4 Areas of Supply Chain Compliance
to Fix Today
Leveraging automation in key areas mitigates risk for mid-market companies
BY DONNA FRITZ, VP OF MARKETING
AND PRODUCT MANAGEMENT AT TAKE
Many businesses are challenged by the dual demands of the internal economic drivers of an
organization and the external customer
requirements for quality and efficiency.
As the customer is increasingly empow-
ered and publicly vocal, product quality and safety have become
tightly integrated with traceability and supplier scorecards. Bob
Ferrari, a leading supply chain consultant, succinctly put it this
way: “You never want to hear about the guys who run the supply
chains for multinational companies. When you do, usually it
means something really bad has happened.”
In addition to safety and quality concerns, compliance regula-
tions can affect the supply chain in finance, shipping, and out-
sourcing. This article gives an overview of the key risk areas and
provides measures to help you improve quality and mitigate risk.
1. Regulatory Compliance
Companies in a variety of industries are increasingly focused on
balancing customer growth with compliance with country-specific
Fines and penalties are just the tip of the iceberg when it comes
to the cost of non-compliance: other hidden costs can include
returns and customer issues resulting from a non-compliant product, and implementing new tracking systems if they don’t already
exist. The rise of global sourcing as a means to minimize costs has
had an unintended consequence of increasing risk, in addition
to regulation concerns. Dependence on an increasing number of
suppliers makes it difficult to monitor their performance without
Quick Safety Checks
• Does your organization’s traceability system allow for current
and emerging global compliance regulations?
• Is someone in your organization responsible for maintaining
compliance requirements for varying and changing regulations
such as serialization/ePedigree, RoHS, WEEE, REACH and others?
• Does your organization have compliance management systems
to ensure materials and supplier certifications are up to date?
2. Accounts Payable Compliance
The Sarbanes-Oxley (SOX) regulation of 2002 was enacted in the
wake of the Enron scandal, and although there is still some debate
as to its effectiveness, the required guidelines remain relevant for
reducing overall accounts payable (AP) costs and errors. The best
way to ensure compliance is through automation of an organization’s AP functions, especially invoicing.
Surprisingly, however, a decade after SOX became law, 39 percent of AP professionals indicated that paper-based invoices still
make up 90 percent of their total volume. Unfortunately, paper
invoices can provide a bottleneck of manual labor at the end of
accounting periods, risking inaccurate expense and income statements, which in turn leave a company susceptible to cutoff fraud
(“phony profits”) and/or lost invoices.
In addition, automating AP functions enables complete traceability of both process and participants to ensure audit compliance. It can also improve tax compliance by automating tax
calculations for each location in the system.
Quick Safety Checks
• Is your AP system integrated with your Procurement system to
allow for 3- or 4-way automated invoice matching?
• Have you automated manual AP processes that have historically
required additional oversight or caused bottlenecks?
3. Procurement Compliance
Distributors and manufacturers face the challenge of reducing
procurement, transportation and logistics costs at a time when
supply chain complexity is rapidly increasing through outsourcing
To help with effective distribution in an expanding number of
regional markets, distributors as well as manufacturers increasing-