A report by accounting firm KPMG has found that British public and private sector organizations lost more than £5 million in procurement fraud during 2011. The figure is based on the number of procurement based prosecutions that passed through the British court system. There were seven major cases involving procurement fraud of £5,096,805 (US$7.85 million). Another accounting firm, PwC, says that supplier fraud in the public sector has increased from 13 percent to 32 percent in the last two yearsThe ways in which criminals have been able to defraud companies include pretending to be a legitimate supplier, and informing the purchasing department that an existing supplier's bank details had changed. Sometimes the criminals are the purchasing staff themselves, as in one instance an employee created a fictitious care home vendor. The employee then linked the care home to a legitimate customer's details to make illegal payments their own bank account.
Follow me on Twitter
Comments
The point you make is interesting and sometimes valid. However, as a negotiator from the other side of the fence (sales contracts), let me tell you why companies are sometimes hesitant to boast about procurement success. If I highlight the quality of the procurement group’s efforts at driving lower prices, or generating superior reliability, or cutting lead times then you are right that customers value this. So of course the immediate question (from one of those talented procurement professionals sitting opposite me) will be So where are those benefits reflected in your contract? They immediately turn my achievements around on me to look for superior’ terms and conditions or lower prices. Now that is fine if I can indeed demonstrate that I do offer better terms shorter lead times, higher damages for failure, lower cost of ownership, superior guarantees or service levels. But few sales organizations have this level of competitive intelligence we rarely know in detail what competition is offering or what they may be desperate enough to match. Second, in today’s inter-connected world, many of my major customers are also my major suppliers. It is not always smart PR to suggest that I am somehow screwing my customers yet that is the way that Procurement success stories will often be read. So Marketing and Communications have a tricky balance to perform here, but in my experience trumpeting Procurement’s achievements often results in unintended and adverse consequences.