Managing Supply Chains
Government has mandated several corporate requirements that can put a business in quite a serious bind if it doesn’t monitor the supply side of its balance sheets properly. On the very tangible end of the spectrum, in this on-demand economy, a failure to deliver even minor parts on time could bring things like a manufacturing production line to a screeching halt. On the less tangible end, but of possibly even greater financial impact, the Sarbanes-Oxley legislation requires companies to account for all transactions and agreements that could have an impact on future financial performance.
Imagine what could happen with a company that has machines running all day long, and suddenly has to stop all industrial production because the company that supplies something like parts on demand has experienced delays at their end. This sort of risk attends the use of an on-demand supply chain, and it occurs in every industry that does so. Including, with potentially disastrous results, the health care industry and numerous health products.
But there are certain off-balance sheet liabilities, another aspect of the supply chain that is more “potential” than tangible. Sarbanes-Oxley dictates that even the costs of your agreements, commitments, guarantees and other planned future transactions need to be taken into account, so that you have all aspects covered. What is required then, to keep track of this net liability and ensure that the company’s actual financial health can be accurately assessed, is a liability professional who specializes in this type of accounting. A whole industry of such specialists has sprung up in recent years, in response to Sarbanes-Oxley and other such legislation.
You can deal with intangible liabilities like future timed commitments and obligations from agreements by acquiring risk management software programs that calculate and report them. The software can also enable you to keep track of changes in supply and demand, to keep inventory costs down while still allowing for possible delivery delays. In order to comply with government regulations but still stay solvent and profitable, you need to keep on top of your production and manufacturing costs, both tangible and intangible.
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