Rina Redelinghuys, CQuential WMS Customer Services Executive unpacks warehouse theft prevention tips.

Warehouse Theft Prevention Tips

There are many drivers that create cost and inefficiencies within the warehouse but theft can cause a lot of operational disruptions and it’s one of the most difficult to solve. It takes a combination of strong processes, security systems, warehouse management software and excellent hiring criteria to reduce the negative impact of theft within the business.

What is the impact of theft within the warehouse?

Theft is directly responsible for all the following:

• Reduced company profits
• Negative impact on revenue
• Negative impact on customer satisfaction levels
• Drives a toxic culture within the business.

It’s crucial that warehouse theft is dealt with in a timely manner to avoid any long-term damage and to retain ethics and values within the organisation.

There are several initiatives that can be implemented to address the warehouse theft issue including:

Stock-take vs. cycle counting
Cycle counting ensures that your inventory is frequently checked for accuracy and without interrupting your operations. Not only is this a more productive and efficient method of inventory control, but it also makes it easier to spot theft because you can identify discrepancies sooner rather than later.

Missing stock vs theft
Inventory shrinkage in your warehouse is normal, within certain limits. The best way to identify theft in your warehouse is to conduct regular stock takes. If you notice discrepancies, investigate them immediately.

Red Flags – watch for the following indicators of theft:

• Stock levels don’t match sales records
• Sales seem to dip on days when particular staff are on duty
• Staff rumours suggest theft is taking place
• Certain team members avoid taking their annual leave
• Important documentation (such as invoices) is missing or appears to a duplicate rather than the original
• Stock is constantly found near exits or loading bays.

What further measures can be put in place to remove the negative impact of theft within the business?

• Conduct background checks before hiring new warehouse staff – check for criminal records.
• Educate employees about company policy on theft and the implications for staff found to be involved.
• Make sure your staff are aware that you have a zero-tolerance policy when it comes to theft or fraud.
• Have staff sign a code of conduct that clearly outlines how violations will be punished.
• Encourage whistle blowing by provide anonymous channels for staff to report suspicious activities.
• If everyone knows that their colleagues are keeping an eye out, it will deter thieves due to a higher chance of being caught.
• Deal with thefts immediately, in line with your company policy.
• If experiencing a theft, or series of thefts, examine shift registers to identify the time of the incidents and who was on duty when the stock went missing. If you notice a pattern between missing stock and specific staff members working hours – monitor their activity in the warehouse.
• If you notice suspicious behaviour, such as consistently clocking in or out at odd times, investigate further. This can be done in-line with the company’s stated policies.

Maximise managerial visibility in the warehouse
Having a strong managerial presence on your warehouse floor will deter theft. It can, however, be difficult for warehouse managers to spend a lot of time on the floor, as many of their duties require a computer.

Consider investing in a warehouse management solution that offers a mobile component, this would facilitate a desk free working solution for your managers. It will also lead to the following positive outcomes for managers as they walk the floor:

• Systematically record active interactions with employees, including observations and performance measurement
• Review work in the warehouse by wave, job function and task/activity
• Put a task on hold, re-prioritize a task, assign a task to an employee, or release a set of tasks to be completed
• Monitor, plan and forecast work in real-time
• Track the status for a particular customer, including order lookups and wave progress
• Locate your manager’s office above your warehouse, on a mezzanine floor, with a bird’s eye view of the warehouse below.

Limit access to stock in the warehouse
Use the physical layout of your warehouse to create barriers that help to prevent theft.

• Split receiving and shipping docks where possible, to prevent newly received stock exiting on an outbound truck before it even enters your warehouse
• Keep pick faces and inventory storage locations as far away from shipping and receiving areas as possible. The only stock that should be near these areas are incoming and outgoing orders
• Provide visiting truck drivers with a dedicated lounge area to wait while orders are being loaded or unloaded. Only staff should have access to the warehouse or distribution area.

Ensure you install robust security systems in the warehouse
Installing security systems like access control and CCTV cameras not only deters criminals but also provides visual evidence of theft. Security personnel should be stationed at every entrance/exit of the building. Staff and visitors’ parking should be located away from warehouse operations. No private vehicles should be permitted anywhere near the warehouse.

Understanding the motivation behind theft
Knowing why employees steal can help you to effectively curb theft. In other words, break down why employees steal. This can be due to a myriad of reasons including:

• Poverty – people may be struggling financially and steal to take items home for their family or to sell for cash. The justification of this is often an attitude of ‘the company won’t miss or can easily afford to replace missing stock’ and ‘we need it more than they do’.
• Entitlement – some staff work on the premise that the company owes them something.
• Opportunistic – these thieves will take something desirable just because they can. Small stock items like makeup, clothing, foodstuff, and electronics are most at risk of opportunistic theft, as thieves will take items that are easy to access and conceal.

Implement a Warehouse Management System – the less accurate your inventory records are, the faster your warehouse becomes an easy target.

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Catch my next piece where we will examine the challenges around warehouse optimisation.

In case you missed it – also read: Effective Slotting – your next step in warehouse management cost reduction.

For more information contact us on 011 712 1300; email info@cquential.com or visit our website www.cquential.com