Building blocks
Combat Supply Chain Fraud
Jim Gee
23/03/2018
Building blocks

Our 2017 Annual Fraud Indicator, which assesses the cost of fraud to UK Plc, estimated that the cost of fraud affecting supplies and services was £121 billion a year.

The estimated percentage loss rate (a running average over 20 years) to individual businesses is 4.8% of supplies expenditure. The fraud arises from

  • supplier companies not providing the quality or quantity of goods which have been procured
  • internal fraud and theft by staff.

Corrupt relationships between buyers and suppliers can also develop.

How to protect against fraud

There are three key steps you can take:

  • check the integrity of staff both before they are recruited and regularly thereafter
  • do due diligence on suppliers; this requires specialist advice.
  • analyse the pattern of communications between key supplier staff and your buyers, as well as the prices which are charged and paid.

None of this is very costly, and it all of this helps to secure supply chains against fraud and corruption and the related costs.

How to build trust with third parties and suppliers

The majority of staff, partners and suppliers will always be honest, but a minority won’t.

The key thing is to make the former as large as possible and the latter as small as possible – and there are some simple ways to achieve this, which then allow trust to grow.

Business relationships are increasingly complex and suppliers increasingly distant. In this context, securing firms against problems is a requirement not an option.

Contact us

Jim Gee
Jim Gee
Partner, Head of Forensic and Counter Fraud
London