TLIX4028ATHEFT AND SHRINKAGE

PRESENTATION OUTLINE

The following areas are covered in this presentation:

• Checking for Potential

Breaches of Security

• Security Measures

• Policies and Procedures

• Employee Responsibilities

• Business Continuity Plans (BCP)

• Deducting Losses from an

Employee’s Wages

• Terminating Employment

• Practical Suggestions

• Extent of Shop Theft

• Forms of Workplace Theft

• Methods of Stealing

• Costs of Retail Theft

• Approaching Theft

• Why the Offence may not be

Reported

• Reducing Theft

• Secure Storage

EXTENT OF SHOP THEFT

• According to Bill Healey (Executive Directory of the Retail Traders

Association of NSW), retail theft cost to retailers was approx. $700

million per year

“Retailers have great difficulty in establishing when, who and how

thefts occur in their stores.”

– Centre for Retail Research, 1999

24588678http://

www.istockphoto.com/photo/employee-stealing-money-from-the-cash-register-24588678?st=53f34ce

EXTENT OF SHOP THEFT

• 70% of business fraud losses are from staff and former staff

• Costs of theft also include:

Low staff morale

Recruitment costs

Time spent on dealing with the investigation and disciplinary

process

• Upon employment staff should be made aware through company

policies and an appointment letter or contract that theft will not

be tolerated and consequences will result if they take part in such

conduct

FORMS OF WORKPLACE THEFT

Not strictly limited to stealing of money. Can also take the form of:

• Undercharging

• Giving unauthorised discounts

• Altering documents or creating fictitious ones

• Theft of intellectual property

• Fraudulent refunding

• Receiving gifts or commissions from supplies and incorrect time

recording

• Using company time for personal matters

METHODS OF STEALING

Most common methods:

• ‘Grab and run’

• Concealing of goods either on person or in bags, babies’ prams

etc.

Other methods:

• Removal of packaging in store

• Switching of price tag for one of lesser value

• Refund fraud – stealing items and returning them for a cash refund

COSTS OF RETAIL THEFT

• Shrinkage: represents the shortages in stock/inventory

attributable to theft by customers, by employees, vendor fraud

and clerical error. Excludes losses that result from burglary,

robbery, arson damage and vandalism.

• Smaller businesses suffer higher average rates of shrinkage than

larger firms

• Collapse of many small businesses might be due to inability to

identify solve the issue shrinkage; larger businesses are better

equipped to withstand financial loss

• Installation of electronic article surveillance (EAS) aids in the

reduction of shrinkage, however the expense of security systems

is often not affordable or justifiable for smaller businesses with low

volumes

COSTS OF RETAIL THEFT

• Loss of goodwill – customers venture elsewhere if desirable items

are unavailable to them or service is unavailable due to staff being

absent in order to deal with offenders in court

• In order to cover the expenses linked to pursuing retail theft

incidents through court, with the installation of security systems or

through other methods, prices of retailers’ goods and services rise

• Taxpayers also fund the law enforcement costs associated with

addressing this crime

APPROACHING THEFT

Employers should consider:

• How an investigation should be conducted

• If the employee has a history in poor performance or conduct

• The evidence available

• Whether to include the police

• What policies should be considered

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WHY THE OFFENCE MAY NOT BE REPORTED• Less than ½ of apprehended shop thieves reported to police

• Businesses more interested in recovering goods stolen and avoiding

public attention

• Retailers more likely to report offence if it resulted in the loss of an

expensive item

Reasons for not reporting offender to police:

• Belief/assumption by security staff that it was a first time offence

• Offender admitted to theft and agreed to return or pay for the items

stolen

• Stolen items considered to be dispensable

• Hesitance to stigmatize the offender

• Managers believe police will do little to aid them

REDUCING THEFT

• Theft can be reduced through the use of protective devices such

as:

Electronic monitors

Security mirrors

Security labels or tags

Security staff

http://www.istockphoto.com/photo/woman-security-guard-22399984?st=c0c7907

22399984

http://www.istockphoto.com/photo/security-camera-8337345?st=69bf151

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http://www.istockphoto.com/photo/rfid-tag-40132736?st=ab61f29

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SECURE STORAGE

• How your warehouse is laid out can deter inventory theft, pilferage

and shrinkage

You can limit access to an area with:

• Folding Security Gates, if you need flexibility and door coverage

• Lockable wire cabinets and lockers can provide pilferage

deterrence and protection in the right situation

• There are other products that can lock a pallet rack bay or a

shelving unit down, allowing you to combine security and storage

into the same process

SECURE STORAGE

Storage systems for items of value

include:

• Internal locked cages with touch pad

key locks

• Internal rooms with separate monitored

security systems

• Items stored in locked cabinets

• Items stored in locked storage

bins/cases

CHECKING FOR POTENTIAL BREACHES OF SECURITY

When allowing vehicles and persons onto the site, security

might:

• Ask for identification

• Record the movement in and out of the worksite on a register

supply a visitor pass (if required)

• Look at the load and check it against documentation such as a

load manifest

• Check containers seals are intact

• Phone or make contact with someone to meet visitor

SECURITY MEASURES

• The use of security measures

such as locks and tamper proof

packing assist by checking if an

unauthorised opening of cargo

has occurred during transporting

• These types of security measures

can also act as a deterrent for

criminals by making harder to

gain access to cargo

SECURITY MEASURES

• These security seals/locks are used to protect the load from been

tampered with during transportation.

