as a result of the contents of this blog. We exclude any liability (including without limitation that for negligence or for any damages of any kind) for the content of this blog. The views and opinions expressed in this blog are those of the author/(s) alone and do not necessarily reflect the official position of Lexplosion Solutions. We make no representations, warranties or undertakings about any of the information, content or materials provided in this blog (including, without limitation, any as to quality, accuracy, completeness or reliability). All the contents of this blog, including the design, text, graphics, their selection and arrangement are the intellectual property of Lexplosion Solutions Private Limited and/or its licensors.

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