This educational piece will discuss the often-overlooked application of standard operating procedures (SOPs) in business. What are they and what information do they convey? Why are SOPs, particularly for small- and mid-size businesses, paramount for seamless continuity? SOPs are in essence how-to manuals that describe tasks, job descriptions, processes and operating procedures. Many companies adopt the use of SOPs to support their operations, with enhanced compliance, among other reasons for their use. SOPs enable documented workflows, efficiencies, standardization, compliance, and safety protocols.
SOPs are important for small businesses for a number of reasons, some of which include:
- SOPs help standardize processes and procedures, ensuring that tasks are performed consistently. This consistency is crucial for maintaining product or service quality and meeting customer expectations.
- SOPs provide a roadmap for the company and its divisions, departments, and employees, reducing the likelihood of errors and minimizing the time and resources required to complete tasks.
- SOPs serve as valuable onboarding and training tools for new employees. They provide a clear and structured guide to help reduce the learning curve new hires experience when learning their jobs, responsibilities, interactions, and business processes.
- SOPs play a key role in maintaining product or service quality. They outline the specific steps and standards to be followed, facilitating quality control measures and ensuring that products or services consistently meet predetermined criteria.
- SOPs help identify and mitigate risks by incorporating safety measures and compliance guidelines. This is particularly important for small businesses operating in regulated industries, as adherence to SOPs can help avoid legal and regulatory issues.
- SOPs are critical for audits or inspections by regulatory authorities. They help demonstrate the company’s commitment to compliance and established procedures, making the audit or inspection more efficient and cheaper.
- SOPs establish accountability among employees. When everyone is aware of their roles and responsibilities, it becomes easier to assess performance and address any deviations from established procedures.
- SOPs become even more crucial as small businesses grow. They provide a foundation for scaling operations by ensuring that new team members can seamlessly integrate into existing processes and that the business maintains consistency and quality.
- SOPs contribute to overall customer satisfaction. When customers can rely on a business to deliver products or services in a reliable and predictable manner, it enhances their trust and loyalty.
- SOPs are not static documents. Small businesses can use them as a starting point for continuous improvement. Regularly reviewing and updating SOPs allows businesses to adapt to changes in internal processes, the industry, technology, or regulations.
- SOPs play a crucial role in succession planning. If key employees leave or new leadership is introduced, having well-documented procedures ensures a smooth transition and minimizes disruptions to the business. SOPs bring more clarity.
Many industries develop SOPs for safety protocols, quality standards, and best practices. SOPs are indispensable in compliance as they provide documentation, facilitate training, manage risks, improve efficiency, and help prepare for audits and inspections. There are also industries where SOPs are required for regulatory compliance.
For example, pharmaceutical and healthcare industries are highly regulated, and SOPs are crucial for ensuring compliance with Good Manufacturing Practices (GMP), Good Clinical Practices (GCP), and regulations from the Drug Enforcement Administration (DEA), Centers for Disease Control and Prevention (CDC), and other governing agencies. These standards are established to ensure quality, protect patient safety, prevent the spread of infectious diseases, improve the efficacy of pharmaceutical products, and enhance the integrity of clinical research.
Similar to pharmaceutical companies, biotech companies often need SOPs to comply with industry regulations, ethical standards, and the safety of their processes and products. They help companies adhere to guidelines set by agencies such as the Food and Drug Administration (FDA), European Medicines Agency (EMA), and the U.S. Department of Agriculture (USDA).
SOPs are likewise required in the food and beverage industry per the Food Safety Modernization Act (FSMA) to support implementation of preventive controls, hazard analysis, supplier verification, Current Good Manufacturing Practice (cGMP), documentation, training, recall plans, and foreign supplier verification. By following well-defined SOPs, food facilities can enhance food safety practices, reduce the risk of contamination, and meet the regulatory standards set by the FSMA.
SOPs are required in the chemical industry by the Environmental Protection Agency (EPA) and the Toxic Substances Control Act (TSCA) to ensure regulatory compliance, manage risks associated with chemical processes, meet reporting requirements, maintain accurate documentation, plan for emergency responses, and contribute to the protection of human health and the environment.
SOPs are required in various manufacturing industries by a number of different regulatory bodies, including the Occupational Safety and Health Act (OSHA), the FDA, the EPA, and the Federal Aviation Administration (FAA), among many others. SOPs assist with adherence to standards set by these regulatory bodies, which helps ensure the safety of workers, product quality, environmental compliance, occupational health, aviation safety, vehicle safety, consumer product safety, mine safety, transportation safety, and so on.
SOPs are required for financial institutions by regulatory agencies such as the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Consumer Financial Protection Bureau (CFPB), the Securities and Exchange Commission (SEC), and others. SOPs can serve as a crucial tool in demonstrating a commitment to regulatory compliance and responsible business practices in the financial industry. They help mitigate risks, protect consumers and investors, maintain financial stability, assist with fraud prevention, and establish sound governance and operational practices.
SOPs in the oil and gas industry document things like safety procedures, environmental compliance, emergency preparedness, and risk management. Overall, they support compliance in this complex sector set by agencies like the EPA, the Bureau of Safety and Environmental Enforcement (BSEE), the Bureau of Land Management (BLM), and the Department of Energy (DOE).
Companies in the cannabis industry require licenses to operate, so SOPs play a crucial role in ensuring these companies are licensed and that their operations comply with ongoing operational requirements. This industry is heavily governed by state-run cannabis regulatory agencies, as well as the Internal Revenue Service and FinCEN (a bureau of the U.S. Department of the Treasury). For this reason, SOPs ensure accounting and tax compliance (IRC Section 280E and cash management) are addressed, as these are required for cannabis license approval. Some of the common SOPs required to be submitted for cannabis license approval by state governments are SOPs for adverse event reporting, quality assurance/control, recall, packaging and labeling, and inventory control, storage, and diversion prevention procedures, among others.
In conclusion, SOPs are essential for small businesses in establishing structure, consistency, and efficiency in their operations. They help organizations with regulatory compliance, risk management, customer satisfaction, emergency preparedness, safety, resource optimization, cultural alignment, product development, and delivery. Adopting the use of SOPs likewise helps organizations demonstrate due diligence and adherence to industry standards. In the event of legal issues or disputes, well-documented SOPs can provide a defense against claims. They contribute to the overall success, profitability, and sustainability of the business by providing a framework for employee training and productivity, faster decision making, improved supplier relationships, quality control, and continuous improvement.
