Detecting that Fraud Permeating Your Supply Chain!

As per our last post, fraud is permeating your supply chain and your current iZombie platform needs to take a lot of the blame as it lulls you into a false sense of security when it should be sounding all the warning bells and sirens at its disposal.

So what kind of platform do you need?

Simply put, a platform with good market intelligence, encoded expert intelligence, (hybrid) AI algorithms, and other modern features that can detect common types of fraud and stop it dead in its tracks. To give you a better idea of what these platforms look like, we’re going to address each type of fraud an organization may encounter and what a platform would need to detect it.

Unacceptable Cost Inflation via Metric Inflation

If the platform monitors all historical performance metrics and computes trends, it will be able to detect when a quality or reliability metric is out of whack.

If the platform also monitors market costs for the product or raw material according at different volume tiers, it will be able to detect when a cost is most likely more than percentage point above average.

If the platform uses smart algorithms, it will be able to compute a high probability of something being off when the two factors coincide on a category being sourced and alert a senior manager or executive to explore and verify the situation before a buy is made.

Double Fuel Surcharges

A good platform will also integrate with fuel price indices and transportation exchanges and know the average surcharge on fuel for any given region as well as the limits imposed by the organizational contract and immediately detect when a surcharge is out-of-whack, unjustified, or against the contract and prevent a buyer or AP professional from paying the invoice until it is corrected.

Duplicate Invoices

When an invoice comes in, a smart platform will not only insure there is a corresponding PO before it is accepted, but that the total sum of invoices against the PO doesn’t exceed the total value of the PO (and the total number of any unit invoiced doesn’t exceed the maximum authorized amount). Furthermore, it will not allow payment until the total sum of unpaid goods received at least equals the amount invoiced. This will not only make it easy for a human to identify duplicate invoices (where only the invoice number is changed) but duplicate billings, where similar invoices (for unshipped goods) are submitted with only minor changes.

T&E Fraud

You need a T&E system that can enforce spending limits, match establishments with blacklists, find duplicate charges for similar expenses on the same day, pull in expected airline fares in the proper bracket to identify policy violations, and other capabilities that can detect policy violation or over spend.

Distribution Theft

Now, if your organization is large enough, it’s pretty much a guarantee there is going to be theft somewhere along the chain. And if its external theft, that’s not something your system is going to be able to predict. But internal theft, that’s something it should be able to detect.

The fact of the matter is that if there is repeated internal theft, it will follow a patter. Similar types of inventory, coming from similar suppliers, on a small set of routes used by a smaller set of carriers — usually with a small set of common drivers involved. With enough data and data mining, a good platform can identify patterns indicative of inside jobs that can be investigated, identified, and stopped.


While platforms aren’t the entire answer, as they can’t detect, for example, true inside jobs by an employee cutting a camera feed or power feed (in a blind spot) on the way out, they are a very large part of the answer.