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Maintaining SOX Compliance with Intralogistics Software

Nick VanWallaghen | 24 May 2023

If your company is publicly traded, there's a good chance you’ve heard the term “SOX” before. The SOX (Sarbanes-Oxley) yearly financial reporting audit touches every function of a public corporation – from human resources to supply chain management. SOX compliance is a massive operation both in terms of cost and labor force. The right software solution, however, can not only help you achieve the most out of your warehouse system design but can also help support you through SOX compliance.

SOX in Warehouse Operations

There are a multitude of sections within SOX’s 11 Titles but some are more impactful than others to a business’ bottom line. SOX 404, which concerns the assessment of internal controls, has historically been one of the more complicated and time-consuming sections. When it comes to warehouse management, the right automation and accompanying software can greatly reduce the costs and human capital required to perform these evaluations.

Improving Internal Controls with Automation


The automation type we will use as an example for this article is GTP (goods to person) technology. There are many different flavors of these systems in the industry today, but the overarching theme is that inventory is generally stored within a secure grid, products are brought directly to the picker and can only be accessed at an operator workstation. Robots manage the movement of inventory bins within the grid and are given inventory movement commands from a software suite. This software package, through an interface setup with the automation, maintains strict inventory tracking as bins move throughout the system and are stocked or consumed.

The software suite, commonly referred to as a WES (warehouse execution system), serves as the “brains” behind the operation and provides many benefits when it comes to maintaining inventory for SOX compliance. 


As mentioned, inventory is completely secure within the GTP grid and can only be accessed at operator workstations. Inventory bins can be called forward to a workstation in a multitude of methods:

  • Fulfillment of an outbound order line
  • Cycle counting
  • Putaway
  • Hot movements (a bin or SKU can be requested for reasons outside of a pick or putaway order)

For an inventory bin to be presented to a workstation, a user must first be logged in to the UI (user interface). This not only serves to ensure an authorized user is logged into the system, but also allows for strict transactional logs to be kept. If there is an inventory discrepancy found within a location, you have the history and the accompanying usernames to root cause the issue.

Additionally, users will be assigned to user groups with specified permissions and restrictions. This will give management full control of not only who can access the system but also allow you to dictate what level of access each individual user has.

A BI (business intelligence) suite, built into your WES solution, provides a number of useful reporting tools to give your business the insight needed to stay on top of your cycle counting progress. From high level reports that show the total number of locations still needing to be counted to drill down reporting by location to see when the last cycle count was performed against it and which user was responsible, a reporting suite comes fully equipped with standard reports.

Going a step further, custom reports may be required that support your unique business needs. Extensibility of the BI suite should be considered; whether the WES data warehouse can be accessed by your own BI team for analysis or if those reports have to be created by the WES provider.


Third party auditors may require your company to perform cycle counts against every location within the warehouse at least once and sometimes twice per year. The proper software package should have the tools to ensure your operation is staying on top of these counts.

For example, can the WES automatically generate cycle count orders on a daily basis with just a few inputs from your operations team? Can it manage the cycle count frequency (locations to be counted once or twice per year) and the ‘blackout dates’ (you may want to focus on order fulfillment, not cycle counting, during peak season for instance)? Or will your WMS manage the creation of these counts, passing them to the WES to be performed and the appropriate data sent back to the WMS to keep everything on plan?

The right WES may also give you the ability to interleave cycle counting tasks within normal day-to-day operations with “opportunistic” cycle counts. Events like picking a location to empty, picking a location below a configured number of units, putting away to an empty location, etc. can be used to prompt the operator to perform a quick count of inventory in that location, serving as one of the required counts for that location. If properly taken advantage of, these opportunistic counts can be huge time savers for your business.

An Investment in More Than Just Equipment

Maintaining SOX compliance, while necessary, can be a tedious and costly venture. The right combination of material handling equipment and software can not only optimize warehouse operations, but also improve SOX compliance processes. While a move into the automation sphere may seem a steep investment, the payback can be quickly realized when it comes to streamlining manual processes that are tying you down.

As you weigh various automated solutions, consider systems and software that will support your business across multiple functions. Reach out today to see how our software experts can improve your inventory maintenance controls, fulfillment times and overall operational efficiency.

Author: Nick VanWallaghen

Nick is a Logistics Consultant for the Bastian Solutions Software team based in Louisville, KY.  He received his Bachelor of Science degree in Mechanical Engineering from the University of Kentucky – “home of the nation’s greatest collegiate basketball program” - and his master’s degree in Supply Chain Management from Penn State.  In his current role, Nick focuses is on providing industry leading custom software solutions to our current and future customers.


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