If you don't secure your data from unauthorized access, others may find out just how much you've lost due to "shrinkage." Shrinkage is another aspect of Homeland security that needs attention.
But technology often proves to be ineffective at dealing with it. It's easy to put in various technical solutions, like closed-caption cameras, product tracking equipment or even security guards, and assume those are the best steps to take.
Despite these measures, though, shrinkage continues to be a problem - a growing one. Companies tend to lose $100 billion to $350 billion a year. A large portion of these losses occurs in the warehousing and distribution industry, says a report, Security Best Practices, Protecting your Distribution Center, by Barry Brandman. "Experts agree that employee-, vendor-, and contractor-caused loss is a major factor behind plunging profits, inflated overhead, layoffs and bankruptcies," says Brandman in his report.
Managers ought to take a look at this report. For one thing, it will tell you of the weaknesses of high-technology solutions in stopping this problem.
Think installing RF equipment will help? Think again. According to the report, radio frequency does an excellent job of tracking product as it moves throughout a logistics facility, and is equally effective at reducing mistakes by selectors. However, it can be easily circumvented by devious workers intent on committing theft ... They circumvent the system by simply not scanning the stolen product. ... On trucks, drivers have accomplices come to them to steal items.
Global positioning systems have not lessened driver theft because "of the amount of data the system provides. The volume of information obtained can make it impossible for management to digest it all on a daily basis."
So access to lots of data is not a deterrent or a help. Too much data paralyzes us so that no one can analyze them all, defeating the purpose of gathering data.
And forget about CCTV cameras. Do you really watch them 24 hours a day? Employees know you don't, which makes the cameras a poor solution.
Theft is easily camouflaged as standard operating procedure, says the report. "Security experts know from firsthand experience that distribution centers, both public and private, are more prone to internal theft than other types of business." Because "finished goods are highly desirable and easily marketed ... to many dishonest workers, a distribution center is a thief's paradise."
Scanned any eBay sites lately? You just might find some of your inventory up for sale. According to the report, e-commerce provides a whole new world of opportunities through which to sell hot merchandise.
So how do you stop it? Theft is a human problem that may require a human solution. Suggestions include hiring educated employees whom you've really screened, paying them well and training them. Also, make sure employees understand that if caught they will be prosecuted to the full extent of the law. The prospect of jail time seems to be more of a deterrent than other threats, including loss of job.
Make sure employees know that each is watching what others are doing. Establish an 800 number for employees to call if they suspect or know of illegal or unauthorized activity by a co-worker, vendor or contractor.
And, lastly, get rid of that sweet, benign euphemism "shrinkage." It's too easy to hide such a serious problem behind that word. Perhaps if financial reports used a more accurate term, like theft, it would require management to pay serious attention to this issue. After all, everyone -- financial analysts and investors -- understands what theft means.
(To purchase a copy of the book, Security Best Practices: Protecting Your DC, contact the WERC office at 630-990-001, wercof[email protected]. Cost is $30 for members and $60 for non-members.)
Leslie Langnau, senior technical editor, [email protected]