Security Gets Real

March 1, 2003
Security means more than mounting a few cameras (that are not turned on) and issuing key cards. The best practices for warehouses and distribution centers are moving beyond "cosmetic" security.

Business analysts estimate that companies lose $100 billion to $350 billion a year to product theft or poor inventory tracking, much of it out of warehouses and distribution centers. You would think that with numbers this high, executives would be willing to do whatever it takes to improve security. However, it’s the threat of terrorism that’s become the goad.

“For warehouses and DCs, the reality is, we are really just getting up to where we should have been [regarding security],” says Al Hockstein, product manager at Rite-Hite.

John Shoemaker, vice president, Matrics, agrees. “Our culture has been in some ways careless. Like anything else, it’s a business decision. You take a risk and if something happens, then you pay for it. Many companies are taking a more thoughtful approach on how they can protect their assets, because for anything that moves or can move, you need to consider security.”

Astute executives have searched, and will continue to search out vulnerabilities before others find them. “But companies with a history of security problems tend to approach security in a superficial way,” says Barry Brandman, president of security consulting firm Danbee Investigations. “Executives develop policies on paper, but they are not best practices. And in many cases, the policies are not even followed because the employees don’t know what they are. The policies are not formalized, targeted or communicated effectively. Secondly, management installs the trappings of security. They will go out and buy 20 CCTVs and just put them up. They don’t strategically design a system and determine where they need cameras, the kind of views needed, who will use the cameras and what objectives they want to accomplish. Instead, they listen to a salesman tell them that by just putting up 20 cameras, their employees will become honest.

“There’s a huge difference between having cosmetic security and having meaningful security,” continues Brandman. “The biggest mistake is becoming complacent, because then you have a false sense of security, and that was one of the lessons demonstrated by the level of security at airports during 9/11.”

Controlling access

The first rule in security is controlling access, be it to product, equipment or facilities. Posing as employees, it’s easy for strangers to enter buildings. “Correctly identifying employees and visitors entering buildings, offices, stateside plants and branch offices in foreign countries is becoming a major issue,” says James Farinella, president of T&G2. But using manned entries and exits is often a costly and marginally effective solution.

“The first level of security is either the contactless or contact low-frequency keycard given to employees that allows entry and exit,” says Shoemaker. “It’s very basic and, frankly, it’s pretty poor because anyone could carry that card.”

Or anyone can walk in behind an employee with a card. Even when the card’s active range is just two or three inches someone could still “piggyback” his way into a plant.

“Now, you need to start looking at second and third levels of security beyond those cards,” adds Shoemaker. “That’s where you start associating the card with an employee ID number, and matching the employee to that number. This is where security may go into biometrics.”

There are several ways to use biometrics, from fingerprints to retina scans. “Personally, out of all the technologies being discussed,” continues Shoemaker, “the only one that’s really reliable, even though it has its problems, and the one that you can immediately tie into an extensive database, is the fingerprint.”

Biometric fingerprints are not the same as those taken by law-enforcement agents, though. Biometrics uses a bit map of the fingerprint, which avoids issues of privacy invasion. Every time an employee enters, he places a finger on a pad, which scans the finger image in bit map form and compares it to one stored in a database.

Finally, RFID?

Biometrics is still in the early stages of development and use by companies. A more readily available solution is radio frequency identification. In fact, proponents of RFID technology are hoping that security will be the “killer app” needed to launch this technology into wide use.

Factors such as cost, distance and function have hindered wide application of RFID. Short read distances make it easy to simply not scan an item, and it “disappears” from inventory. Longer reading distances demand higher frequency technology. But then cost becomes a factor.

Many of these challenges will be solved by new, low-cost solutions. The latest chips are passive but with a frequency range of 900 MHz or more. “That frequency is going to be the big differentiator,” says Shoemaker. “Especially in facility security where many companies use low frequency — 13.56 MHz — for read ranges of an inch or two to maybe a foot. With higher frequencies, read ranges are to 20 feet, making it easier to track product movement.

“A system that can read a tag 10 or 20 feet away,” continues Shoemaker, “is sufficient for most entry and exit situations. Such a system uses a database that you can refer to. You read the ID number off the tag and then go to the database. The database shows, for example, that a specific truck is supposed to be driven by a certain driver, that it’s supposed to arrive at this place at this time, and that these are the load contents. All that information can be in the database rather than stored on the tag. Therefore, you eliminate a lot of transmission time, which just lowers performance and raises cost.”

This development also results in better visibility of product throughout material handling processes. “In the production line, for example,” adds Shoemaker, “you can reduce the cost of losing track of product. We had a customer who lost track of an automobile engine. It’s a big item, and not something someone will pick up and walk away with. Well, engines go offline for repairs or inspection. Sometimes they don’t get back on line. So there’s an eight-cylinder engine in a holding pen that no one knows anything about. Each day it’s there, it’s costing the company in tax and other ancillary expenses.” Tagging it with RFID technology would eliminate that problem.

