The Tale of the Two-Ply Toilet Paper Caper

Toilet Paper Caper

“I’d rather use sandpaper than this toilet paper.”  “We can’t keep up with the clogs.”  “It’s tough enough to write on with a pencil.”  The complaints were overflowing, literally.  Our client’s procurement team had recently negotiated a seemingly attractive contract with a supplier that included, among other items, standard two-ply toilet paper at a very large Asia Pacific office site.

Somewhere, somehow, things were going horribly wrong.

Within several weeks of transferring to the new vendor, the only thing that was clear was the major problem in the bathrooms, specifically with the toilet paper.  The site management team was puzzled.  “What could possibly be different with this brand?  Why the sudden upsurge in complaints about such a basic commodity?”

Stumped, they sent in a team to troubleshoot. The group soon discovered that one-ply paper, not two-ply as contracted, filled the bathroom stalls.

Suspicious, they decided to set up an investigation.  Later that week they observed the vendor delivering the sub-par product, along with a stuffed envelope, to the company’s dockworker as he received the lower quality cases into the storage room.  Obviously, there was cash in the envelope. There was, however, even more money for the supplier who was pocketing the difference in cost-savings as profit.

Although somewhat amusing, this real-life story illustrates a huge problem faced by corporations of all types and sizes each day.  Based on the Association of Certified Fraud Examiner’s 2012 report, corporate fraud, including procurement-related deception, drains companies of up to 5% of revenue each year.  On a global basis, this adds up to more than $3.5 trillion US dollars each year.  Even more troubling, estimates suggest that compliance audit teams identify less than 3% of these schemes.  In a very large percentage of cases, these frauds occur when an inside company employee colludes with an outside merchant.

Fortunately, procurement fraud analytics assist in identifying these schemes and focus investigative time on cases with the highest propensity for dishonesty.  This is yet another way that companies can leverage analytics to drive better bottom line results.  Our fraud analytics solution encapsulates over 10 years worth of internal audit lessons learned at IBM.  It identifies the key red flags that are indicative of deception, coupled with advanced text and insight analytics, that help reduce the size and duration of fraud losses, increase detection levels, and deter future incidents.

After all, none of us want to wait until we feel the affects of fraud in sensitive places!

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Categories: analytics, big data, Business, CIO, technology, Uncategorized

About the Author,

Steve Harvey is the Worldwide Leader for Technology and Analytics across IBM's Business Process Outsourcing unit.


2 Responses to The Tale of the Two-Ply Toilet Paper Caper

  1. Great article!

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