From Procurement to Profit

Deloitte: More Use of Supply Chain Fraud Analytics

The use of analytics to combat third-party supply chain fraud, waste, and abuse risk has jumped to 35% of companies in 2017 from 25% percent in 2014, according to a Deloitte poll of more than 3,200 supply chain professionals.

“It’s encouraging to see more organizations using analytics to help prevent and detect financial abuses within supply chains,” said Mark Pearson, a forensic expert at Deloitte Financial Advisory Services.

“Unfortunately, increased vigilance doesn’t translate into lower instances of fraudsters trying to perpetrate their schemes. Even the most advanced analytics users should work to constantly evolve their efforts to stem supply chain fraud, waste, and abuse.”

Between 2014 and 2017, almost a third of those surveyed reported at least one instance of supply chain fraud, waste and abuse in the prior year.

For the third time in four years, consumer and industrial products professionals reported the highest level of supply chain abuse for the past 12 months (39%, virtually unchanged from 2016.

Energy and resources (about35%) respondents also reported a higher than average rate of financial abuse in 2017, also essentially unchanged from the prior year.

Life sciences and health care professionals noted a marked decline in 2017, at 26%, down from 37% in 2016.

“In the energy and resources industry, I’ve seen complex capital projects rife with bribery, bid rigging, collusion, fraud, and other schemes,” said Larry Kivett, another Deloitte forensic expert.

“Beyond reducing sole-sourced procurement to manage risk, supply chain executives can also prevent financial abuses by working to improve supplier invoicing timeliness, accuracy, and approval processes,” Kivett said.

The online poll was conducted in June, querying more than 3,220 professionals about their use of supply chain forensics and analytics.  Respondents worked in consumer and industrial products, financial services, technology, media and telecommunications, life sciences and health care, and energy and resources

Similar online polls were conducted in February 2014, February 2015 and January 2016.

Deloitte provides audit, consulting, tax and advisory services to more than 85% of the Fortune 500 and more than 6,000 private and middle market companies.

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