• If you notice the seal or lock is broken, you should immediately

notify your supervisor

POLICIES AND PROCEDURES

Security procedures include:

• Informing management

• Passing information onto the appropriate authorities (e.g.

Australian Customers Services, police (state/federal)

• Asking for information or proof of identity, validity of load

• Making a report (after an incident/accident)

• Sounding alarms

• Cyclic/Ongoing Stock Take: This is an ongoing daily stocktaking

routine to count stock while work continues in the warehouse or

select product range or locations are counted daily after the end of

trade or before the commencement of the next days picking

process.

POLICIES AND PROCEDURES• Security checks are carried out to confirm the cargo has the correct

quantities, quality is maintained and it has not been tampered with

• All security checks are conducted in conjunction with documentation

supplied with the freight.

• Documentation must be checked to ensure signatures and authorisations

are present

• The action required will vary according to:

The potential breach of security

The type of goods stored

Whether site is part of airport or dockyard (first point of entry of goods

into Australia)

Relevant legislation

Workplace policies and procedures

POLICIES AND PROCEDURES• For any site, significant amounts of investment capital are tied up in

stock (inventory) and equipment (forklifts, trucks & trailers and

electronic systems).

• These things must be protected by store’s security systems and

procedures

• Workplace security policy & procedures are in place to minimise

and control losses to the business, and the benefits can be:

Lower insurance premiums

Developing a reputation as a business that is trustworthy and

efficient

No lost time to investigate loss of goods or damages

Increase business and maximum profits

EMPLOYEE RESPONSIBILITIES

Employee is to ensure that they:

• Commit to loss prevention

• Follow all security policy & procedures

• Uphold the company values

• Share skills and knowledge with coworkers

• Perform regular observations of the work site

• Work with a high attention to detail

• Report breaches of security or suspicious behaviour

Every employer has a role to play when it comes to loss prevention

and report any breaches

BUSINESS CONTINUITY PLANS (BCP)

• Business Continuity Plans (BCP) considers three main aspects of

sound business security:

Physical security

Information security

Personnel security

• Risk management and BCP are vital to achieving business

sustainability and growth.

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DEDUCTING LOSSES FROM AN EMPLOYEE’S WAGES

• An employer cannot withhold or deduct any wages without the

employee’s authorisation

• If the employee is charged for theft by the police, you may seek

restitution or compensation through the courts.

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TERMINATING EMPLOYMENT

• Fair Work Act 2009: theft or fraud is considered ‘serious

misconduct’. However theft may not justify the dismissal of an

employee

• A thorough investigation should be carried out before any

disciplinary action is carried out

• For less serious cases of theft (e.g. one-time occurrence, low-value

goods), a verbal warning may be more appropriate punishment

• Ensure you are consistent in your treatment of employees. No one

should receive different treatment for the same actions as another

employee

PRACTICAL SUGGESTIONS

By managing areas of weakness employers can better control theft in

the workplace and prevent it from rising. Some practical suggestions

for deterring or reducing theft include:

• Implement strict no tolerance policy for theft – educate employees

of policy

• Review existing policies and procedures regarding investigations

and disciplinary action

• Encourage employees to report any suspect theft or fraud – make

an anonymous method available e.g. telephone hotline

• Install video surveillance where theft is most likely to occur

• Ensure access to systems is controlled and monitored

• Conduct criminal record checks when employing new staff and be

vigilant in checking references

ADMINISTRATIVE ERROR• While it is not strictly theft, mistakes made by employees can result

in shrinkage

Example:

An employee has been tasked with picking a selection of products from

inventory. On the picking order, they mistake the request for 1 unit as

a request for one pack. This results in the employee picking a whole

carton of bottles instead of one individual bottle as requested.

While this might be a simple mistake made, upon multiple occurrences

it can become costly to the company and inventory.

Risk of administrative error can be reduced through:

• Increasing employee training

• Implementing computer systems

VENDOR FRAUD

• Vendor fraud is the intentional theft or inventory loss associated

with vendors, often involving the accurate delivery and return of

merchandise

Example:

An employee is friends with the truck driver collecting an order to be

delivered. As a treat for their friend, they decide include an extra

carton of beer in the picked inventory for the driver to keep for his

own. This in turn results in a shortage of inventory and a carton of

beer unaccounted for.

• While vendor fraud could be as simple as the shortening or

padding of invoices, vendors can develop more complex ways of

committing fraud against the company

VENDOR FRAUD

Common vendor fraud schemes:

• Overbilling

• Inflated invoices for goods and services – invoice reflects charges

for more goods than the customer receives

• Bid Rigging – vendors and employees steer a company’s purchase

of goods or services to a bidder offering a higher price

• Price fixing – agreement amongst competitors to set the same

price for goods or services (e.g. through price range or minimum

price)

• Kickbacks – employees accept misappropriated funds from

vendors for facilitating fraud

USEFUL VIDEOS

• Stop Employee Theft – Inventory Control and Clear Policies

• https://www.youtube.com/watch?v=KSyciFMFWvQ

• Employee Theft Cartoon:

• https://www.youtube.com/watch?v=vlfLyXLFx2w

• Warehouse superviser steals $125’000 worth of clothing and

resells

• https://www.youtube.com/watch?v=034KAkjS2CU

• RFID discussion point

• https://www.youtube.com/watch?v=eob532iEpqk