by Jac Brittain
The role of loss prevention across the retail supply chain has grown considerably in recent years. Part one of this article in the previous issue of Security Solutions Magazine introduced readers to supply chain management and began the discussion on points of potential risk to the supply chain. Jac Brittain continues the discussion in the final of this two-part article.
In-Transit Methods
For decades, members of organised groups have stolen full and partial shipments and/or loaded trucks while they were in transit. These incidents can occur in a number of different ways. For example, many hijacking incidents occur while a driver is away from the truck, such as at dinner or on a break, and thieves simply break into the vehicle and drive off with the goods. In other instances, hijackers will target a vehicle and forcibly enter the cab while the driver is in the vehicle. Freeway on- and off-ramps, rest stops and other common stopping points are particularly dangerous.
Another common method is to coerce the driver into making an unplanned stop by having someone gain the driver’s attention while he is driving. This individual may falsely inform the driver that something is wrong with his vehicle or may use other persuasive tactics to convince the driver to stop the vehicle. Once the driver pulls over and the vehicle stops, accomplices arrive to steal the rig.
A technique favoured by organised retail crime (ORC) groups targeting trucks or containers loaded with high-tech and high-value merchandise is the ‘grab and run’. Often travelling in vans or similar vehicles, they follow a targeted vehicle, waiting for the vehicle to stop. Once the rig stops, several individuals will forcibly break into the cargo area and off-load as much product as they can. This is also a common technique used when employee vehicles are used to transport valuable goods, such as jewellery, from one store to another.
Deception is another common method. Thieves may tamper with trailer/carton seals and/or locks in order to conceal trailer break-ins, or tamper directly with the container or trailer to commit these thefts. Leakage incidents may involve the theft of entire cartons, or removing desired product from within a carton and resealing the packaging to attempt to conceal the theft. ORC groups have even used individuals who present themselves as legitimate drivers at shipping facilities, using counterfeit paperwork or even electronic shipment information in order to gain access to and make off with valuable loads.
Effective, well-planned strategies must be developed, combining the latest advancements in technology with industry best practices, robust security procedures and fundamental loss prevention methodologies. Such practices would include enhanced awareness efforts, improved response, advanced information and communication management, safety practices, employee screening programs, and robust training programs that provide necessary and appropriate information to employees at every step along the way.
Distribution Centres
Distribution centres are often viewed as the foundation of the retail supply chain network, establishing a centralised location from which retailers can stock and distribute products to the stores or directly to customers. While designs and functions may be similar, each facility is also unique based on the organisation, the types of products and the special needs of the business. These complex operations can house volumes of merchandise, equipment, supplies and employees in order to meet and maintain primary business objectives.
While often viewed as simply a project-specific, labour-intensive venture, the actual mission of the distribution centre operation is strategic and tactically calculated. Coordinating the concurrent needs of the stores, customers, suppliers, buyers, inventory control, transportation systems and other services and service providers is a formidable task to keep product moving efficiently and contributing to a company’s profits.
“Today’s distribution centre can house thousands of SKUs [stock keeping units], with some of the larger facilities managing the inventory for several hundred stores in a single location,” said one industry expert. “Teams must ensure the accountability of the freight at all times throughout the product cycle, to include accurate receiving protocols, proper storage of the freight in its designated location, cycle counting, and order pulling and shipping of merchandise to the correct location.”
This is not simply an exercise in moving boxes from one site to another. This is about product flow and speed to market, driving replenishment, maximising sales and maintaining quality customer service while minimising losses, damage and theft of goods. All of this requires cutting-edge loss prevention management, with progressive programs that build on modern technologies and supply chain management strategies and design. Every function, process and practice must be continuously re-evaluated to help control costs and maximise efficiency.
Depending on the company, a retailer may purchase and sell tens of thousands of products. Goods typically arrive in bulk and are stored in the distribution centre until needed by the retail location. Products are then retrieved and assembled into shipments before being forwarded to stores or directly to customers. Throughout every stage of the process, there are opportunities for loss.
The efficient processing of goods through the distribution centre plays an essential role in the business operation. Every facility must be designed to provide for the safest, fastest, most secure, most efficient and cost-effective control and movement of retail products, and loss prevention efforts must complement the process. Vulnerabilities extend well beyond basic physical security measures and access controls, and the same proactive, cooperative insights that have helped to build success in other areas of the business must be shown.
