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Regulations

Regulations are rules that are established by an authority. While the term is somewhat generic and can be used by any person or group in charge, this discussion will be limited to governmental agencies. In practice, most companies do not call their directives “regulations”. There are more likely to call them policies or rules.

Governmental bodies at all levels have the power to enact laws. These laws, however, often lack clarity in the fine details. What they do, in many cases, is granted the authority for an administrative agency to create regulations. As an example, the FDA (Food and Drug Administration), by law, is tasked with keeping the nation’s food and medicines safe. With the vast variety of different things that people eat, it would be prohibitive for Congress to create a law that covers every single possible issue that could arise. Instead, they grant the FDA the authority to create regulations that carry the force of law. OSHA is perhaps the agency whose regulations most commonly impact employees in the workplace.

In addition to creating these regulations, these agencies also enforce them.

Read more about this topic below.

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One of the challenges of regulations is that there are vast numbers of them that cover every aspect of a business. For large corporations, there are generally people with expertise in dealing with the nuances of every governmental agency. The finance department understands SEC regulations. The accountants understand the regulations that cover how to keep the IRS at bay when filing taxes. The engineers understand safety regulations.

This can be more challenging for smaller businesses. They may not have the in-house expertise that is present in their larger, deeper-pocketed competitors. What this means is that more of their managers’ time is spent researching regulations outside of their expertise, or they are spending money bringing in outside experts to ensure compliance.

At the frontline level, regulations mean that processes may have external constraints on them. In most cases, these make sense. For example, OSHA may dictate that certain machines must have two-handed operation. Requiring both hands to be on the machine during operation means an operator cannot be picking up the next part. While this slows down the process, most operators like going home without injury.

Sometimes however, regulations do not make sense in every situation. Despite this, they still must be followed. Fortunately, Lean can still improve processes that have to comply with regulations. Keep in mind that the competition must also follow the same regulations. Good continuous improvement efforts provide a competitive advantage over other companies.

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