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9 November 2017 | ITSM
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Use of Supply Chain Fraud Analytics on the Rise
More organizations are using analytics to help prevent and detect financial abuses within supply chains...

During the past four years, use of analytics to mitigate third-party fraud, waste, and abuse risks in supply chains has jumped to 35 percent in 2017 from 25.2 percent in 2014, according to a Deloitte poll.

“It’s encouraging to see more organizations using analytics to help prevent and detect financial abuses within supply chains each year,” said Mark Pearson, Deloitte Risk and Financial Advisory forensic principal, Deloitte Financial Advisory Services LLP. “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 fraud, waste, and abuse in supply chains.”

Between 2014 and 2017, an average of 30.8 percent of poll respondents reported at least one instance of fraud, waste and abuse in supply chains in the preceding year. However, some industries saw higher and lower rates of financial abuse.

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 (39.1 percent), a slight decline from 2016 (39.6 percent). Energy and resources (34.7 percent) respondents also reported a higher than average rate of financial abuse in 2017, dropping a bit from 2016 (35.9 percent). Life sciences and health care professionals noted a marked decline in 2017 (26.3 percent) from 2016 (36.9 percent).

“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, Deloitte Risk and Financial Advisoryforensic partner, Deloitte Financial Advisory Services LLP. “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.”

Pearson concluded, “From a life sciences and health care perspective, I’m surprised to see such a big drop-off in reports of financial abuse from 2016 to 2017. But, I wouldn’t take that slowdown as a reason for supply chain executives to get comfortable. Even in highly regulated industries, there are still motives for bad actors to commit supply chain abuses. Managing supply chain risk is a constant effort.”

About the online poll

On June 28, 2017, a Deloitte Dbriefs webcast titled, “Supply chain fraud, waste, and abuse: The growing role of forensics and analytics,” polled more than 3,220 professionals about their use of supply chain forensics and analytics. Respondents work in industries including consumer and industrial products (28.4 percent); financial services (20 percent); technology, media and telecommunications (9.7 percent); life sciences and health care (7.4 percent); and energy and resources (6.7 percent). Similar online polls were conducted in February 2014, February 2015 and January 2016. Answer rates differed by question.

For additional information on the Deloitte poll “Supply chain fraud, waste, and abuse: The growing role of forensics and analytics” click on the link https://goo.gl/AJWKkn.

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