Taking a Fresh Look at Compliance Screening

One of the few good things about the Covid-19 pandemic is that it has forced companies to carefully evaluate all aspects of their supply chain processes and capabilities. One area that may have been overlooked in the past is compliance screening. What is compliance screening? Why has it become more important during the pandemic? What capabilities should companies look for in a solution? Those are some of the key questions I discussed with Steve Williamson, Director of Solution Consulting at BluJay Solutions, during a recent episode of Talking Logistics.

What is Compliance Screening?

Since some people may not be familiar with compliance screening, I started our discussion by asking Steve to define it. Steve says that first and foremost it is a prevention capability—preventing customs officers from knocking on your door. “Because at that point you’ve probably done something wrong.

“We look at this in three areas,” Steve notes. “First we look at it from who are you doing business with, both from a company and individuals perspective. A second area is embargoes, which is perhaps more obvious. The third is whether the products or components you’re shipping have any licensing restrictions that you should know about or the government wants to regulate. For our discussion today, then, I consider these three areas as doing the right things, with the right people, so you don’t get that knock on the door.”

Compliance and the Pandemic

Did the COVID-19 pandemic impact compliance screening like it did so many other things? Steve thinks it did. He mentions that the pandemic changed buying patterns with many more direct purchases than previously. “When you look at your network — where you are buying from, where you are shipping to —  e-commerce and direct shipping has likely expanded your traditional supply chain network. How do you know the companies and individuals you are now doing business with are okay from a compliance standpoint?”


With all of the changes going on, what risks do companies face if they don’t have robust compliance screening capabilities? Steve notes that in addition to the prevention aspect discussed above, there are also risks of fines, penalties and jail time, as well as delays in your supply chain. “Delays that cause you to not meet customer expectations can be a problem.

“The other thing that is not often talked about is brand reputation,” says Steve. “It’s not just the image, it’s do you have a defendable compliance program that demonstrates you’re trying to do the right thing.” The potential damage to the brand can have a bigger impact to the bottom line than any fines or penalties.

Steve also comments that the risks go beyond exporting products to other countries. “Often, individuals on denied party lists are from your own country.”

Benefits of a Compliance Screening Program

Steve says that beyond risk mitigation, the benefits of a robust compliance screening program are preventing that knock on the door from customs officials and the associated fines and penalties of non-compliance. But it is also about having a defendable program to help protect your brand when things happen beyond your control. “Risks vary based on whether you’re shipping T-shirts or electronic components for nuclear reactors, of course, but you don’t want to be on the government non-compliance list.”

Where Compliance Fits in the Logistics Landscape

The short answer is everywhere. Although we often think of compliance screening occurring when we receive the order or just prior to shipment, it has relevance throughout supply chain processes, especially for more complicated manufacturing environments. Steve points out that compliance issues are changing daily, so what was acceptable when you receive the order may not be when you’re ready to ship it if there is a gap of days or weeks between the two points. “If you’re manufacturing non-standard products, you’ll want to know any compliance issues before you begin making them as well as when you ship. We have clients who do compliance screening three or four times during the supply chain process to minimize the risk.”

Evaluating Compliance Screening Solutions

If you don’t already have a robust compliance screening program and supporting system in place, now is the time to begin looking. But what factors should you consider when evaluating vendors’ solutions? Steve had a number of thoughtful suggestions. (Hint: it goes way beyond the software.) Therefore, I recommend that you watch the full episode for all of his insights and advice. Then keep the conversation going by posting your own perspective and experiences with compliance screening.