• Mr. ByteChek

Who is a SOC for Supply Chain report applicable to?

Updated: Mar 22



SOC for Supply Chain is an AICPA developed framework for reporting on the controls over manufacturing, production, or distribution systems. Supply chain companies can use the reporting framework to communicate to stakeholders the processes and controls they have in place to detect, prevent, and respond to supply chain risks that may impact companies meeting their objectives.


A question we are commonly asked by companies looking to get a SOC for Supply Chain report instead of a SOC 2 report is: Who are the companies this is relevant to? The AICPA says companies that produce, manufacture or distribute products should earn SOC for Supply Chain reports. In this article we will break down each of these types of companies:


Distribution companies:

Distribution companies are companies that provide or manage all or a significant portion of another company’s logistics, including one or a combination of the following: inbound freight, customs, warehousing, inventory management, order fulfillment, distribution, or outbound freight. In the interconnected world we live in, supply chain SaaS companies are operating as distribution companies specifically in the order management and warehousing space. Most companies we speak to fall under the distribution category.


Manufacturers:

Manufacturers include entities that transform raw materials or components into other components or finished goods for sale using labor and machines, tools, chemical and biological processes, fabrication, or formulation. The components or finished goods may be sold to other manufacturers for the production of other products such as aircraft, computers or computer parts, household appliances, furniture, sports equipment, or automobiles. In other cases, the finished goods may be sold to wholesalers that, in turn, sell them to retailers that then sell them to end users and consumers manufacturers include contract manufacturers that outsourced manufacturing for other companies.


Producers:

Producers include companies that extract raw materials through operations that remove Metals, minerals, and Aggregates from the Earth (such as oil and gas extraction, mining, dredging, and Corian); produce food, feed, fiber and other products by the cultivation of certain plants and the raising of domesticated animals and develop software for on-site installation.


If you operate in the supply chain industry then chances are you fall under one of these three categories and should explore earning a SOC for Supply Chain report. We interact with a lot of distribution companies that have built software solutions to solve the supply chain challenges we faced over the last two years of the pandemic.


A SOC for Supply Chain report helps companies prove to customers, prospects and investors that they have a product that meets the principal product performance specifications, meets delivery and quality commitments and requirements and meet production, manufacturing, or distribution commitments and requirements.