Supply Chain Fraud on the Increase

From Engineering News: ” International fraud detection specialist Kroll says in its 2008 report that at every step along the supply chain, opportunities for fraud exist, ranging from simple theft through to large- scale misrepresentation of inventory assets. It notes that as firms expand across borders and multiply their product offerings, opportunities for fraud augment too.

As modern companies have adapted their structures for modern global business, so too have they unwittingly loosened the ties that bind all corporate activities to a company’s head-office. As decentralised decision-making structures prevail, an organisation’s many facets become vulnerable to fraud and theft on a variety of levels, particularly along the many legs of its supply chain.

Kroll senior director Stefano Demichelis says: “You’re facing fraud from the very beginning, on every single factor: raw materials, production and delivery.”

While supply chain fraud is too broad to be measured meaningfully, a survey Kroll conducted in 2007 showed that 42% of companies globally had suffered from at least one instance of either supplier fraud or physical asset theft, while 9% had experienced both. Supply Chain Fraud on the Increase As the global recession worsens, there is no doubt that supply chain fraud will increase even further. Want to learn more about the risks for supply chain fraud and actions you can take to mitigate and reduce? Read our full series of Supply Chain Fraud articles here at Supply Chain Network contributed by Norman Katz.

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