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Of Patrick Burnson, executive editor ·
November 8, 2018
In the last five years, an average of 31.1% of Deloitte's annual survey respondents said their organizations experienced financial crimes in the supply chain, in particular fraud, waste or abuse, in the previous year.
However, in a survey of 2018, only 15.1% of respondents report that their organizations use (3.9%) or pilot (11.2%) blockchains to help mitigate the risks of financial crime in their chains of supplying.
"Financial crimes in supply chains are more complex than ever, but some cutting-edge organizations are taking advantage of emerging technologies to help them fight it," said Larry Kivett, Deloitte Risk and Financial Advisory's partner in forensic practice, Deloitte Financial LLP Advisory Services. "Increased transactional transparency and visibility along the chain of custody push organizations to look to the blockchain to help prevent and detect fraud, waste and abuse of the supply chain through the management of relationships with third parties and the execution of transactions. Stratified with advanced analysis, blockchain can offer supply chain managers a path to digitize prevention and the identification of financial crimes. "
From an industrial point of view, the groups that reported above-average supply chain financial crime rates in the 2018 survey were: energy, resources and industry (38.6%); consumer (37.1 percent); technology, media and telecommunications (34.2 percent); and life sciences and health care (33.5 percent). Two of those industries with higher financial crime rates in their supply chains were also those with below-average utilization and blockchain piloting to prevent financial crime, which were: technology, media and telecommunications (14 percent ) and consumers (13.5 percent) – followed by government and the public sector (8.1 percent).
"We are noticing growing awareness among executives that the blockchain might be worth exploring because it can offer a new way to mitigate the possibility of fraud, waste and abuse in the supply chain," Mike Prokop, Deloitte Risk CEO and Financial Advisory in regulatory and operational risk management, Deloitte & Touche LLP. "While the application of technology for managing financial crime in supply chains is nascent, early users could gain attractive competitive advantage by exploiting the intrinsic anti-fraud functionality of blockchain."
In an interview with SCMR, Prokop there are still many managers struggling to differentiate the facts from fiction in space.
"Allow me to offer some examples," he said. "Some people think that Blockchain and Bitcoin are the same thing, or that it is necessary to have a cryptocurrency like Bitcoin in order to use Blockchain.
Also, said Prokop, some managers still think of Blockchain as new and untested, yet it was conceived in 2008 and is used in almost all areas today.
"Blockchain is not a technology that should go away faster than it was started," he added. "While some organizations are still in the first Blockchain pilot tests, others are using it to handle thousands of transactions every day and intend to continue doing it for the long run."
November 8, 2018
About the author
Patrick Burnson, executive editor
Patrick Burnson is executive director of Logistics management is Review of supply chain management magazines and websites. Patrick is a widely published writer and publisher who has spent most of his career in international business, global logistics and supply chain management. He lives and works in San Francisco, offering readers a Pacific Rim perspective on industry trends and forecasts. You can reach it directly to [email protected]
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