Understanding Vendor Fraud Shrinkage: Causes and Solutions

$455 million. That's how much U.S. businesses lost to cargo theft last year. 🚚 💸 Our latest SupplierWiki article breaks down: 🚨 Where theft happens across the supply chain 👀 How to identify and respond to theft 🔒 How stakeholders can prevent it Protect your profits. 🛡️ https://hubs.la/Q03MRVqH0 #SupplyChain #CPG #Logistics #Retail

This week, I've seen numerous people in the trucking industry discussing the Guy Fieri tequila heist and their own experiences with having a load stolen - freight theft is, unfortunately, an everyday reality for many carriers. If you're curious how thousands of bottles of Añejo (or trucks full of fresh produce) can disappear, here's a crash course:

Case Snapshot: €1M Recovered in Under 12 Months Retail losses are often invisible — until you start looking closely. In one of our recent projects with a large FMCG retailer, we analyzed the past 3 financial years and reviewed data from over 700 suppliers. Here’s what we found: 🔹 Uninvoiced income – rebates, bonuses, and marketing or logistic contributions agreed in contracts but never invoiced. 🔹 Under-invoiced income – bonuses and contributions calculated and billed at lower amounts than contractually agreed. 🔹 Duplicate payments – hundreds of payments identified where invoices were paid twice. 🔹 Unregistered credit notes – supplier-issued credit notes that never reached the books. 🔹 Overpaid invoices – invoices paid for higher amounts than their face value. 🔹 Fraud detection – one internal-external collusion case exceeding €250,000 uncovered during the review. All of this — in less than 12 months. Total recovered: approximately €1 million, directly credited to the retailer’s accounts. 👉 This is what a structured recovery audit delivers: facts, evidence, and results.

Retailers can lose up to 15% margin due to non-compliant vendors. ⚠️ One overlooked compliance gap can create a ripple effect: ❌ Delayed shipments → missed promotions ❌ Penalties & rejections → higher costs ❌ Customer complaints → damaged brand trust The hidden cost? Up to 15% of retailer margins. That’s why compliance is not just paperwork, it’s margin protection. At FortuneLivingDeecor, every shipment is backed by: ✔️ Verified certifications ✔️ QC documentation ✔️ Transparent audit reports Retailers who partner with compliant vendors see fewer disruptions, lower risk, and stronger bottom lines. 👉 Want a Compliance Checklist your sourcing team can use immediately? Comment “COMPLY” and we’ll DM it to you. #RetailSourcing #Procurement #Compliance #HomeTextiles #Bedsheets

Spotting Theft, Fraud, and Corruption in Warehousing In warehousing and logistics, small red flags often reveal bigger underlying problems. Losses don’t just happen overnight, they creep in through overlooked warning signs. Here are key indicators every warehouse professional should stay alert to: 1. Suspicious paperwork – copies instead of originals, handwritten or manually altered documents, frequent corrections in ledgers. 2. Numbers that don’t add up – rounded-up weights, inaccurate figures, or missing records. 3. Package tampering – puncture holes, tears, or the famous “doughnut stacking” (hollowed-out goods hidden in the middle). 4. Manipulated distributions – reduced rations or slightly smaller packages. 5. Unusual behavior – staff accessing storage at odd hours. Remember: one overlooked sign can translate into massive stock losses and compromised trust. Strong internal controls, regular audits, and visible leadership presence on the ground are critical in closing these loopholes. What red flags have you observed in your warehouse or logistics experience? #Warehousing #Logistics #InventoryManagement #FraudPrevention #SupplyChainExcellence

Journey into Supply Chain and Inventory Fraud in Import-Driven Trading and Distribution Part 1/7: Phantom Inventory Phantom inventory is a hidden danger for import-oriented trading and distribution companies. It occurs when goods shown in your system records aren’t actually present in the warehouse. Fraudsters, sometimes in collusion with external vendors and internal staff, doctor documents, inflate receipts, or even create fake delivery notes to claim payment for items that were never shipped. This can also result from poor inventory management, irregular audits, theft, or simple human error, leaving dangerous gaps between digital records and reality Modus Operandi: * Fake invoices and delivery receipts are generated to match inflated orders, falsely boosting stock records and claiming funds * Receiving teams may report more items than actually arrived, sometimes to conceal theft or spoilage * Suppliers and logistics partners collude, submitting fraudulent bills of lading and shipping documents which confirm fake deliveries * Inventory management software, if not updated in real-time, further propagates errors and hides discrepancies Red Flags: *Persistent discrepancies between physical stock and digital records, especially after big shipments or transfers * Repeated inventory write-offs or “damaged goods” with little supporting evidence or suspicious patterns * Delivery paperwork lacking traceability - missing carrier signatures, vague location details, or documentation inconsistencies * Unexpected surges in insurance claims for “lost” or “spoiled” goods, often surrounding specific suppliers or dates * Audit delays or sudden record changes before review periods Consequences: * Financial losses from paying for non-existent inventory and processing fraudulent insurance claims * Distorted financial reporting, with overstated asset values and misleading profit figures, potentially triggering regulatory scrutiny * Inventory gaps lead to out-of-stock incidents, lost sales, revenue declines, and damage to customer trust The ripple effect encourages wider fraud, if unchecked, one successful phantom inventory scam becomes a template for deeper systemic corruption #InventoryFraud #PhantomGoods #ImportScam #SupplyChainSecurity #BusinessIntegrity

