Corporate Governance and Systems Integration: Impact on Globalised Supply Chains (1, 2) Flashcards
What is corporate governance?
It provides a set of responsibilities, practices, principles and processes to lead and direct an organisation. It is concerned with the structures and systems of control by which managers are held accountable to those with legitimate power.
What is the Sarbanes-Oxley Act 2002?
The act is an example of legislation surrounding corporate governance. It was passed by U.S. Congress to protect investors from the possibility of fraudulent accounting activities by corporations. The act mandated strict reforms to improve financial disclosures.
What is meant by segregation of duties, an important element of corporate governance?
Transactions: ensuring no one person has the access to systems to allow them to execute transactions across an entire business process without appropriate checks.
Non-Executive Directors: a role for someone who can bring an impartial view to the executive management board
Corporate governance encourages an ethical outlook. What areas are key considerations with regard to ethical practices?
- Customers – fair treatment of customers
- Suppliers – equal and transparent treatment
- Corruption – fraud / bribery must be avoided
- Conflict of Interest – must be declared
- Staff – treated fairly and with respect
- Finance – invoices must be paid on time etc.
What methods do companies rely on to detect breaches of ethical policy?
Ethics audit – checking individuals are complying with policy
Whistleblowing – someone informing the organisation
What should an organisation do when it becomes aware of a breach of ethical practices?
- Obtain firm evidence (if breach highlighted by whistleblower)
- Establish the severity
- Consider escalation procedures and forewarn PR team
- Identify how breach occurred and draw up CAP
What is a system in relation to supply chains?
A system is a set of inter-related elements which form a structure, created by the relationships between each of the elements. Often there is a sequence and the focus is on meeting a desired outcome.
What is meant by “Control Systems”, “Control Environment” and “Control Procedures”?
Control Systems – information systems capture control data and feed it back for analysis and conversion to information which can be acted on.
Control Environment – the internal control to reflect the organisations values and culture
Control Procedures – comprise the individual control mechanisms such as budgets, segregation of duties or financial approval limits
What is systems integration and what are the typical methods for systems integration?
Systems integration is bringing together different systems or sub-systems into a single overall system with the aim they will function together as a total new system.
- Vertical Integration can be used which is integrated functional systems e.g. supply chain systems
- Horizontal Integration can be used which is cross functional systems e.g. ERP
What are the challenges with systems integration?
Often after mergers or take-overs there are legacy systems. Creating the ability to access all data individually and locally can be difficult.
Two broad options exist for systems integration across the supply chains. What are they?
Option 1 – The creation of one system with all data stored centrally
Option 2 – A real-time sharing network
