Businesses depend on an efficient and productive supply chain to succeed. Everything from planning to sourcing to production distribution, inventory management, logistics, and information flow must work in lockstep to maximize profit and reduce losses.
Part of a multinational company’s global supply chain management is smoothing out legal hurdles and ensuring the company and its suppliers and vendors comply with all laws. For an international business to succeed, it needs to consider the following regulatory concerns:
Trade restrictions and sanctions
Multinational companies must navigate political and economic sanctions to trade with certain countries. Staying informed about current trade restrictions and sanctions ensures the company avoids legal issues affecting its revenues and ability to trade and operate in certain countries.
Antitrust laws and ESG compliance
Each country has different competition laws and ESG regulations. Failure to comply can result in severe penalties and damage to a company’s reputation. Additionally, authorities will levy fines, and the company will incur ongoing costs from lost revenue for each day the supply chain remains down.
Intellectual property protection
Intellectual property (IP) theft and infringement increases when companies operate internationally. Registration in every area where the company operates is vital. IP protection clauses with suppliers and partners are also standard protocol. Companies must enforce and legally fight to protect and preserve their IP. Infringers may interpret lax IP enforcement as permission to use a company’s IP.
A 2021 study showed that a company’s economic performance positively relates to IP ownership. The loss of IP can be a significant drag on company revenues.
Avoiding legal hurdles
Navigating these legal concerns requires careful planning and proactive measures. Addressing these critical issues is vital in mitigating risks and ensuring a more resilient and compliant global supply chain.