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How to Audit Your Supply Chain for Performance, Risk, and Fraud

Leverage technology you already have—or join operations improvement projects—to gain optimal benefit from the data youre collecting on every transaction.

By Norman Katz | Updated on December 17, 2015
Selling fraud-prevention efforts can sometimes be as challenging as preventing fraud. How does one ask for money to prevent something that has not yet happened or is difficult to quantify? The standard statistics from the Association of Certified Fraud Examiners state that enterprises lose 5 percent of their gross revenues to fraud every year. Is a single statistic enough to build a case on?

If a fraud-prevention or risk management program will have a negative impact on operational throughput—causing a decrease in operating efficiency or an increase in the cost of goods sold, perhaps due to an increase in labor required by operations processes—the proposed fraud-prevention and risk management programs will have little likelihood of receiving the go-ahead from C-suite executives.

That’s why risk management and fraud prevention cannot be implemented as standalone, isolated objectives. They should be married to operational improvement projects, and they should use the embedded technologies that operate the enterprise’s supply chain activities. This approach offers a clear return on investment: When supply chain operations and technologies are brought together with risk management and fraud prevention, the same technologies and transactions that are used to enable the supply chain and measure its performance can also be used to monitor for fraud and analyze patterns for risk. This helps ensure that the overall goals of the enterprise are truly shared amongst all internal stakeholders.

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