SUPPLY CHAIN MANAGEMENT UPDATE

Since its inception in 2002, the Sarbanes-Oxley Act (SOX) has presented significant challenges to managers in all lines of business, requiring them to work closely with finance departments and outside auditors to catalog financial reporting systems and ensure compliance. Supply chain management is no exception.

According to Paul Matthews, director of supply chain for CGEY, it's no longer enough to have, for example, a transportation management system (TMS) that's aligned with a warehouse management system (WMS); today, it's as much about the flow of money and information as it is about the flow of goods and materials. "SOX imposes an obligation on supply chain managers to understand the financial implications of everything they do," he said.

Deep diving
It's a challenge that's not easily met. In the early days of SOX, few companies realized that the regulation would require them to dive deep into the inner workings of their businesses, particularly their supply chain operation, including distribution, inventory, purchasing, and transportation. The situation isn't much improved today. According to Forrester Research, 76 percent of logistics managers at major companies still can't trace their products en route or get updates.

In an October 2005 report titled "Risky Business: The Growing Importance of Supply Chain Risk Management," the ARC Advisory Group noted that the only way to keep up with SOX is to have an integrated system that can track every aspect of shipping—from transport to finance.

Leveraging integrated systems
Until recently, that level of integration has been difficult to find. But with its recent acquisition of GLog, Oracle's Transportation Management solution now supports corporate compliance requirements in accordance with SOX, by allowing supply chain professionals to plan, track, and monitor their supply chains in greater detail than ever before. Users now have real-time shipment and status checking, exception management and notifications, load consolidation and route planning, and full visibility into carriers, as well as freight payment and audit and cost allocation.

The acqusition has been good for both companies. "As transportation becomes more integrated with other business processes, it has become increasingly difficult for stand-alone TMS vendors to compete," says Adrian Gonzalez of the ARC Advisory Group. Now, GLog is integrated with Oracle's broader solution; and Oracle leverages the power of GLog's industry-recognized functionality. Customers are the biggest winners. "GLog's products allow companies to lower the total cost of ownership while giving them the ability to drive an integrated, information-driven enterprise," says Gonzalez.

Global Command and Control
Central to Oracle's new solution is the Global Command and Control Center (GC3), an integrated logistics management platform that optimizes transportation and logistics networks. GC3 provides accountability and auditability controls for every SOX-related process in the supply chain, including the ability to track usage of equipment against contracted quantities; maintain terms and financial thresholds for carrier contracts; define workflows and processes (and flag report deviations); proactively manage purchase order terms; and report on supplier/vendor performance and identify the financial impact of performance failures.

Supply chain companies are taking notice. "Following an extensive selection process, we chose Oracle Transportation Management [GLog GC3] web-native technology platform as it aligns with our corporate strategy," says Colin Cobain, IT director, Tesco International. "Their global data model and single instance of software will enable Tesco to deploy the solution worldwide, whilst maintaining central control and administration."

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