The 2020 Mid-Year Economic Update_long

Operations Q&A: Will Your Inventory Sprout Legs & Walk Away?

The holiday season presents more opportunities for thieves in your warehouse.
LeeSchwartz

Question:  Will your inventory sprout legs and walk away?

Answer: If you are a betting person, it's a safe bet that some of the inventory in your warehouse will disappear. Not simply misplaced but gone … forever.

My last blog focused on preparation for the upcoming holiday season. Why prepare? Because the holidays usually result in a spike to normal business activities. With that spike comes tumult and turmoil. There is no better environment than chaos for thieves. So as you plan for this holiday season, make sure that you include theft prevention on your checklist.

Warehouse theft comes in many flavors. I know, I have been called in by manufacturers and distributors to solve for this problem over the course of my career, and I've seen many variations of it:

  • Product folded into a newspaper and carried out the door.
  • Items tucked into a pocket or stuffed behind one’s back covered by a jacket or sweater.
  • A lunch bucket/ bag that is heavier on the way out than on the way in.
  • Trash tossed in the dumpster that somehow still contains goods.
  • “Samples” taken but somehow never returned.
  • Disabled security cameras.
  • Modified security systems.

Bottom Line: There is probably no way to completely eliminate employee theft, but there are many ways to dramatically reduce the frequency of occurrence. Here are just a few examples:

  • Upgrade your monitoring systems. Install cameras – inside and out. Sometimes the mere presence of cameras – operational or not – will act as a deterrent.
  • Establish a policy that all boxes intended for the trash bin are collapsed and flattened.
  • Conduct intermittent scanning. X-ray machines are expensive to purchase and operate but hand wands will serve the purpose. This does not need to be done on each entry and exit; the randomness of such acts curbs a thief’s desire.
  • Create warehouse practices that reduce or eliminate open cartons. Once a box is open, transfer the remaining goods directly onto the shelf. Enforce this practice among all employees.
  • Eliminate dark areas in the warehouse.
  • Introduce a practice of cycle counting. This will not necessarily prevent theft, but it will provide quicker visibility that it is happening.

Do not be lulled into a false sense of security. Theft can and will happen to you and your company. According to the Department of Justice, 33 percent of employees commit theft. And studies show that 80 percent of your employees will steal, depending on how they rationalize a given opportunity.

Protect yourself. Protect your company.

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