Regulation has a significant impact on all business sectors, but the financial services industry is one in particular where organisations need to be constantly aware of incoming rules. This is obvious when looking at trading, accounts and the like, but this filters down to all areas of the industry, including procurement.
Legal obligations can vary over different locations, meaning that companies must always be alert to any alterations, as they often mean that firms need to adapt or even overhaul some of their methods, whether that be their trading strategy, or their supply chain.
It is not easy for companies to quickly adjust to changes in regulation and it represents a large challenge for many organisations because rules are launched every few months and come with an associated time limit. The problem for the procurement teams is that in many cases systems will need upgrading and replacing in order to comply with the latest regulations, creating a massively complex, ever-evolving technology hub, which will always present significant challenges to the procurement function.
The significance of regulation has been particularly echoed by Alan McQuade, Europe, the Middle East and Africa supply chain management executive at Bank of America Merrill Lynch. Mr McQuade has outlined that vendor oversight is being focused on more than it has in previous years.
He explained: “This is leading to a range of internal programmes and related change activity to ensure the regions and businesses have clearly evidenced controls, routines, oversight and understanding of their vendor and outsourced activity.”
Mr McQuade also pinpointed regulatory focus around 3rd party activity as one of the key difficulties in the market, as it means Merill Lynch has to discover new and innovative ways to decrease the cost base of its 3rd party while guaranteeing a strong control environment throughout all regions.
Regulation’s impact varies across the globe, with different laws being enforced for specific areas, a fact which has been highlighted by Niclas Badelius, purchasing manager at the leading Swedish bank Swedbank. Mr Badelius highlighted IT and cash handling as the organisation’s two main categories of expenditure, and noted that there are numerous stages to software procurement, which he listed as implementation, project management and documentation.
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