Supply Chain

Supply chain: Theft in distribution centers is a growing threat

Theft in distribution is a growing threat in the US, security expert Barry Brandman of Danbee Investigations said during a very interesting presentation last week at the annual Warehouse Education and Research Council (WERC) conference in Ft. Worth.

One recent change fueling the increase: the internet, which now provides a global marketplace where pilfered goods can be sold virtually anonymously, especially on auction sites, Brandman says, whereas in the past stolen merchandise mostly had to be sold locally.

That also means once goods make it outside the DC, the chances of recovering it – or even tracking the source – are very low, Brandman said. There are a number of different theft scenarios, Brandman said, including individual employees stealing goods on their own, the very common scenario of employees working inside a DC colluding with drivers to steal, and drivers stealing from customers during deliveries.

Brandman cited a recent survey that found 40% of delivery drivers said they had been propositioned about joining in some kind of theft activity – a high number from which certainly some said Yes.

Relative to collusion, Brandman cited a recent example in which a second shift supervisor conspired with order pickers to select extra cases that were then loaded on a truck, with a driver also part of the scheme. Text messages were sent by the DC employees relative to what extra cases were on the vehicle.


He offered other interesting examples. In one case, a driver was caught on film in a major city exchanging the stolen goods from the truck on to another vehicle right in the open, even as police drove right by. Brandman said this exchange was performed on the driver’s route, just a few blocks from his last delivery, so that nothing would look amiss from GPS tracking and so-called geo-fencing systems.

Another driver sold some $200,000 of merchandise over a period of time, at a heavy discount to their retail value, so that the value of the goods was probably around $800,000, Brandman said. That is pretty big time.

What can companies do?

There are no easy answered, Brandman said. A detailed security audit is a good place to start, and these need to involve more than the simple checklists that are often used. The audits should include a true analysis of processes, Brandman said.

Companies should also employ unannounced audits, Brandman said, and the results should be included in the performance reviews of DC managers.

Brandman said it is critical to have some kind of hotline where employees can privately and anonymously report illegal activity. That anonymity is key to getting many employees to call about the theft. There are third-party service companies that can maintain such hot lines for a company, Brandman said, and having the service managed by an outside company might be viewed as less risky to employees, increasing the number of tips.

Source: Supply Chain Digest

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