Supply Chain Fraud - Slide - Manufacturing Frauds

Manufacturing frauds are similar to quality assurance frauds in that they can be the result of supplier collusion or internal company pressures.

Quality Assurance checking may not detect all failures of a part prior to the manufacturing process. Here again, collusion with a supplier can allow parts into the manufacturing process that should not be there, either due to their sub-standard nature or due to part substitution.

Internal company pressures to manufacture goods for a backlog of orders can force the manufacturing department to forgo quality checks and rush certain processes; sacrificing the goal of producing first-quality products. Similar to the quality assurance department, (and sometimes the receiving department), the manufacturing department can be viewed as a bottleneck process to the company’s ability to ship orders on time.

Also, manufacturing fraud may be the result of asset misappropriation if the manufacturing equipment is misused and damaged.

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