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Uncovering New Uses for Supply Chain Analytics

APICS CEO

Friday November 17, 2017


For supply chain professionals, much is made about utilizing data analytics to improve demand planning and forecasting. However, Deloitte reports that 35 percent of companies now use analytics to mitigate third-party supply chain fraud, waste and abuse, an increase from 25.2 percent in 2014. 

“Unfortunately, increased vigilance doesn’t translate into lower instances of fraudsters trying to perpetrate their schemes,” said Mark Pearson, Deloitte Risk and Financial Advisory forensic principal, Deloitte Financial Advisory Services. “Even the most advanced analytics users should work to constantly evolve their efforts to stem supply chain fraud, waste and abuse.”

Deloitte’s experts urge supply chain professionals to use forensics and analytics capabilities to gain insights. If professionals ignore supply chain data, they could overlook potential competitive, regulatory and litigation risk. Likewise, without the appropriate examination and protection of valuable data, businesses could open themselves up to cyberattacks. Lastly, investing in forensics and analytics can help companies avoid these and other risks while decreasing losses.

“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 Advisory forensic partner, Deloitte Financial Advisory Services.

In fact, in the Deloitte poll, 34.7 percent of energy and resources industry respondents indicated a higher than average rate of financial abuse in 2017, slightly lower from the 35.9 percent reported in 2016. Consumer and industry products professionals (39.1 percent) reported the highest levels of supply chain abuse over the past 12 months.

“Even in highly regulated industries, there are still motives for bad actors to commit supply chain abuses,” Pearson said. “Managing supply chain risk is a constant effort.”

Last month, a German documentary accused Haribo – the manufacturer of iconic gummy bears and other confections -- of using materials manufactured in horrendous conditions for humans and animals.  In a statement, reported by the Miami Herald, Haribo said it was now auditing its suppliers and, in some cases, its suppliers’ suppliers. It also is conducting a site-by-site audit of pig farms in its supply chain. 

Carefully combing the data

Companies need to use all their resources, including analytics, to protect their brands from supply chain risk. Consider the APICS Dictionary definition of risk mitigation: “Reducing exposure to risk in terms of either its likelihood or its impact.”

In one section of Haribo’s website, the company boasts of the “happy world of Haribo.” That ideal has been shattered by revelations accusing the company suppliers of using slave labor and treating animals deplorably. Could a more careful examination of the company’s supply chain have mitigated or even prevented the challenges Haribo faces now?

Find out how APICS can help your company manage risk and drive performance. Visit http://www.apics.org/apics-for-business to learn more about resources APICS provides organizations.

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