From Silenced to Strategic: What the Last 25 Years Tell Us About What Lies Ahead INCLUDES • How safety compliance has changed • The strategic role compliance now plays • Current trends in supply chain transparency • New technology for changing needs

President Trump’s official portrait: Shealah Craighead

Presenters

Founder and Chief Strategy Officer ICIX

Jay Howell

Senior Director, Product Safety & Compliance Walmart

Lisa Bate

Senior Vice President Bureau Veritas

Matt Smith Joe Mohorovic

Former Commissioner CPSC

“The past can serve as an anchor, keeping us secured to one spot, or as a foundation upon which to build the future. The future belongs to the builders.”

— Jay Howell

Consumers Have Changed Dramatically

•! Better access to information –! Growth of the Internet (and the Web since ‘93) –! Social media (2004 onward) –! Smartphones always available, connected

(early to mid 2000s)

•! More knowledgeable, vocal, engaged •! Great expectations for health, safety

and quality

Jay Howell—Walmart Jay Howell—Walmart

Consumers Have Changed Dramatically

Retail Undergoing a Transformation

•  Rapidly evolving business model •  Growing product complexity and

sourcing environment •  Expanding access to huge volumes of

data •  CSR activity expands from a focus on a

few shareholders to more global issues –  Sustainability –  Ethics –  Social performance

Jay Howell—Walmart

How Have Regulations and Standards Changed?

•  Increase in number and complexity –  CPSIA passage in 2008 was landmark legislation –  State and global regulations have also increased

•  Increase in sanctions for violators •  Continued interest in alignment of

regulations and standards—domestically and internationally

•  Growing influence of involved, global, connected consumers

Jay Howell—Walmart

How Are Global Regulators Changing?

•  Capacity-building to strengthen the global consumer product safety network

•  Increasing reliance on private sector conformity assessment activities

•  Limited cooperation in market surveillance and enforcement activities

Jay Howell—Walmart

“Looking back at CPSC, the last 25 years is all about CPSIA—the conditions that prompted the landmark legislation, its passage, and implementation.”

— Joe Mohorovic

How Did CPSC Regulation Change in the Last 25 years?

•! Fast Track Recall Program •! CPSIA: Landmark legislation passed 2008

–! Lead and phthalates

–! Mandatory standards for cribs, toys & nursery products –! Children's product mandatory testing, tracking labels & certification –! Public database –! Increased penalties

•! Introduction of compliance programs in settlements •! Front line of compliance shifts from HQ to the border

Joe Mohorovic—Former CPSC Commissioner Joe Mohorovic—Former CPSC Commissioner

CPSC Budget and Headcount

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Joe Mohorovic—Former CPSC

CPSC Recalls and Total Penalties

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Joe Mohorovic—Former CPSC

“When I started in the industry in the 90’s as a buyer, there was no quality department, orders were placed using carbon paper, rarely did we have contact with the factory, and consumers had a high tolerance for poor product quality.”

—Lisa Bate

Lisa Bate—Bureau Veritas

What’s the History of TIC?

Lisa Bate—Bureau Veritas

How Did Quality Testing and Requirements Change in the Last 25 Years?

Lisa Bate—Bureau Veritas Lisa Bate—Bureau Veritas

Activities Impact •! Increasing importance of

chemical (focus CFR-1303) •! Downstream to upstream

(focus final stage/in-store) •! Results primarily pass/fail •! Limited transparency (“golden

sample”) •! Culture of late compliance

•! High non-compliance/failure rates (in some cases product 10x limit)

•! High percentage of retest and rework

•! Limited data decision making •! Significant amounts of hazardous

chemicals in products •! Longer product lifecycles and

habitual missing of ship dates

How Have Safety & Quality Departments Changed?

Lisa Bate—Bureau Veritas

•  Little to no focus on understanding of core regulatory requirements

•  Limited knowledge of what was in product

•  Labs were seen as policing as opposed to providing solutions

•  Four buying seasons evolved to no buying seasons

•  Limited touch points from the consumer to provide feedback on quality and performance

FROM MARGINALIZED TO STRATEGIC “When I started working in product safety, there were almost no departments set up for it, and product safety was marginalized—really almost an afterthought. Today, there are Chief Compliance Officers and they often report to the board.”

