Welcome to our continuing series spotlighting speakers at the upcoming National Conference on Operations & Fulfillment (NCOF), which Multichannel Merchant cosponsors with the Direct Marketing Association. This year’s NCOF will be held in Schaumburg, IL, from April 29 to May 2; for details visit www.NCOF.com. This month John Hill, principal of Toledo, OH-based supply chain process improvement firm ESYNC, talks about the impact of Sarbanes-Oxley on fulfillment.
Most people think the Sarbanes-Oxley (SOX) Act of 2002 pertains to the accuracy of a publicly traded company’s financials. And though that’s true, it’s only part of the story.
SOX requires that public companies establish and maintain adequate internal controls and procedures for financial reporting and that management report annually on the effectiveness of those controls. And this directly affects your supply chain.
For starters, is there a process for managing the supply chain, from suppliers to customers? Or is the “process” really nothing more than a series of transactions?
Information technology is important with SOX. Visibility across the supply chain is needed. And visibility is more than simply knowing what is stocked at warehouses. From purchase orders at suppliers through to delivery orders for customers, companies need to see what is happening to their operations, their inventories, and their other assets and to the financial results.
And don’t expect you’ll satisfy SOX requirements merely by purchasing software package. Technology is a tool, not an answer. Tracking data from inefficient processes could be an exercise in garbage in, garbage out.
Identifying and mitigating serious disruptions in the supply chain is also important. Potential performance failures should be identified. For example, the shutdown of the West Coast ports in 2002 disrupted inventory flow. Needed product was sitting on vessels or backed up at overseas suppliers. The result was lost sales at Christmas and the need to reduce prices to sell the late-arriving products.
And if you work for a privately held company and think SOX doesn’t apply to you, consider this: Your publicly traded competitors are nearly five years into making supply chain improvements and gaining a competitive advantage. Why aren’t you?