Katzscan Supply Chain Fraud Business Model

This supply chain design process highlights how within the  analysis of supply chain execution for performance can also be leveraged for the assessment of supply chain activities for fraud detection and subsequent reduction. 

Supply chains rely on three core technologies: 

• Enterprise Resource Planning (ERP)
• Electronic Data Interchange (EDI)
• Automatic Identification (e.g. barcodes)

At the center is the ERP system.  The ERP system is extended externally from the enterprise to supply chain partners - both customers and suppliers/vendors - via EDI for business transactions.  The ERP system is extended internally within the enterprise to the warehouse or distribution center, even if this operation is outsourced.   

The goal of the extension of the ERP system externally and internally using ERP and automatic identification is to replace paper-based transactions with electronic transactions, thereby enabling programmatic audits and cross-checks of the transaction data both in real time and in aggregate.  

The transaction cycle image below highlights a typical supply chain transaction flow represented by EDI document identification numbers in both a Business-To-Business (B2B) and a Business-To-Consumer (B2C) scenario.  

The arrows in the middle of the supply chain transaction cycle highlight the variety of transaction cross-checks that can be performed.  Some cross-checks can occur at the point of transaction creation, e.g. the receiving dock.  Other transaction cross-checks may be performed in aggregate during off-line processing.  

Audits between the ERP and EDI system should be performed as well.  The transaction baseline perspective will be determined by which supply chain entity originated the transaction and which system - EDI or ERP - the transaction originated within based on whether the party is the sender or receiver of the transaction.