Mark Twain wrote, “I was gratified to be able to answer promptly. I said I don't know.” It’s an interesting proposition and amusing when we consider the answers we must provide when shrink, loss, or performance misses the intended goal. In general poor loss prevention performance has only three sources—systemic error, shoplifting, or employee theft. Thankfully it is only three because even at that, it can be quite difficult to narrow it down to just the one. The issue isn’t that discovery of the main cause is impossible, the issue is we often rely more on “crystal ball” techniques than evidence based analysis.
The main cause of the crystal ball guess is, of course, blame. If you “knew” this was an issue then why did it become an issue? No one wants to, or really can, wield that double edged sword. So often the cause selection is, regardless of facts, a matter of locus of control. The more “out of our control” the cause, the more pleasurable the answer. A store manager doesn’t want the answer to be “internal theft.” The inventory control folks don’t want it to be a systemic issue and pretty much everyone wants the cause to be shoplifting—after all, with shoplifting “what are we to do?”
Without an evidence based approach the only real answer is as Mr. Twain stated, “I don’t know.” The evidence is all around. We can analyze it after the bad news arrives or we can use it on a regular basis to reduce our losses. There are plenty of indicators that a potential problem is on the horizon. From small things like a store that is consistently “late to open” to the big things like empty shelves and empty containers.
Of course there are also a number of conundrums and these factors play into the crystal ball explanations. One such problem is “if we have high losses and we all agree that internal theft is 45% of the problem…then why do we have so few employee apprehensions?” The crystal ball answer is, “we don’t have an employee theft issue, we have a shoplifting issue.” Evidence based loss prevention asks, “can you demonstrate proof that shoplifters stole X number of dollars a day from your location?”
As stated the evidence is all around, if we care to take the time and to be honest as to the causes. Things like LP key performance indicators, known loss logs, audits, exception based reporting, and good ole’ observations and inquiries provide all the information we need to discover our answers. The only other option is best summed up by one definition of crazy—to do the same thing over and over and expect a different outcome.
Ray Esposito, Sr. VP Strategic Development & Marketing at LP Innovations Inc