Fault Detection and Diagnosis for Compliance Monitoring in International Supply Chains

Currently international supply chains are facing risks concerning faults in compliance, such as altering shipping documentations, fictitious inventory, and inter-company manipulations. In this paper a method to detect and diagnose fault scenarios regarding customs compliance in supply chains is proposed. This method forms part of a general approach called model-based auditing, which is based on a normative meta-model of the movement of money and goods or services. The modeling framework is proposed on compliance monitoring of supply chains with focus on information systems and compliance reporting tools. The innovation lies in the application and mapping of modeling techniques from dynamical systems engineering to business process analysis for audit and supervision purposes. Specifically, the application domain is where money, goods as well as information are transferred between international supply chain partners. A case study of a leading company in electronics manufacturing applying the model is analyzed.