According to the World Bank, economies spend the equivalent of 8 percent of their Gross National Product on regulatory compliance annually. For most countries like the United States of America, a large chunk of that is attributed to the manufacturing industry. In a report by The National Association of Manufacturers, they shared that the average manufacturer in the United States of America spends almost $19,564 per employee to comply with federal regulations- an increasing burden that continues to be borne by manufacturing companies. Now, with the use of Regtech ramping up across several sectors, it is about time that manufacturers tap into the benefits of its implementation. Up until now, we have already seen Regtech transform the healthcare industry and the Fintech space. Now, let’s take a look at the ways Regtech will begin to drive the manufacturing industry forward- from reducing regulatory labor costs and gaps to reducing industry safety hazards.
Reducing The Rising Cost Of Compliance For Manufacturing Businesses
Compliance is essential in manufacturing. Because of the heightened emphasis placed on this, manufacturing businesses are paying twice the amount per employee to adhere to federal regulations. For smaller manufacturers, these costs rise to almost 3 times more- or approximately $34, 671 per employee. Fulfilling compliance requirements as a manufacturer can be expensive and time-consuming.
However, failing to meet those regulatory compliance guidelines can be even more costly to a company. A past study by the Ponemon Institute, non-compliance can cost manufacturers up to $14.82 million. Yet, that does not negate the fact that compliance can run manufacturers a hefty $5.47 million each year and a sizable percentage of its workforce. With the help of automation, improved regulation interpretation and continuous regulatory assessments can not only speed up the compliance process but reduce the burden on a company’s workforce for interpreting the ever-changing compliance guidelines in the manufacturing industry.
Improving The Occupational Health & Safety Compliance Of Manufacturers As Employers
In the manufacturing sector, health and safety compliance is paramount. In a Liberty Mutual Safety Index, employee injuries were shown to cost manufacturers $7.62 billion annually. It is a well-known fact that one of the best moves a manufacturer can make to protect its profits and future is to minimize its workplace injuries. This is where Regtech comes in. RegTech companies specializing in risk management can help businesses’ monitor their employees’ behavior and workplace conditions for unsafe conditions.
A great example of this has been experienced during the ongoing pandemic, which has seen the demand for Regtech skyrocket in Asia. Analysis of incident data can also help manufacturers identify weak points for improvements. This technique can also be applied to manufacturing equipment to identify more efficient solutions. For instance, manufacturers that use pressure-sensitive tags can circumvent recurring blockage of their stamping equipment by examining the data sets presented for embossing.
Helping To Shape The Future Of Emerging Technology In The Manufacturing Industry
Integration will lead to reduced compliance costs by manufacturing companies- something that regulatory technology focuses on. The industry is undergoing a significant transformation right now, with trends like artificial intelligence becoming mainstream in manufacturing over the next few years. At any one time, manufacturers have to contend with several classes of regulatory compliance guidelines including health and safety, product safety, financial reporting requirements, and cybersecurity regulations. To meet all of these compliance requirements, manufacturers need to implement a strict compliance strategy. With the help of rising Regtech companies like SteelEye, which focuses on regulatory transaction analysis, companies can ensure they are not only meeting currency regulatory guidelines but their bottom line is prepared for anticipated regulatory changes to come.
The role of RegTech for manufacturers does not end there, either. With the digital transformation in manufacturing continuing, opportunities for regulatory technology to create both value and efficiency across the industry will continue to reveal themselves.