“In some situations, it doesn’t matter whether you can see the item,” continues Shoemaker. “Your warehousing or inventory control system doesn’t see it. When the system doesn’t see it, it doesn’t exist. Here’s where security can tie into other important business processes of a company. At receiving, when a truck comes in the gate, a warehouse system can be alerted that it’s carrying all product ordered. So you get a time stamp validating delivery — for logistical planning. Now that’s feeding procurement, MRP and other business systems.

“In a systems approach, the expense of security has to be viewed in the light of operations. It’s not just coming in the door or leaving out the door. It’s identifying what’s coming and going and using that knowledge to more effectively manage your business processes for your customers. That’s how everything needs to be looked at now, on a much higher level.

“Thus, you have a database to manage the data, a tag that functions as a license plate with a minimum amount of chip space, and the total cost of the tag drops dramatically. Without a battery, you have a tag that can be in the 25-cent to 50-cent range depending on how you package it. But we’re out of the world of $20 or $30 tags and that’s what will change the RFID world. We’re now at the point with airline baggage where we can make reusable tags for 50 cents, disposable tags for a quarter. The intent is, on chips alone, to get the price down below 10 cents,” says Shoemaker. “And with the Gillette announcement of an order for 500 million RFID tags, it’s just beginning.”

The Gillette announcement is a big one for RFID. The tags, supplied by Alien Technology Corp., use the Electronic Product Code (EPC). EPC labels are more that a radio bar code because they contain individual item serial numbers and other information such as manufacturing location, date codes and other vital supply chain data. Alien uses a Fluidic Self-Assembly manufacturing approach that allows tiny integrated circuits to be cost-effectively handled and packaged into tags in large volumes. The tags are affixed to product or packaging to track it through its life cycle. These tags are expected to revolutionize supply chain management because they provide visibility to inventory levels and product movement whether product is on pallets, in cases or on shelves.

Staying alert

Alarms have always had a role in security. The latest devices, however, don’t have the drawbacks of early versions. “High-tech alarm devices have come a long way in terms of reliability and flexibility in their use,” says Brandman. “There are external alarm devices today that can secure ventilation units located on the outside of facilities, storage containers, gasoline or propane tanks or devices that generate power for a building that are all on the outside. In the past, these devices had limitations and a tendency to false alarm so most companies didn’t use them. That’s changed quite a bit. Some of the devices can cover 500 to 800 feet of width.”

Combined with motion sensors, the two devices offer an excellent way of staying informed of events in a facility. The latest motion sensors have improved, too, with the use of dual-sensing technology. “They operate on infrared, which senses a change in ambient temperature, and on microwave, which measures any type of motion,” adds Brandman. “In the past, most companies used single-mode detection sensors.” The dual technology helps eliminate false alarming because it requires two triggers before the device reacts.

In view

For the most part, video cameras don’t deter criminal acts. However, that may change with the newest cameras available.

“First, you can put a camera virtually anywhere, thanks to new technology,” says Brandman. “Wall clocks, paper weights, junction boxes, a whole list of devices. Secondly, now companies have access to digital camera technology and the advantages are numerous.

“You don’t have to worry about tapes, which are a nuisance. Most people forget to rotate tapes for one thing. For example, one huge retail firm we helped stored cash in special rooms set up like vaults. One day, however, they found they were missing $40,000. It turned out that the security people forgot to rotate the tapes on the days that the cash disappeared. This is common.”

With digital, though, there are no tapes. Everything is automatic. And, the picture clarity is a magnitude better than that of analog systems. Most people don’t use analog video systems because they can’t clearly see what’s in the frames.

“In addition,” adds Brandman, “it’s extremely easy to make digital video alarm- or event-driven. The new digital cameras also offer immediate queue and review. Simply enter in a time, and the system moves to that point. Digital also lets you send images, either streaming video or still, through the Internet or e-mail, which can be handy if you need to alert law enforcement agencies. The cost of these systems is about double that of closed-circuit TVs.

At the dock

Digital cameras, ID tags and cards are steps in the right direction, especially at the dock door. The “open door” behavior found in many facilities is quickly fading. It’s far less common for non-employees to enter a warehouse or DC through a dock door. First, the door is open less. “A fabric rollup door is not considered a security door, but more and more people are purchasing them to cover the dock opening just to keep the casual passerby or stranger from walking into their building,” says Hockstein. Steel doors offer greater security, but they are a bit slow to open, affecting productivity. The compromise is a fabric door used during operating hours. It opens quickly, yet gives the perception that access is not “wide open.” Steel doors protect the dock during non-operating hours.