Who Audits Your Supply Chain? The only correct answer is you do! Whatever service your vendor provides, you’ve probably received assurances that they operate responsibly, ethically, and securely. But do they, really? The first question I ask every client is: what’s important to you? Each client has their own priorities — strong rebates, a secure chain of custody, environmental responsibility, and more. As a representative of my company, I assure them that they’re in good hands. But I don’t stop there. I provide evidence — verifiable proof that my claims are factual — so they can confidently include it in their due diligence records. And still, that’s not enough. I also show them where and how to verify that evidence for themselves. After all, real trust is built on truth, not just promises. To take it further, I invite clients to visit our facility — or, if that’s not possible, to join me for a live video inspection of our site. As a salesperson, I welcome this level of scrutiny. It removes doubt, builds trust, and, in most cases, doesn’t take long at all. Trust should not be given, it should be earned!

Physical inventory counts are a must, but they're often a massive undertaking. Inventory can get lost, damaged, or stolen, leading to discrepancies between what's on the books and what's actually there. Regular, strategic counts are a key corrective measure to ensure accuracy and prevent fraud. #AssetManagement

𝗪𝗵𝗮𝘁 𝗘𝘃𝗲𝗿𝘆 𝗦𝘂𝗽𝗽𝗹𝘆 𝗖𝗵𝗮𝗶𝗻 𝗠𝗮𝗻𝗮𝗴𝗲𝗿 𝗦𝗵𝗼𝘂𝗹𝗱 𝗞𝗻𝗼𝘄 𝗔𝗯𝗼𝘂𝘁 𝗔𝗰𝗰𝗲𝘀𝘀 𝗖𝗼𝗻𝘁𝗿𝗼𝗹 𝗶𝗻 𝟮𝟬𝟮𝟱 Supply chain security today is about more than just locks. It’s about visibility, compliance, and speed. The reality: outdated access systems are costing businesses millions. From warehouse break-ins to fraudulent pickups, old methods like keys and manual logs leave critical blind spots. 📉 Keys can be copied. Logs get faked. Revoking access can take days. 📈 Modern systems offer real-time control, instant credential management, and audit-ready digital logs. Real-world cases like the Charlotte Tilbury warehouse heist or the $128M surge in North American cargo theft highlight one fact: old access control is not only inefficient, it’s dangerous. ✅ Supply chain managers should be asking:  • Can I revoke access instantly?  • Do I have digital, real-time logs across all sites?  • Am I preventing fraud, or only reacting after the fact? Those who modernize gain more than security. They gain efficiency, compliance readiness, and resilience. 👉 Read the full article here: https://lnkd.in/gzupwebA #SupplyChain #Logistics #AccessControl #SmartLocks #IkinGlobal

🔒 𝗙𝗿𝗮𝘂𝗱 𝗣𝗿𝗲𝘃𝗲𝗻𝘁𝗶𝗼𝗻 𝗶𝗻 𝗝𝗲𝘄𝗲𝗹𝗹𝗲𝗿𝘆 𝗥𝗲𝘁𝗮𝗶𝗹 – 𝗪𝗵𝘆 𝗖𝗵𝗲𝗰𝗸𝘀 & 𝗕𝗮𝗹𝗮𝗻𝗰𝗲𝘀 𝗠𝗮𝘁𝘁𝗲𝗿 💎 The jewellery business is built on 𝘁𝗿𝘂𝘀𝘁 𝗮𝗻𝗱 𝘁𝗿𝗮𝗻𝘀𝗽𝗮𝗿𝗲𝗻𝗰𝘆. But because of its high-value & low-volume nature, it’s also more vulnerable to fraud than many other industries. Here are some 𝗸𝗲𝘆 𝗰𝗵𝗲𝗰𝗸𝘀 & 𝗯𝗮𝗹𝗮𝗻𝗰𝗲𝘀 every jewellery store should adopt: ✨ Segregation of Duties – Sales, inventory, and accounts should never be handled by the same person. ✨ Daily Stock Reconciliation – Even the smallest mismatch between physical stock & records must be flagged. ✨ Customer KYC & Billing Transparency – Invoices, PAN details (above limits), and digital payment trails build trust. ✨ Surprise Audits – Internal checks keep everyone alert and accountable. ✨ CCTV & Access Control – Not just theft prevention, but ensuring correct inventory handling. ✨ Vendor Verification – Always verify suppliers to avoid counterfeit or under carat goods. ✅ Takeaway: Strong controls don’t just protect the business—they build confidence and long-term credibility. #JewelleryBusiness #FraudPrevention #RetailManagement #Accounting #TrustAndTransparency