Great article in Supply Chain Journal about how companies are using data analytics to mitigate supply chain fraud as well as review other data such as sustainability, human trafficking, child labor and diversity within partners of their organization's supply chain. Many companies are starting to develop best practices around these new data sets coming into their review and as such -- the role of the management accountant is becoming more advisory to the C-Suite because of their ability to review data and present to management the significance of their findings.
The IMA just released a white paper on "Effective Internal Controls to Help Improve Confidence in Sustainability Information." These same controls can be utilized related to supply chain management.
Data analytics continues to be an important function management accountants can provide to an organization as supply chains within organizations become more complicated and global.
Supply chain management is a job function area where Big Data and Analytics can significantly impact decision making and result in better cost management. Until recently, however, businesses have been less slow to utilize big data analytics in supply chain management than in other areas of operation such as marketing or manufacturing or financial analysis.
BUT TODAY -- the type of analytics which are really transforming industry is real time analytics of huge, rapidly growing and very detailed unstructured datasets. Standards like XBRL are being applied to unstructured financial data linked to accounting rules to make this information machine-readable for immediate analysis. BUT the vast majority of data coming into the review of management accountants is unstructured data and new tools and technologies are coming online to help management accountants move into the realm of supply chain data analytics as a new and quickly evolving professional area.
According to the article – from a recent poll from Deloitte: “…during the past four years, use of analytics to mitigate third-party fraud, waste and abuse risks in supply chains has jumped to 35 percent in 2017 from 25.2% in 2014.”
Supply Chain Fraud Continues to be an important issue for companies:
“For the third time in four years, consumer and industrial products professionals reported the highest level of supply chain abuse for the past 12 months at 39.1%. Energy and resources respondents also reported a higher than average rate of financial abuse in 2017 at 34.7%. Life sciences and health care professionals noted a marked decline in 2017 at 26.3% from 36.9% in 2016.”
High areas of concern for fraud:
“Asked which employee group presents the largest supply chain risks in their organizations, 31.6% of respondents said project managers and invoice approvers compared to 26 percent in a similar poll last year, while 27.5% chose procurement compared to 24.7% last year and 13.1% said accounts payable compared to 10.3% a year earlier.”
Sustainability, human trafficking, child labor and diversity are also entering into the data analytics mix and management accountants are starting to focus on filters within supply chains managing the data related to these topics of corporate governance.
This recent article in Forbes Magazine also details the transformations happening in supply chain data analytics and some of the new areas for analysis entering into the management accountant’s world related to DATA ANALYTICS as well and references a white paper study on the topic…