Deterrence is always the most cost-effective way to deal with shrinkage due to theft and fraud in any business, yet it is often a last consideration, occurring only after there is hard evidence, through detection of loss, that there is a problem.
Deterrence can be equated to keeping a customer, as opposed to finding a new customer. The cost of retention of your assets through simple methods means you do not have repeat losses prior to preventing an occurrence of theft or fraud.
Many of the techniques to deter loss are simple and straightforward, incurring little or no expense outlay. They should be part of running your operation, whether it is retail, restaurant, hospitality, processing, manufacturing, warehousing and transportation or trades.
The most definitive steps should be the result of reviewing the “Opportunities” section of the M.O.I. Inventory and implementing risk mitigation using the measures to counter the opportunities that are discussed. The next step should be to examine the “Indicators” section to see if more risks are revealed through analyses.
Deterrent measures flow from a well-regulated and ordered business, which also is at the heart of business efficiency.
The ogres, Rules and Regulations, may seem punitive or authoritarian, but they need not be. A proper training and follow-up regimen for all staff present company rules as a process for good operation, leaving no doubt on behalf of the staff of expectations and, in turn, reducing angst or anger over unknown rules.
Rules and regulations that are expanded upon in a comprehensive training manual or video blend into the concept of expectations. What can the employee expect of the company, and what can the company expect of the employee.
Staff awareness of their roles also can expand into training them i8n the understanding of external loss control, whether it is at the hands of customers, sales representatives, suppliers or delivery personnel. An annual loss prevention seminar provides refreshers and enhances your deterrence efforts, even if staff are not expected to involve themselves in actual detection and apprehension. Clear channels of communication, with anonymity guaranteed, or a reward system both work to motivate staff positively to deal with internal or external threats.
For both staff and external persons, the presence of vigilant and knowledgeable people who can react to a loss situation also acts as a deterrent. Signage, warning of bag checks, security, cameras and consequences of deviance should be presented in a positive, yet firm manner, reinforcing that loss is a cost to the consumer and staff.
Integral to theft and fraud deterrence is to take away temptation. Of course, anonymity for customers and other thieves provides opportunity and reduces risk, so involve yourself with all the people who come in contact with your business. Customer service and good human resources relationships are the keys to this effort to eliminate temptation. But removing all temptation to steal may also serve to reduce all motivation to buy, so balance the two carefully.
Simple steps, like neat, well-faced and blocked shelves not only disallow the person from taking from a spot where the item may not be missed but create a visual reminder that the business is organized and on top of their inventory management.
There should be flow and order to your displays and storage areas, as well as flow and order to the movement of stock. Think of the efficiency with which IKEA manages a huge retail warehouse.
The ordering process should not be a knee-jerk reaction to shortages, but should follow a structured perpetual inventory management system, like the Mini/Max inventory control program.
At your shipping and receiving doors, order is vital. Proper logs for everything and proper handling of incoming and outgoing stock reduce risk. But even as much as is possible, receiving door hours and the timetable when salesmen, drivers and others are allowed in the area should be defined clearly and enforced.
Bag checks, while intrusive, are effective for customers, tradesmen and staff.
Lastly, for any behaviour management system to be effective, it must be both immediate and proportionate to the action. It is accepted fact that one of the reasons the judicial system fails or is weak is because punishment, if it happens often is less than the potential reward of a crime and happens long after the crime has taken place.
We all know that when we overindulge in ice cream or alcohol, we will pay a price later. However, the immediacy of the reward outweighs the future punishment.
A bank robber may only get a few hundred dollars, but he also knows that he has a vey good chance of never being caught.
So, punishment must occur quickly and be significantly greater than the potential immediate gain. Punishment for shoplifters is not easily meted out, but for most of your regular customers, the threat of being publicly apprehended is a deterrent, so floorwalkers need to be active and proactive.
But punishment is not the best method for motivating. Reward is. For staff, that can be some sort of shared bonus for successful loss reduction. It can be recognition for a good job. It can be a group benefit.
For individuals, those rewards are meaningful, one on one. When there is a group reward or loss of reward because of n obvious failure to act, the lack of reward to the group applies social pressure to the few who have failed to contribute, but the success of the individuals in a group bonds the group together when they share a reward.
Immediacy and effectiveness: two tools that are underutilized in deterring theft.
Deterrence is an ongoing process, though. Almost as quickly as you plug one loophole, a dedicated thief will find another. Involve your staff in identifying these opportunities for theft and risks to the business, and reward them for doing so.