The Retail Perspective: Securing The Supply Chain

By Andrew Wren and Keith Aubele

Much of the press around loss prevention in retail focuses on shoplifting, employee theft and other losses that take place in the "front of the house." But losses that occur on the back-end of the operation are often even more dramatic. Losses that take place in the supply chain may occur at any point during the process in which merchandise leaves its manufacturing place of birth, travels to a warehouse, is stored off-site, is re-loaded onto a truck, and travels to the store where it finally lands on the shelf. This long and sometimes arduous process is fraught with potential losses due to the many hands that touch the product, the difficulty of tracking product across long distances and multiple stops, and the massive volumes of merchandise being handled.

For these reasons, losses that take places on the supply-side can be larger, more expensive, and harder-hitting to the bottom line. It is imperative that the retailer's loss prevention organization take steps to secure the supply chain. Here are some suggestions as to how.

Self-run operations versus third party operations
It is first important to make a distinction between the parts of the supply chain that are managed internally, with corporate processes and resources, and those that are managed by third parties. Managing third party processes and staff can be difficult, as the retailer has little control over these individuals, how they are selected or how they are incentivized to perform their job. Securing the portion of the supply chain that is wholly owned and operated by the retailer requires some planning, processes and excellent execution, but is in many ways much easier than controlling loss when merchandise is in the hands of third parties.

On the internal side, retailers simply need to understand the potential for loss in the back-end operations and close those windows of opportunity by implementing processes and developing resources. A few best practices can go a long way toward reducing losses.