22 May 2008
Firms have been urged to create a specific function to deal with and mitigate corruption in their supply chains, particularly if they are sourcing from low-cost countries.
The call comes in a report by risk consultancy Kroll, which said the globalisation of supply chains is exposing firms to the risk of fraud.
Its annual review revealed the further an organisation extends its reach when outsourcing, the more vulnerable it is to fraud. This can range from theft to suppliers misrepresenting stock levels.
Buyers should be aware of indicators such as unusual payment patterns, or if a supplier has an unexplained upturn in lifestyle.
Charles Carr, managing director EMEA at Kroll, told SM: "Fraud is a growing problem, particularly if left unchecked and unsubstantiated. [Purchasers] must really examine the reason for buying from a supplier and make tender processes strong. Things can get better if companies attack the problem."