chain, and promote sizable efficiencies in inventory control
and management. With support and encouragement from
the diverse and influential elements of the government and
private sectors, acceptance of a basic RFID environment is
something to expect in years ahead. Inbound supply chain
executives need to pay attention to RFID, proactively, be-
cause it is likely to become an integral part of import pro-
cesses, not only to be competitive but to meet regulatory
demands.
SARBANES-OXLEY
The fiscal landscape of American corporations changed
dramatically since the accounting scandals of the last few
years were made public. When the federal government wit-
nessed such poor corporate accounting practices and lack of
responsibility by corporate officers, they intervened with
legislation. SOX regulations required very strict lines of
communications and better fiscal accounting practices
within public corporations.
These regulations have had a major impact on American
public corporations in forcing them to create SOX operating
guidelines and procedures. These extend to global supply
chains. With SOX now in place, the chief executive and the
chief financial officer will be held responsible. The law states
that both must sign off on and can be held accountable for
the following:
All financial statements, both internal and external,
such as those published and distributed to sharehold-
ers, the SEC, and analysts. These include quarterly and
annual forecasts, 10(k) and 10(q) filings, and other
statements.
Accounting practices and SOPs.
Certification from internal and external auditors vali-
dating that SOP documentation and practices are legal
and accurate.
194 GLOBAL SOURCING LOGISTICS
The company must make itself available for scrutiny by
outside auditors, the SEC, and government investigators. If
wrongdoing is uncovered, company officials will be held re-
sponsible and punished.
This added scrutiny has benefits for supply chain profes-
sionals. Anne Marie Griffin, Microsoft’s senior manager for
global trade compliance, noted in 2004 at the summer’s
American Association of Exporters and Importers confer-
ence that SOX has helped with export compliance. “There’s
money now, there’s high visibility,” she said. “Our CFO
comes and sees us and gets us the resources we need, in-
cluding IT systems.”
For years, CBP, the Bureau of Industry and Security (BIS),
the Census Bureau, and other government agencies have re-
quired companies to submit import and export documenta-
tion that includes Entry Summary forms 7501 and 3461 (for
imports); Automated Export System electronic version of the
Shipper’s Export Declaration (for exports); commercial and
pro forma invoices, certificate of origin, correct Harmonized
Tariff System of the United States (HTSUS)/Schedule B classi-
fications to determine duty rates and taxes, letters of credit
and money transfers, applicable licenses or permits, quota
documentation, and packing lists.
This documentation and related shipping and receiving
SOPs authenticate a company’s trustworthiness to conduct
international business. It is only natural that these processes
be incorporated into the SOX Act’s requirements. With mil-
lions of dollars expended daily in this area, this will become
an area for audit and prosecution. There is a dotted-line pro-
gression of the C-TPAT into the SOX arena. In December
2004, a new intelligence agency was authorized by congress
and signed into law by President George W. Bush that will
have ramifications not only in compliance and security but
also for applications to administer the new SOX regulations.
Companies have found that C-TPAT participation has
helped with supply chain management. Many corporations
are creating import and export compliance departments
DEVELOPING AN INBOUND SUPPLY CHAIN RISK MANAGEMENT STRATEGY 195
that usually report directly to corporate counsel or internal
audit departments and have important input in supply
chain, manufacturing, and risk management decisions.
These professionals have become the de facto watchdog
over the entire supply chain.
Many companies with limited staff retain consulting
firms to manage their compliance programs. Not only does
the consultant monitor supply chain, manufacturing, and
risk management issues but also broker and service provider
relationships.
Corporations are discovering the importance of a safe,
competitive, and secure global supply chain. Operating
within the SOX guidelines has become another skill set that
must be mastered by logistics, traffic, and warehousing
managers, as well as chief executives and chief financial of-
ficers. The success of a company’s import and export opera-
tion may depend on it.
196 GLOBAL SOURCING LOGISTICS
FIDUCIARY ISSUES
SOP CREATION
DOCUMENT
PREPARATION
PRICING
VENDORS
Sarbanes-Oxley
INTERCOMPANY TRANSFERS
VALUATION
MONEY TRANSFER
SUPPLIERS
C-TPAT
RECORD KEEPING

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