There are two areas in many businesses where employees are granted substantial autonomy: outside sales and delivery/shipping. When sales and delivery are combined, allowing for point-of contact sales and payment, such as in soft drinks or chips in retail stores, that autonomy increases.
Salespersons and delivery persons also develop “brotherhoods,” often meeting for coffee during, before, or after work shifts. Even on long haul transport, truck stops are “buddy havens.”
Recently, vehicle tracking has enabled businesses to monitor the whereabouts of their delivery vehicles, but salesmen either used their own or are relatively free to travel where they see fit to do so.
There are many operations where the salesperson handles at-the-client sales orders, payments, refunds, discounts and credits, thus compounding the problem.
Intracity deliveries sometimes rely on crossdocking to move products more efficiently, allowing cargo to be moved from vehicle to vehicle. These vehicles often are unsecured and not locked with an identification tag.
Refunds, Returns, Credits
A salesman for a processed meat supplier had a regular client base and a few stores outside his geographical territory that insisted on his services. He would come into the store, count stock, determine orders, recommend purchases based on upcoming deals that his company was offering, write up the order and hand the counts and purchase orders to the office staff for certification. They loved that he did all their work for them and willingly signed off on the orders. After all, if he had ordered too much, he would later issue them with a credit and take the excess back. He also processed all their refunds and returns for out-of-date or “blown vac” goods. The store managers acquiesced to this arrangement.
The department category inventories always were quite good, but not perfect. That was to be expected, they thought, with a product prone to shoplifting.
But the salesman had multiple angles on this arrangement. He carried out the return stock, handing the shipper his credit slips, but the shipper/receiver never counted the contents. That was good, because the salesman always took more than he credited the store. Where large orders were placed, payment was handled through the supplier office, but no one verified that the price quoted and the price charged on invoice were the same. They frequently varied.
At his boss’s place of business, the salesman was not required to turn in defective product, so he didn’t. Much of the product was not, in fact, defective, and he simply sold this product to a local restaurant that was quite happy to get a deal. As well, he also created deals that did not exist, to which his employer agreed, since they still made a profit off the supposed sale. Instead, the guy sold these items to another store for cash, which he pocketed.
Even though he made a substantial income as a successful salesman, he doubled his income on side deals. No monitoring enabled multiple thefts and frauds.
Snack deliveries and stocking
Fast food packages and snacks in vending machines stocked by a supplier sales rep, or in grocery, convenience and local corner stores rarely are verified as they come in. In the case of potato chips, the vendor often breaks down the boxes, so he cannot steal goods easily. The excess products are readily sold elsewhere. Be wary of such vendors who are too obliging and look after stocking, facing and arranging your incoming products.
Deliveries at busy times
Watch for delivery salespersons who always seem to arrive during lunch periods or busy times. At these times, staff are less likely to be vigilant.
Delivery GPS Monitoring
Watch for patterns where your vehicles are parked for periods of time where you do not have clients. One group used a church parking lot to meet and swap goods. Several drivers we caught met at out-of-the-way restaurants.
Excess Mileage
Note the ideal mileage that a delivery route should take and note consistent days where the driver has excess mileage. If you do not have GPS monitoring, this may indicate the driver is going off-route to deliver stolen goods or may have a cash client.
Time taken too long at one client
One sales/delivery person did not use the company vehicle to make his illicit deliveries. Rather, he parked the company vehicle at one client, then used his own vehicle to deliver three other orders, then return to the company vehicle and continued his route. Note excessive delays at one client on a regular basis.
Unmonitored shipping doors
We have caught several delivery/salespersons adding extra inventory to their order at the loading docks before they departed on their route. Sometimes, they simply evaded the shipper or waited until he was busy elsewhere. Other times, they worked in cooperation with the shipper. Use both logs and cameras to verify stock leaving the warehouse.
Crossdocking connections
Pay attention to close relationships between drivers and companies that you use at crossdocking facilities and insist on camera surveillance if you do not own the facility. The privacy afforded drivers in crossdock situations allows for an illicit exchange of goods.
Unfastened truck door seals
Ensure that seals on long haul delivery vehicles match the number of the seal tag issued and insure that the tags are properly locked on departure and arrival. A poorly fastened seal allows the driver to gain access to an apparently secure load.
Stock and supplies verified in and out
Make sure that any supplies, tools or inventory taken by a serviceman at the start of his shift match the quantity (and quality, brand) returned at end of shift, minus any recorded usage. Monitor repairpersons who have consistent inaccuracies.
No sales calls made
Develop a habit of follow-up for potential clients where salespersons are scheduled to call on a client, even if no sale is concluded. One veterinary supply sales rep had modest sales ratios but claimed high costs for a multitude of sales calls. It turned out that he only visited a portion of the clients he claimed to have visited, but claimed expense against all of the calls, while also conducting a second sales business, as a fulltime vendor for another, unrelated company.
Inaccurate sales extensions
Check to make sure that simple arithmetic, like quantity times unit price accurately reflect sales and purchases. One salesman often seemed careless, extending such orders as 20 units times $12, for a $260 cost. While it seemed innocuous, he was working with the one client and splitting the extra revenues. It works both on the receiving and shipping side of the equation. Very often, data entry personnel do not conduct the line item extensions that would catch this problem.
Duplicate work orders
A plumber whose employer serviced a very large corporation occasionally submitted duplicate work and purchase orders for the same job. His employer’s office staff caught the error and credited the account, but in fact was not crediting the actual account. The dummy account number allowed the staffer to divert the money to be split by her and the serviceman—thousands of dollars each month.