By Patrick Burnson, Executive Editor ·
November 8, 2018
During the past five years, an average of 31.1 percent of respondents to annual Deloitte polls say their organizations have experienced supply chain financial crime—particularly fraud, waste or abuse—in the preceding year.
Yet, in a 2018 poll, just 15.1 percent of respondents report their organizations are using (3.9 percent) or piloting (11.2 percent) blockchain to help mitigate financial crime risks in their supply chains.
“Financial crimes in supply chains are more complex than ever, but some leading edge organizations are leveraging emerging technologies to help combat it,” said Larry Kivett, a Deloitte Risk and Financial Advisory partner in the forensic practice, Deloitte Financial Advisory Services LLP. “Enhanced transactional transparency and visibility along the chain of custody are pushing organizations to look to blockchain to help prevent and detect supply chain fraud, waste and abuse through third-party relationship management and transaction execution. Layered with advanced analytics, blockchain can offer supply chain managers a path to digitizing prevention and detection of financial crime.”
From an industry perspective, groups reporting higher than average rates of supply chain financial crime in the 2018 poll were: energy, resources and industrials (38.6 percent); 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 rates of financial crime in their supply chains were also among those with below average use and piloting of blockchain to prevent financial crime, which were: technology, media and telecommunications (14 percent) and consumer (13.5 percent)—followed by government and public sector (8.1 percent).
“We’re seeing a growing awareness among executives that blockchain could be worth exploring as it can offer a new way to mitigate the possibility of supply chain fraud, waste and abuse,” Mike Prokop, a Deloitte Risk and Financial Advisory managing director in regulatory and operational risk management, Deloitte & Touche LLP. “While the technology’s application for financial crime management in supply chains is nascent, early adopters could glean interesting competitive advantage by leveraging blockchain’s inherent anti-fraud functionality.”
In an interview with SCMR, Prokop there are still a lot of managers struggling to differentiate fact from fiction in the space.
“Allow me to offer a few examples,” said. “ Some people think Blockchain and Bitcoin are the same thing—or that you need to have a cryptocurrency like Bitcoin in order to use Blockchain. Neither is true”.
Also, said Prokop, Some managers still think of Blockchain as new and untested, yet it was conceived of in 2008 and is used in nearly every industry today.
“Blockchain is not a technology expected to go away faster than it started,” he added. “While some organizations are still in early pilot tests for Blockchain, others are using it to manage thousands of transactions each day—and plan to continue doing so for the long haul.”
November 8, 2018
About the Author
Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]
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