Supply Chain Technology Seen Helping with Sarbanes-Oxley Compliance

Solutions can provide SOX-ready automation of spares and MRO inventory management, Abrige Consulting finds

Solutions can provide SOX-ready automation of spares and MRO inventory management, Abrige Consulting finds

San Mateo, CA — March 28, 2006 — Supply chain technology can help companies achieve Sarbanes-Oxley compliance by automating the process of managing and reconciling inventory, according to a recent white paper from Abrige Consulting Group.

The Sarbanes-Oxley Act of 2002 ("SOX") puts a new emphasis on timeliness and transparency in financial reporting, and it highlights the importance of internal controls in managing public as well as private companies.

The Abrige report spotlights the issues around inventory management and their relationship to SOX compliance. In particular, the report raises the point that while inventory in general is difficult to manage, spare parts and MRO items are particularly hard to align with SOX compliance internal control objectives.

"Spare parts, MRO or general distributed assets often represent 50 percent of balance sheet inventories at manufacturers and as such are a significant area of control risk," said Garrett Gafke, president and CEO for SeeControl Inc., a provider of solutions for automating inventory management. "However, with the right processes and technology like SeeControl's to implement strong internal control, the path to SOX readiness for executives and managers in charge of this inventory can be smoother and easier on the budget."

Technology such as that provided by SeeControl can bring real-time visibility and reporting where ad hoc or periodic counts were previously relied upon. Counting is resource intensive and often accompanied by manual account reconciliation. Manual solutions are typically less timely and more inherent for error. Physical counts can also conflict with segregation of duties requirements. With the help of technology, stock can be continuously tracked and the scope of physical counts can be reduced.

The Abrige report highlighted SeeControl's technology solutions as improving the SOX-readiness of various companies. Currently using linear and 2D bar code scanning to track item-level consumption and trigger automatic replenishment at both internal and external sites, SeeControl helps to reduce the historically manual process of managing and reconciling inventory — from 3.5 days to two hours per week — meeting SOX timeliness requirements.

SeeControl says that its solutions also improve inventory accuracy to 100 percent while reducing inventory shrinkage from 3 percent to 0.1 percent, which meets SOX information quality requirements. In addition, SeeControl says it is able to reduce overall inventories and the risk of excess ordering of parts and materials through auto-replenishment programs.

A copy of the Abrige report is available on the SeeControl Web site.

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