Chain of Thought

Choosing Victimhood is a Crime and a Punishment

When you see crime victims interviewed on the news it's easy to relate. After all, that person could just as easily be you or me. And actually, where retail crime is concerned, it is you and me, because every time a crime ring attacks a shipment in the retail supply chain, it can affect what we end up paying for something at the cash register.

Via its eighth annual Organized Retail Crime Survey, the National Retail Federation (NRF) heard from 125 retail companies recently. 96% of them indicated their supply chains were touched by organized retail crime in the past year. That was up from 94.5 percent last year. Most also feel organized retail crime has grown over the past three years.

Cargo theft is particularly troubling. According to the survey, 52.1 percent of companies responding said they've had cargo stolen in the last year, up from 49.6 percent last year. Most of this theft happens en route from the distribution center to the store (68.1% vs. 57.4% last year). Four in 10 (43.5%) say these incidents also occur en route from manufacturer to distribution center and 15.9 percent say they happen at the distribution center. i-Sight offers an Infographic showing more of these stats.

“Though retailers continue to make great strides in their fight against organized retail crime, sophisticated criminals with unending opportunities and anonymous outlets to sell their stolen merchandise are proving to be quite challenging for both retailers and law enforcement agencies working to combat this issue,” said NRF Senior Asset Protection Advisor Joe LaRocca. “With the types of organized retail crimes changing in severity and scope every day, and cargo theft and violent instances becoming more troubling, retailers are constantly on high alert.”

NRF states that it believes organized retail crime must be addressed through Federal legislation, by amending the Federal Criminal Code so it can be defined as a federal crime with appropriate sentencing guidelines. It also wants Federal law enforcement to be given the resources needed to combat this crime.

But being on high alert also requires contingency planning. Theft is an insult to the supply chain and it threatens your ability to serve customers. The same can be said for other insults like natural disasters and terrorism. Tsunamis, fires, floods and fanatics have been particularly treacherous at siphoning business via supply chains in the last couple years. This topic came up during MH&L's editorial advisory board roundtable, which we held last week and will cover both online and in our September issue.

I thought I'd use contingency readiness as an excuse to give you a little preview of our discussion. One of our participants, Jim Tompkins, CEO of Tompkins Associates, said private companies tend to do a better job on contingency planning than what you see in the public sector.

“Supply chain contingency planning and supply chain awareness are at an all time level,” he said. “Although the U.S. Government can't quite get its act together, companies are. They are policing it, and they are building integrity into their supply chains, and that's a feather in their cap. I am not saying we are done, but I think terrorists trying to use our supply chain would need to know how to invent tsunamis because you can't get a bigger terrorist attack than that. The Japanese tsunami had a bigger impact than 911.”

John Hill, director at St. Onge Co., addressed supply chain excellence and how management's naïve pursuit of it—particularly via the blind application of technology—can actually do more harm than good.

“Given the amount of time that has passed since the introduction of bar coding, at best 50 percent of American corporate entities are really using it properly,” he said. “Well, a number of larger companies have suddenly gotten religion, saying they need to get moving on this supply chain stuff. Many try to jump somewhere in the middle as opposed to starting their initiative in a measured fashion, doing their homework through a network analysis. Instead, they intuitively select locations and modes of transportation as opposed to doing it in a scientific fashion. I've seen that in a couple cases with some disastrous results for site selection. The rush to closure actually hurt the company.”

Ron Giuntini, principal of Giuntini and Co., said that successful CEOs got where they are by following a specific business model. Changing the elements of that business model represents another big risk to them. They figure that on a GDP level, logistics represents about 8 to 10 percent. So, if you make a change to improve the supply chain, to them it's immaterial to the bottom line in regards to process costs.

“But it could have a major impact on your ability to enter new markets,” he added. “The question becomes, how do you quantify that? It's like telling someone ‘You should lose 30 pounds.' Alright, but that's going to take a change in lifestyle, right? So a lot of people just wait until they can get a quicker fix.”

Waiting is the same as paralysis, and fear is often the factor here. If sure things are comforting to you, count on this: change will find you—whether by crime, disasters or just natural evolution. You're better off planning to meet it than hiding from it.

Related Editorial:

Location, Location and Logistics

Prevention, Not Weaponry, is Better Protection for Ships in Dangerous Waters

Companies Spending Less on Security While Risks Rise

Violent Crime Hitting Retail Supply Chains

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