Fraud Detection in Sourcing

Corruption /Frauds do happen in Sourcing projects. Frauds can be done either by the employees of the bidding company or the Supplier side. Fraud can happen at any stage of Sourcing from Identifying the project -> Pre- Qualification-> Evaluation. Have listed down below some of the patterns that can be found using Machine learning.

Biding company

• Low bid participation rates
• Accept Bids after the submission date
• Award contracts to the same suppliers
• Frequently selecting the same supplier
• Frequently extending a contract with the same supplier
• Not maintaining documentation of decisions & support material for the approved supplier
• Raising Purchase order after invoice received
• Expedite payment approval of invoice than regular payment terms without any discounts
• Paying to service/goods above market standards
• Approving poor Quality service/goods with feedback to the supplier or blocking the supplier
• Abandon an eligible supplier with a vague reason

Supplier

• Sometimes check for terms of reference point to the preferred supplier
• Frequently asking for exemptions
• Suppliers hiring a losing bidder as a sub-contractors
• Same Supplier bidding with multiple company names Shell companies
• Not declaring a conflict of interest
• Multiple invoices having a similar Purchase order number