— Matt Smith

Technology Upgrades and Business Roles •! Tools

–! Spreadsheets –! Email

•! Existing and specialized technologies –! On-premise solutions –! Application service providers (ASPs)

•! Hosted solutions •! Cloud solutions •! Platform solutions

•! Roles –! Siloed and silenced –! Larger teams and SMEs –! Reporting to company leaders

Matt Smith—ICIX Matt Smith—ICIX

Buyer Rolodex

Vendor DB

Supplier Compliance

Product Specifications

Supplier Incidents

Sustainability

Email

PLM

Test Data

What Will the Next 25 Years Look Like?

“My money is not on those who claim to be able to predict the future, but on those who have demonstrated the ability to quickly adapt to the present.”

—Jay Howell

The Next 25 Years—Consumers

•! Many consumer trends continue, such as greater engagement and access to information

•! Even higher expectations •! Significant growth in 65+ demographic •! Decreasing brand loyalty—consumers

embrace change and new experiences •! Personalized shopping experience

Jay Howell—Walmart Jay Howell—Walmart

Retail Transformed

•! Integration of AI into all aspects of the business

•! Omni-channel retail environment •! Dynamic sourcing environment •! Even greater levels of

social responsibility

Jay Howell—Walmart

Regulations, Regulators, and Standards

•! Regulations & standards continue to expand –! More regulations, more complexity, higher penalties,

global alignment of standards –! Growing involvement of consumers

•! Global regulators –! Improving intelligence gathering, risk analytics,

and knowledge management capabilities –! Shifting emphasis from detection to prevention –! Capacity building to strengthen global consumer product

safety network –! Increasing reliance on private sector conformity assessment –! Increasing cooperation in market surveillance and

enforcement activities

Jay Howell—Walmart

“For CPSC to become a model agency, it has to do three things: Play to its strengths, embrace the realities of the evolving marketplace, and raise expectations.”

—Joe Mohorovic

How Will the CPSC and Regulators Change?

•! Priorities: –! Shift from chronic & patent hazards to acute & latent

hazards

•! Operations –! Data analytics –! Risk-based, tiered recall framework

•! Compliance & Enforcement –! Better, more sophisticated import targeting for

predictive defect detection –! Trusted Trader –! Will the CPSC just demand homework, or will they

actually grade it, too?

Joe Mohorovic—Former CPSC Commissioner Joe Mohorovic—Former CPSC Commissioner

“Gone are the days when it was just about product quality and safety. Accountability, connectivity, security, and transparency–as well as quality and compliance–are now added to the C-suite strategy.”

—Lisa Bate

Lisa Bate—Bureau Veritas Lisa Bate—Bureau Veritas

What’s the Future of TIC?

Lisa Bate—Bureau Veritas

What’s the Future of Retail and Product Safety?

Supply Chain Solutions New Essential Requirements

•! Understanding of product AND supply chain QHSE impact

•! Information on product quality AND lifecycle management

•! Reduction in hazardous chemicals AND emissions

•! Data Analytics is shaping the future:

•! Artificial intelligence and predictive analytics are providing real-time insights for a more collaborative value chain

•! Wireless (connectivity) •! Security (privacy and

cybersecurity) •! Accountability (traceability –

blockchain) •! Quality of service

(interoperability / APP testing)

•! Know what’s In your product (phthalates, etc.)

Idea-to-Consumer Replacing Speed-to-Market

How consumers buying behavior will change

Lisa Bate—Bureau Veritas

Quality and compliance remain absolute and essential for protecting brands and business.

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Here’s what we are hearing:

“Modern consumers demand insight and intelligence about the products they buy. To compete effectively today and tomorrow, companies need technology to create conversations and deliver the right information, to the right consumer, at the right time.”

— Matt Smith

Matt Smith—ICIX Matt Smith—ICIX

Technology

•! Cloud platform solutions •! Fewer technologies, more applications •! A strategic approach across operations •! Complete transparency throughout •! Tailored information to the conscious

consumer

Roles Shifting From Defense to Offense

•! Transforming from a cost center to a profit center –! Delivering consumer-requested information –! Strategic speed-to-market role

•! Information experts •! Champions of the Brand

Matt Smith—ICIX

Innovations

Mat Smith Mat Smith Matt Smith—ICIX

•! Desired information delivered to consumer –! Augmented Reality - information in-store –! Virtual Reality - information online

•! Artificial Intelligence – predictive •! Blockchain – trusted information

Q&A

Thank you!