Supply Chain Sarbanes Oxley Supply Chain SarBox Supply Chain SOX Supply Chain Corporate Governance Supply Chain Integrity

Many people believe the supply chain to stop just outside the company's walls, limited to what happens externally. This is not accurate. In reality, there is likely more of a supply chain within a company's walls than on the outside.

Most companies use an ERP (Enterprise Resource Planning) system to control the internal operations. The data stored in an ERP system includes: customers, suppliers, finished goods, raw materials, components, and purchased parts. The functions of an ERP system include: sales order entry, purchase order generation, invoice generation inventory control, distribution, and manufacturing work orders. Often, ERP systems will link to external accounting systems or have embedded accounting functionality for receivables, payables, and the general ledger.

From the time raw materials get to the receiving dock until the time finished goods get to the shipping dock, there are a lot of supply chain activities going on! These activities, the process flows and controls, are all defined within the ERP system.

The table below describes the activities in typical sales and purchase supply chains. Note that these activities happen within a company's walls and highlight the movement of raw materials, finished good, and monies from a "supplier" department to a "customer" department, requiring good information and control authorizations.

SALES SUPPLY CHAIN	PURCHASE SUPPLY CHAIN
Sales Order	Purchase Order
Picking	Receiving
Packing	Quality Assurance Inspection
Shipping	Inventory
Invoicing (Accounts Receivable)	Manufacturing
Sales Commissions	Distribution
Returns Processing	Invoicing (Accounts Payable)

Do not confuse the outsourcing of a process to think that just because the activity happens outside the company's walls that it is an truly an external process! This is because the responsibility for the quality of the process result still resides inside the company's walls. You can outsource a process but not the responsibility.

As we take a look at supply chain governance and the integrity we have in our supply chain, (for example, fraud detection and reduction), we need to look at the supply chain from both the internal and external perspectives, as it is truly a continual flow of information and a continuous process of raw materials, components, purchased parts, and finished goods.