Today’s business needs to be flexible and agile to keep up with changing conditions. Yesterday’s boom may be tomorrow’s bust, and adaptability can make all the difference in whether your business survives or is just a part of the past. Digitization is helping many businesses keep on top of these rapid changes, including adding technology to the supply chain.

The Inherent Risk of Vendor Supply Chains

Like any other business consideration these days, vendor supply chains are fraught with risks. In part, the reason for increased risks involve the increasingly complex nature of supply chains.

“The growing complexity of international supply chains inevitably adds complexity to risk mitigation and increases risk exposure to all players involved. This trend is evolving rapidly, and corporate buyers are examining threats from all angles.”


Some vendor supply chain organizations are, for example, installing third-party applications and software for companies that leave them open to vulnerabilities. It also opens them up to the responsibility of protecting any data assets to which they have access with their client organization. Both parties are taking a leap of faith that leaves both open to risk.

Some user entities working with vendor supply chain companies are currently doing their best to manage the risk without a governing body officially guiding them with the following strategy as one example:

  • Ensuring that all software for the vendor supply chain company—whether SaaS, a commercial brand, open source or as part of a third-party library—complies with the user organization’s security policies. These companies are working closely with vendors to ensure compliance.
  • Seeking a third-party auditing team to analyze and attest to the security of the vendor supply chain’s internal controls and systems.

These workarounds definitely help these organizations work together in harmony, but everyone will benefit from an official set of rules and guidelines from the AICPA with its official SOC for Vendor Supply Chains, once completed.

SOC for Vendor Supply Chain Assessment

In 2020, the AICPA introduced a new solution for better transparency within a supply chain, “a market-driven, flexible, and voluntary reporting framework.” The SOC for Supply Chain framework aids organizations in communicating certain information about the supply chain risk management efforts and assess the effectiveness of system controls that mitigate those risks.

Certified public accountants are able to implement this SOC framework to audit or provide assurance on the supply chain for an organization’s manufacturing, production and distribution systems. This specialized framework standardizes assessment by focusing on the organization’s description of the system it uses to manufacture, produce, or distribute products. And it guides CPAs in providing a professional opinion on the effectiveness of the controls within that system.

Organizations that choose SOC for Supply Chain engagements are seeking a reliable way to assess and manage potentially costly risks. To that end, SOC for Supply Chain assessments and reports create an audited track record for customers, business partners, and other stakeholders regarding supply chain security.

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How to Reduce Risk Within Your Supply Chain

For middle-market manufacturers, supply chain design and efficiency can make a critical difference in how well these companies compete in the market. Effective supply chain management can make all the difference in whether your business is successful or not, and adding digitization and sophistication into your supply chain can make the distinction between whether it’s an efficient, effective part of your business or a detriment that can cause serious headaches and hassles.

Ensuring Intelligent Supply Chain Design

In the most basic approach, supply chain design includes manufacturers who are monitoring their asset capacity at the highest level, then take the time to determine how planning will impact that capability, lacks a solid technological roadmap and is primarily focused on transactions with its partners.

Whether you’re adding a new supply chain to your business or simply enhancing your existing supply chains, the first part of the process needs to cover what you’re hoping to achieve with that supply chain. In addition to that, you’ll need to have a solid understanding of the necessary planning, design and execution requirements to meet that anticipated goal. These requirements have different levels of sophistication, from passive and labor-intensive options that require you to reflect on what actions and events have already taken place to automated options that work in real time and can help you take a proactive approach with efficient forecasting and value-added strategies. Let’s take a more in-depth look at each of the requirements to gain a better understanding of them.

Learn more about the Top 4 Types of Risk Affecting Manufacturing Companies.

Modeling Supply Chain Operations

By modeling your entire supply chain, you can gain a better understanding of how your customer demand approaches can impact overall supply chain management. With that model available, you can develop projections based on a range of different scenarios, taking operational considerations and financial impacts into account, such as production bottlenecks and customer capacities.

Modeling should integrate sales, production and finance together, a wide range of contingencies are socialized in a number of possibilities, machine learning drives business forecasting and partner input is leveraged as a part of the process for intelligent decision-making.

Performance Reporting

Real-time reporting helps to deliver effective insights into exactly how the entire supply chain reacts to different situations, instead of simply relaying information. Using system and organizational controls (SOC) reporting, allows management to understand the chain that is producing and distributing goods, as well as how the controls inside of that system work. Reporting provides senior management with accurate information that supports decision-making.

Related article: Are Current Supply Chain Disruptions Causing Further Vulnerabilities?

Get the Benefits of SOC for Vendor Supply Chain

By adding sophistication to your company’s supply chain, you can make your business more reactive to changing market conditions. This, in turn, helps you drastically reduce risk to your company when these changes happen. If you need help digitizing your supply chain, the experienced professionals at I.S. Partners are here to help with SOC for Vendor Supply Chain.

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