The "Hidden Risks" Series: Episode 3: How Hidden Regulatory Changes Could Disrupt Global Sourcing

In 2015, Volkswagen (VW), one of the world’s largest automotive manufacturers, faced a global compliance crisis. The company was caught installing software in diesel vehicles that manipulated emissions tests. While the cars appeared compliant in testing, they emitted pollutants far above legal limits in real-world driving conditions (ResearchGate, 2025).

📉 The result?

VW’s case underscores the real cost of regulatory non-compliance. Companies that fail to anticipate and adapt to changing regulations risk financial devastation, supply chain disruptions, and long-term brand damage.

Today, in Episode 3 of our Hidden Risks series, we uncover hidden regulatory changes that could disrupt your sourcing strategy—and how to stay ahead before they cost you millions.

✔ Upcoming regulatory changes that could shake global procurement
✔ A case study of a company that got caught off guard – and how they recovered
✔ Proven strategies to mitigate regulatory risks before they hit your bottom line

📌 The Wall Street Journal: Europe Is Looking to Roll Back Climate Accounting Rules
This article discusses the European Commission's reconsideration of its Green Deal environmental policies due to rising costs and competitiveness concerns.
🔗 Read more

📌 Reuters: US Postal Service U-turn on China Parcels Sows Confusion Among Retailers, Shippers
This piece highlights the recent suspension and subsequent resumption of parcel acceptance from China and Hong Kong by the U.S. Postal Service.
🔗 Read more

📌 Reuters: Supply Chain Firms Face Disruptions in Vietnam from Stricter Driving Rules, Report Says
This article examines how new traffic regulations in Vietnam, implemented at the start of the year, are causing significant disruptions for transport and logistics businesses.
🔗 Read more

✔ Breaking Insight – The hidden compliance traps costing companies millions.
✔ Short-Series Feature – How upcoming regulations could impact global sourcing.
✔ Procurement Power Move – Strategies to mitigate compliance risks.
✔ Quick Case Study – A manufacturer hit by sudden tariff changes. 

✔ Premium Case Study* – When Regulatory Changes Shook the Pharmaceutical Supply Chain.
✔ Trend Watch* – Regulatory shifts procurement leaders should monitor now.
✔ ProcWee™ Takeaways & Action Steps – Key lessons and next steps.

*learn more about how we can help you to move up here

Results in the next episode. Subscribe now to make sure you don't miss out:

How Hidden Regulatory Changes Could Disrupt Global Sourcing.

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In 2025, new energy transition investment regulations in Europe and the US are increasing operational costs for manufacturers (KPMG, 2024).

🔹 Why it matters:

🔹 Actionable Takeaway:
Monitor energy policy shifts in sourcing regions & integrate renewable alternatives into procurement strategies

Not all regulatory risks are unexpected. Many are driven by well-known legal shifts, yet companies often fail to adapt in time. Here’s why procurement leaders must act now:

🔹 Example: The New EU Compliance Wave
The EU is tightening supplier compliance laws, requiring detailed reporting on sustainability, labor rights, and carbon emissions. Companies failing to meet new due diligence rules risk fines of up to 5% of global revenue (Financial Times, 2025).

🔹 Why It Matters:

🔹 Key Takeaway:
Companies must integrate real-time compliance tracking, conduct supplier audits, and renegotiate contracts to account for stricter legal obligations.

➡ Next Week’s Teaser: We’ll explore the real cybersecurity risks nobody talks about in SCM—and how to protect your supply chain from digital threats.

Regulatory changes can catch businesses off guard, leading to costly disruptions. Companies that proactively manage compliance risks will have a competitive edge.

🔹 Key Strategies:
✔ Automated Compliance Monitoring – Use AI-driven tools to track new regulations in key sourcing regions (McKinsey & Company, 2023).
✔ Supplier Pre-Screening – Establish due diligence processes to assess suppliers' compliance readiness (CMS Law, 2025).
✔ Contractual Safeguards – Implement price-adjustment clauses and exit strategies to account for regulatory shifts (Financial Times, 2025).

📌 Takeaway: Regulatory volatility isn’t going away. A proactive compliance strategy is essential to safeguard procurement operations.

🔹 Situation: In February 2025, China expanded export controls on critical minerals essential for defense, clean energy, and manufacturing industries. This move was in response to new U.S. tariffs on Chinese goods, leaving global companies scrambling for alternative suppliers (Reuters, 2025).

🔹 Tasks: Companies relying on these materials had to quickly assess alternative sourcing options, ensure compliance with evolving regulations, and mitigate potential production delays.

🔹 Actions:

🔹 Results: Some companies avoided major disruptions by securing new supplier agreements, while others faced significant price increases and delays due to limited alternative sources.

📌 Lesson: Regulatory unpredictability can disrupt sourcing overnight—companies must have contingency plans and diversified supply sources (CMS Law, 2025).

If you don’t see it, check you plan here

If you don’t see it, check you plan here

✅ Regulatory risks are increasing, and companies must stay ahead of compliance shifts.
✅ Proactive supplier screening and contract flexibility are critical to mitigating cost impacts.
✅ AI-powered compliance monitoring can help procurement teams track evolving laws in real time.
✅ Cybersecurity risks are becoming a growing concern for global supply chains—next week, we’ll explore why.

📌 Action Steps:
🔹 Audit your supplier contracts—do they allow adjustments for regulatory changes?
🔹 Enhance due diligence for high-risk sourcing regions like China & Vietnam.
🔹 Invest in automated compliance tracking to avoid penalties and disruptions.