Operations within manufacturing and distribution industries can be very complex. For everything to work as expected, there are expectations from our customers and suppliers to be able to deliver the services and goods necessary to fulfill the supply chain. With increasing risk, such as cyber-attacks, data breaches and operational disruptions, companies are seeking ways to illustrate how they protect their internal and external operations.
These supply chains are critical and maintaining them must be a high priority. What is your relationship like with your existing customers and suppliers? How about new partnerships? These relationships are key links in the supply chain and understanding the strength of each “link” is necessary to maintain a healthy business environment.
One such measure is to obtain a System and Organization Controls (SOC) for Supply Chain attestation. SOC for Supply Chain is a reporting framework developed by the American Institute of Certified Public Accountants (AICPA) that allows businesses to convey information about the effectiveness of their supply chain controls. Assurance is provided through an independent attestation from a licensed CPA firm. These reports are designed to give stakeholders assurance about the organization’s management of risks related to its supply chain, including production, distribution and cybersecurity.
With globalization and the complexity of supply chains, the need for transparency and trust among business partners has become crucial. SOC for Supply Chain reports are becoming increasingly important and can address the following concerns:
- Risk Management: Supply chains are prone to various risks, from environmental to geopolitical, and SOC reports can be useful in identifying and mitigating these risks.
- Regulatory Compliance: Many industries face stringent regulatory requirements that extend to their supply chain practices and SOC for Supply Chain reports can demonstrate compliance with relevant regulations.
- Building Trust: In an environment where third-party vendors play a vital role, these reports build trust between partners by demonstrating the effectiveness of internal controls.
- Competitive Advantage: Organizations with SOC for Supply Chain reports can differentiate themselves from competitors by showcasing their commitment to supply chain security.
This holistic report can cover aspects from three different levels and answers the associated questions:
- Technology – are technical controls established to promote a secure and resilient environment?
- Operations – have controls been put in place to support the integrity and quality of your processing and meeting timing expectations of external parties?
- Governance – are the foundational activities for managing communications, risk and monitoring set up so the other aspects can thrive?
The SOC for Supply Chain report is beneficial for organizations looking to provide assurance to customers, suppliers and business partners regarding the management of risks in their supply chain. These reports can lead to stronger security protocols, protecting against breaches and other cyber threats. By identifying and addressing inefficiencies, SOC reports can streamline operations, reduce downtime and improve operational efficiency. SOC for Supply Chain helps in assessing and managing third party vendor risks more effectively for better vendor management practices. Customers are more likely to trust companies that can prove their supply chain reliability and security through independent assessments, which results in increased customer confidence.
The demand for SOC for Supply Chain reports is expected to grow as more organizations recognize their value. As supply chains become more digital and interconnected with associated threats, the emphasis and need for comprehensive security measures will likely intensify. SOC for Supply Chain reports represent a critical tool in the manufacturing and distribution industry’s arsenal to secure and optimize their supply chains. Companies that adopt SOC for Supply Chain reporting will be better positioned to navigate the complexities of modern supply chains and maintain a competitive edge. By embracing SOC for Supply Chain, organizations can not only protect themselves, but also reinforce the integrity of the global supply chain ecosystem.
Reflecting on our earlier questions, how do you feel these conversations with your customers and vendors will go if you are able to provide such a report through the onboarding and relationship maintenance processes? At RKL, we can help build relationship trust through assurance. The SOC for Supply Chain is a great example of how we can assist with championing confidence in your business practices by performing a SOC readiness assessment followed by the full SOC attestation.
