Supply Chain Fraud - Slide - Quality Assurance Frauds

Frauds in quality assurance can be either in collusion with a supplier or as a result of internal company pressures.

In collusion with a supplier, quality assurance fraud could include the passing of inferior-quality parts as first-quality, allowing them to move on to manufacturing or inventory for further distribution to customers. The supplier would provide a bribe or kick-back to the employee at the customer site (buying party) in charge of this area.

Conversely, quality assurance personnel may feel pressured by internal company staff, i.e. manufacturing or distribution, to “fast-track” the checking of goods, reduce the sampling percentage, or overlook parts that marginally fail tests. The quality assurance department becomes a bottleneck process, forcing pressures upon other departments to perform beyond their capabilities. The fraud here is less "criminal", but just as damaging to the company. Good executive management practices, open-door communication policies, and oversight can help avoid this kind of fraud.

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