Internal Theft in Warehousing

The retail industry has the highest rates of internal theft of any industry in Canada. But what goes on before those products make their way to the retail stores?

Internal theft in warehouse/distribution centres is a growing concern. Theft at this level is harder to catch and can often be much harder to monitor. With company employees, contract employees, as well as drivers having access to the facility, freight can go missing much easier.

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Please note: internal/employee theft can take the form of stolen merchandise, time theft, or misrepresentation of finances, among others, but for the purpose of this post we will be focusing primarily on stolen merchandise/freight.

The large amount of people it takes to run a warehouse or distribution centre opens the company up to liabilities in the form of internal theft. Many companies have a loss prevention division in place designed to develop policies and procedures to help inform and deter theft.

But how do you know if you have an internal theft problem? Here are 5 ways to determine if your company should be concerned with theft:

  1. Pay attention to your finances – access to information allows employees to take advantage
  2. Pay attention to supplies & bills – taking small items such as tools could be unnoticeable
  3. Pay attention to inventory – larger items may be harder to steal but in a busy warehouse could still go missing
  4. Pay attention to your employees – lifestyle/behavioural changes may be indicators of theft
  5. Pay attention to what employees are saying – office politics can be clues to what is really going on

Paying attention to these areas of your business can help determine if internal theft is happening in your warehouse/distribution center.

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If you believe employee theft is a problem in your facility there are preventative measures your company can take:

  • Physical Security: Use access control systems to prevent people from walking through all areas of your facility. You can also use undercover patrol posing as workers or uniformed guards in order to dissuade theft
  • Training & Awareness: Put a solid loss prevention awareness plan in place and explain to employees how loss occurs, how to prevent it, and what to do if they are a witness to a theft. Creating an outlet such as a Tip Line that employees can call in to if they witness something can provide a safe environment for reporting internal theft
  • Shrink Awareness: Take regular inventory of your warehouse/distribution centre and follow company procedures to ensure freight is regularly counted
  • Audits & Assessments: Have a loss prevention team assess your company. Perform self-audits regularly then develop action plans, address known loss concerns, and identify potential future concerns.
  • Community & Law Enforcement Partnerships: Create a partnership with local law enforcement to create a safe work environment for your staff. Get your team involved with local community events in order to foster a ‘great place to work’ mentality; employees who like their job are less likely to steal.

If your company is moving into a new warehouse or building a new location there are specific warehouse designs to prevent theft. Click here for more details.

By implementing  these loss prevention techniques and guidelines your company should be well on their way to controlling your loss and deterring internal theft.

-Team Breakaway

Sources:
http://www.statcan.gc.ca/pub/85-571-x/2009001/aftertoc-aprestdm1-eng.htm
http://www.cisco-eagle.com/catalog/c-3085-laying-out-your-warehouse-to-prevent-theft.aspx
http://blog.lpinnovations.com/Loss-Prevention-Leadership/bid/72053/Thinking-Shrink-And-Loss-Before-Merchandise-Hits-Your-Stores
http://blog.apexcctv.com/5-ways-to-identify-internal-theft-at-your-company/
http://www.lpinnovations.com/page/57-loss_prevention_101/