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Loss Prevention as Management Science

Posted on 1/25/11 9:30 AM

LPI works with many great loss prevention professionals and solutions providers across the retail industry. This week’s article is provided to us by Walter Palmer, a leader in loss prevention strategy, training and consulting.

When I was a District Loss Prevention Manager many years ago, one of the hardest challenges I faced with my store management teams was overcoming their common tendency to blame shrinkage on external factors.  As I visited store after store, everyone was convinced their store was in a “tough market” and that shoplifters were causing their shortages.  Or, the distribution center was responsible for shorting them goods on their deliveries.  Or, inventory control wasn’t properly accounting for markdowns.  Or, the corporate office wasn’t…

You can complete the sentence with any of the other excuses or rationalizations you have heard over the years.  Of course, over time, the management teams had to be convinced that there was more in their control than was not and that what they did made a difference in their results.  This same message needs to be kept in mind today at the corporate level.

Over the past several months, I’ve had the opportunity to meet with Loss Prevention executives whose companies have achieved outstanding results over the past two years despite the pressures generated by the economic situation and resulting downturn in sales.  The common thread that seems to run through these discussions is that the Loss Prevention organizations who have had success over this time period have convinced their senior leadership teams that shrinkage and safety is within the control of the management team regardless of the external environment.

In 2011, I hope to see us move away from what I call the “Chicken Little” syndrome where we spend much of our time running around claiming the sky is falling.  Rising organized retail crime, more employees stealing to put food on their tables, increased on-line fraud, and other imagined calamities all figured prominently in media articles and industry blogs this past two years.

I feel certain the motivation was to stress the importance of Loss Prevention and caution companies from cutting the budgets of their Loss Prevention departments, but don’t we lose credibility when this is the primary message we send but then shrinkage results come in at historical lows?  More importantly, the more we point to the outside factors and cry wolf, the more we are telling our senior leadership that we are subject to the vagaries of these outside forces and that little is within our control.

Loss Prevention ManagementInstead, the message that we should be sending is that Loss Prevention is a management science and, as such, there are particular methods, processes, and tactics that can influence our results to the positive when applied. We must believe that what we do matters more than what is done to us.  This does not mean that ORC, external theft, vendor deliveries, and the like are not a factor.  Of course they are, but they cannot be a scapegoat.

Finally, we must have the courage to be held accountable, as a management team, if shrink goes up.  If we aren’t willing to take that risk, how can we possibly get credit from our senior executives if shrink goes down? 

Written by Walter Palmer, CEO/President of PCG Solutions

About the author

Walter E. Palmer is the CEO/President of PCG Solutions, a training, education, and consulting firm focused on retail loss prevention and assets protection.  Founded in 2002, PCG Solutions works with some of the world’s leading retailers on strategy, training, and global issues related to shrinkage, safety, and ethics.

Walter blogs regularly at http://retailnotes.wordpress.com/

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Topics: Loss Prevention program and development

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