As loss prevention professionals, we often focus on how loss in our retail locations can be detected, resolved and most of all prevented. Reducing inventory shrinkage in our retail locations helps reduce shrink percentage, and for many is the primary indicator of a successful loss prevention program. What about the merchandise that never makes it to your locations? Does it matter to your loss prevention program?
One avenue that is sometimes overlooked in loss prevention program development is merchandise in transit to retail locations, known as the supply chain. There are several components of a supply chain including: manufacturing, shipping, transit and distribution channels. Previously I wrote an article titled, “Thinking shrink and loss before merchandise hits your stores”, which touched upon preventing loss within distribution centers. In this article, let’s move up a level on the supply chain and talk about cargo theft.
A simple definition of cargo theft is the criminal taking of goods moving from its point of origin to its final destination. There are more definitive descriptions; however, for our purpose and understanding, it is basically theft of merchandise during transportation from the point of manufacturing to the intended destination, e.g. your stores. This could be theft of merchandise while it is on cargo ships, held at docks, stored at distribution facilities or from trucks during transfer from the distribution center to the retail location.
Considering that simple definition of cargo theft, is it really a concern? According to the 2011 United States Cargo Theft Report published by CargoNet (the cargo theft and recovery network), cargo crimes have increased over the last two years. According to that report:
There was a 17% increase in reported annual cargo theft incidents at the close of 2011 (1,215) over what was reported at the close of 2010 (1,035).
Indiana and New York joined the Top 10 list of states with the highest number of cargo theft incidents reported in 2011.
The Top 10 list of states with the highest number of reported cargo theft incidents make up 85% of total reported cargo theft incidents in 2011. These states all are economically developed and have a high population and cargo concentration.
Prepared food and beverage, electronics, base metals, apparel, animals and animal products represented 59.4% of all commodity types reported stolen.
In 2011, there was an increase in the theft of low value (less than $50,000) cargo, and a decrease in mid value ($50,000 - $100,000) and high value (over $100,000) cargo.
Total estimated cargo related theft loss value in 2011 is approximately $130,000,000.
Many of you may be asking “will our company fall victim to cargo theft?” and some may not view it as a significant threat to their business. Like organized retail crime, it may not be whether or not you view it as a significant threat, but whether you have procedures in place to address it.
The 3 “P” basics to help prevent theft in transit
Whether you have direct or indirect responsibilities of protecting your supply chain, there are certain practices that are critical to ensuring your transportation process is safe and secure.
Partnerships: Develop a strong relationship with the carriers who transport your goods. Get your organization involved in carrier management meetings or driver status discussions. My experience working in distribution facilities has shown that getting involved and sharing information creates opportunities to build better relationships, alter procedures and meet organizational goals in a team environment. Don’t forget about UPS, FedEx and other couriers.
Prevention: The goal is to make it theft a very difficult task. Education and training of drivers and others involved in the supply chain, including associates, is the first line of defense. Additionally, being more aware of cargo crime, like being involved in CargoNet, can help in understanding what is occurring. Get involved with others; share ideas, data and support on how best to prevent cargo crime.
Protection: It can be challenging to protect assets during all points of transit. There are many new technologies and strategies in the world of cargo theft prevention. RFID, trailer CCTV systems and GPS are but a few. Other than technology, having good policies and procedures, along with simple security measures can be a deter theft.
The supply chain can be a “long road” from manufacturing to retail location. As loss prevention leaders, it is important to help protect merchandise across the business spectrum, not just the merchandise that makes it to your retail store.
Written by Joe Faul, National Client Services Manager