“We see a lot of companies providing some type of secondary security door,” adds Hockstein. “It’s very common for us to provide a high-speed door on one side of the opening and a rolling steel door or a security door on the other side. That security door may be an expandable cage or fencing-type material or expanded metal material.”

In addition, companies serious about security are insisting non-employees and visitors have appointments and escorts. A supplier representative may no longer just walk in to visit the plant manager.

Securing equipment

Once entry and exits have been secured, the next step is to look at ways to secure inventory. In addition to newer digital cameras and RFID, the right choice of equipment can eliminate many problems.

For example, low-volume, low- value product may not need secure systems. In these cases, horizontal carousels and miniload AS/RS systems are cost-effective storage equipment.

For higher-value product, consider vertical carousels. “This equipment offers lots of protection,” says Lenny Lelchitsky, AS/RS program manager, White Systems. “Usually, there’s just one lockable door, which is the first level of security available with this equipment. The next level is a solenoid electrically operated lock, which is harder to open than a regular lock. But these carousels are usually wide, so one opening often means that multiple trays of product are accessible. Therefore, another option is multiple doors in the opening, which narrows access to product.

“One company, for example, stores credit card originals in a vertical carousel system,” continues Lelchitsky. “But fraud was very high, even when they put the machine in a vault with five guards watching it at all times. They were losing millions of dollars through internal theft. The solution was a multiple-door vertical carousel. Now, employees have to swipe a card at a particular door for access. Upon opening, they have access to only one card original. The fraud has dropped significantly, to one-half of one percent versus 20 percent before.

“The next level up, instead of a manual movable door, you can have pneumatically operated doors,” says Lelchitsky. “This is a big step up in security because you can’t open the door unless you have a security code that’s entered through software.”

Working together

When you’re putting together a security strategy, pay attention to the interoperability, or lack of it, with the components you choose. Security products are going through the same integration challenges that other controls, equipment and systems are going through. And the lack of integration is delaying or inhibiting security.

“There are not many people who understand the operational logistics of a distribution operation,” says Brandman. “If you design a system for a retail store, college campus or a hospital, it absolutely will not work in a distribution center. You want a system that’s going to work within the parameters and functions of a logistics operation, and you want the integration to be seamless so you don’t even know it’s happening. When you do this, the system will be used. It will give you a dramatically enhanced level of protection and it will lower risk. But if there is a problem, whether it be sabotage, dishonesty or workplace violence, your ability to investigate and reach a successful resolution is dramatically enhanced if you have this type of integrated system in place because you have a tracking mechanism now.”

Like other aspects of material handling, the key to a successful security implementation is a well-thought out strategy. MHM

For more information

Contact the following companies:

Access Denied Systems,

Alien Technology Corp.,

Danbee Investigations,




Synergy Security Systems, 800-686-8330


Vision Controls Inc.,

White Systems,

The Power of Digital Cameras

Barry Brandman relates a couple of stories that illustrate the benefits of using cameras in warehousing and distribution centers, particularly digital systems.

One client called asking for help on locating two pallets of expensive inventory. Apparently, the pallets, which held $90,000 worth of product, disappeared over a three-day period. “The managers did a cycle count on a Monday and the product was there,” says Brandman. “On Thursday, the pallets were gone. They didn’t find any empty containers or the empty wood of the pallets. Well, we had installed a digital video system that activated whenever there was a change in the ‘pixelization’ of an image, which is due to motion. So we didn’t have to search through hours of tape. Instead, we quickly queued up the system to search based on motion. It took us only an hour to find the two pallets.

“When we watched the video, we saw every outbound order that went onto the trucks, and we counted pallets and compared that to the manifests. Through the video system, we tracked the number of pallets that went out. So, we knew that the right number of pallets went on to the truck.”

Brandman’s team then contacted the common carrier that transported the goods that day and showed them what was on the video. The carrier manager sent a representative to their consolidation center and found the two pallets inside there. “If we hadn’t had video evidence, the trucking company would have said that there was no way they picked up the product.”

These cameras can do more than find missing product. “We’ve also caught blatant dishonesty and collusion,” says Brandman. “In one facility, an undercover investigator working inside the building told us that he had reason to believe that a loader and a checker were working in collusion with two company drivers and putting extra product on the truck. So we used the digital video system to focus in on those trucks. Sure enough the manifest called for 142 cases to go on but the camera showed that 148 cases were loaded. Yet only 142 were manifested. When the driver returned from his delivery, we brought him in and showed him the digital evidence. He confessed and gave up the two inside accomplices. He explained that any extra product that was loaded onto his truck he sold for cash and then kicked back 50 percent of the proceeds to the accomplices. The clarity of analog systems may not have let us do such an accurate pallet count.”

You can thank high-definition technology, which makes HDTV possible, for the improvements in digital video cameras.

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