Understanding and Mitigating Supply Chain Fraud

Abstract

Managing fraud should be fundamental to effective supply chain risk management. Companies must maintain continuity in the face of supply chain fraud which can average about five percent of total revenue. One in seven companies will not fully recover. Minimal research outside accounting has effectively defined supply chain fraud, where it occurs, or identified best practices in mitigating and managing fraud in complex supply chain networks. Global supply chains are particularly vulnerable to fraud because of their complexity, wide dispersion, and lack of transparency, thereby making effective fraud control problematic. Internal controls are ill-prepared to protect complex global supply chains.