One of the most critical elements that impacts the level of service we provide as a relocation management company (RMC) is how our global supply chain functions. Tracey Gatlin, vice president of global supply chain at Plus provides us with her reflections on integrity, fraud and minimizing risk within the supply chain.
I passed this article along to her for her thoughts and Tracey replied with the following.
In supply chain management, you develop and nurture partner relationships. You often create a personal connection with the individuals who represent your partners. In discussing last quarter’s performance review, you discover that you like the same Sci-Fi movie genre or you went to the same middle school, but never knew one another!
But, as is stated in this article, you need to know whom to trust. Like any relationship, you work to establish a level of trust with your partner and their representatives. Williams quotes Vito Giovingo, a former risk advisory consultant, who states, “It is a case of not trusting blindly, but you also don’t want to presume everyone is a bad actor.”
Anyone can be fooled from time to time but knowing how to identify “fraud” in a supply chain is key. As the article suggests, fraud comes in many forms. Using an assessment tool is one broad way to measure your risk vulnerability, but an assessment may not always capture where you may truly be at risk.
In relocation, some fraud may be harder to identify. Perhaps, you were led to believe a partner has their own temporary housing inventory, but then discover they are actually using the inventory of other temporary housing providers. What about a partner who is knowingly providing inaccurate data in their reporting to show a lower than actual household goods claim ratio? Are these situations implications of fraud?
Ensuring that everything that can be done to protect the integrity of your supply chain and maintain compliancy means doing all the best practices stated in Williams’ article, but I find the most important is that your entire organization must have the same viewpoint. Williams cites Katie Hausfield, J.D., “Compliance has to be enforced from the top down. It is understandable that a company will want to push its business to grow, but you have to do it ethically and in the right way.”
I’ve always felt that as a supply chain professional, I need to know that I have the support of my leadership to uphold the company’s and our clients’ ethical standards. More importantly, I need to be able to look at myself in the mirror each day and know that I upheld my own integrity.
Because of their complexity, supply chain operations are particularly vulnerable to fraud. The true cost of supply chain fraud can only be guessed. The Association of Certified Fraud Examiners (ACFE) estimates that a typical organisation loses 5% of revenue a year because of fraud. Yet, more than 44% of company fraud cases are discovered only through a tip or by accident. So, finance professionals need to understand what supply chain fraud is, where is it happening, and what can be done about it. “Supply chain fraud can mean a lot of different things to a lot of different organisations,” said Vito Giovingo, CPA, CGMA, formerly a risk advisory consultant, and now director of enterprise risk management at McDonald’s Corporation. “It can cover everything from the purchase of raw materials, to delivery and logistics, and also marketing activities,” he said. Giovingo, who along with Katie Hausfeld, J.D., a senior litigation associate at global law firm DLA Piper, gave a presentation on supply chain fraud at the 2017 AICPA Global Manufacturing Conference, said it “runs the gamut” of frauds, from false expenses claims from employees, to high-level corruption involving government officials and partners.