2 SUPPLY CHAIN COMPLIANCE DEFINING THE RISK With all the challenges the world has thrown at us lately, we’ve all adapted to a myriad of risks. And, in a weird way, each new disruption has helped us. With each new challenge, we can categorize a risk into the “what” of the product that we’re going to need, the “when,” and then exactly “how much.” To do that, we deal with risk in forecasting quantities, in timing, and in challenges to the supply chain. Regardless of the particular risk, it’s important to ensure you’re securing good, quality product. You need to know where it’s coming from and if there are any ESG challenges that come with it. DEALING WITH RISK These days, supply chains are multinational spiderwebs. A change in a single factory in one country can have a ripple effect. That’s why it’s key to stay aware of the strains on supply chains and the pressures they can put on the compliance side of things. One way to adapt is being able to adjust quickly. Having decentralized teams that have very good controls in place helped Fastenal make good decisions for ourselves and for our customers. period of time you would get to know that factory, and approve that factory for a specific product mix. For example, you wouldn’t go to a factory that was approved to make nuts and bolts and start buying hi-vis vests or gloves from them. Well, as we went into the pandemic and then again coming out, there was a lot of movement in the supply chain where factories were starting to create new things. They were expanding into new capabilities plus new businesses were opening. For that reason, we have reliable teams that put controls in place to make sure that we weren’t tempted – as we move very, very quickly in a decentralized environment – to ever make a bad decision for our company or for our customers. Traditionally, compliance just meant finding quality product from a good factory. Over a long 30
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