Distribution Centre Risks
Identifying the potential source of theft risks within a distribution facility is typically not hard to determine. Access to the facility is managed. Activities within the facility are controlled. In the stores, there is public access to the building. However, this is clearly not the case in the distribution centre environment. In plain terms, the most likely way for theft activity to be successful in distribution centres is if employees are involved.
Often, the greatest opportunities for losses in the distribution centre involve collusion between multiple parties – especially between drivers and the employees that load and unload trailers. Merchandise within the distribution centre is at its greatest risk when trucks are being loaded and unloaded, which is a timeframe that is particularly chaotic, with individuals largely concerned with emptying or filling the trailer and getting the truck away from the dock. With attention focused on labour and speed, employee interest can be diverted, leading to enhanced risks and greater opportunity.
The possible infiltration of associates by organised criminal groups is also a threat within the distribution centre environment. Perpetrators may gain access through temporary agencies when services are needed, such as during peak selling seasons. Employees with ORC ties may simply hire into the company in order to gain access to merchandise, information and opportunity. Existing employees may be recruited by ORC operations to participate in illicit activities. Individuals who hired in with honest intentions may also observe and exploit opportunity, and make poor life decisions as a result.
While the direct theft of merchandise is an ongoing concern, the theft or disclosure of information can be just as problematic. Shipment and product information, seals and seal sequences, delivery schedules, truck routes and other relevant information can be divulged to assist with hijackings and similar operations. Blank forms may be pilfered to create fraudulent documents. Alarm information, CCTV placement, internal layouts, rosters, schedules and shift changes, and other important operational information may be shared or exposed. Additional actions may include intentionally damaging or blocking CCTV or other security equipment, removing batteries from alarmed doors, leaving outside doors or security enclosures opened or unlocked, purposeful distractions, or simply looking the other way. Any and all opportunities may be exploited depending on the complexity and motivations of those involved.
Establishing a Culture
The retail supply chain network demands control to drive efficiency and productivity. Setting the tone early and often by maintaining direction and enforcing rules sends an important message and helps establish a culture of safety, control and honesty. This is why the fundamental aspects of loss prevention provide such an important barometer of program success. Failure to control basic support functions is an indicator of greater opportunities, which in turn can significantly influence the scale of involvement throughout the entire network.
Creating and implementing policies that serve to establish workable controls is an important step, but this must be coupled with appropriate resources to support the control measures as necessary, to include adequate attention and staffing. Programs must be regularly reviewed and monitored to ensure effectiveness, efficiency, relevance and application. Most importantly, this must have the support of all levels of management, to include implementation, maintenance, enforcement and resolution.
Finally, as an industry, knowledge, awareness and education regarding the entire retail supply chain network must be improved. Programs such as the supply chain course within the LPC certification coursework provide a tremendous resource; however, retailers must also open more effective channels of communication with subject-matter experts, especially those within their own organisations, to gain a more comprehensive understanding of this critical aspect of the retail business.
As emphasised by one industry leader, “Within our industry, there is a tendency to place the roles of loss prevention in the stores and in the retail supply chain in very different buckets. However, closer inspection definitely puts things into a different perspective, as these roles are often much more similar than they are different. I would encourage each of you to pause for a moment and reflect on some of your dealings with your fellow loss prevention peers who work in the supply chain. If you haven’t already done so, take some time and get to learn more about this aspect of the business. If possible, look for opportunities to do some cross-training in these partner departments. Make the effort to expand your professional horizons. These lessons will go a long way in building relationships and adding value to your organisation and your future.”
For some, this may open the doors of opportunity that lie within the supply chain for growth and development. For others, it may serve as a simple reminder of a side of the business that does not always hold their full attention. For all retailers, it should serve as a notice that the role of loss prevention is expanding and they have a definitive responsibility to keep pace.
Jacque (Jac) Brittain, LPC is editorial director, digital for LP Magazine. He has worked in the loss prevention industry for over 30 years and was instrumental in the development of the industry’s only internationally sanctioned LP credentials – the LPQualified (LPQ) and LPCertified (LPC) courses in collaboration with the Loss Prevention Foundation. Jacque can be contacted via email jacb@Ipportal.com
This article first appeared on losspreventionmedia.com, the website of the US-based Loss Prevention Magazine.
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