LPM Special Report on Supply-Chain Security: Trailer and Warehouse Theft, Investigations, and Loss Prevention Tips from the Experts

Our friends at Loss Prevention Magazine recently asked Glenn Master (ISCPO board member and former Chairman) and John Tabor (ISCPO board member) how organizations can anticipate, prevent and investigate cargo theft as well as maintain logistics protocols that mitigate risk when it comes to supply chain security.

Protecting more than just merchandise

According to FreightWatch International, a risk management service provider, the average value of a stolen shipment in-transit can be around $300,000. One incident of organized retail crime, a problem we all consider a serious threat, nets about $8,000. Bank robbery? A pittance at about $2,000.

Efficient and effective supply-chain networks are necessary to successfully compete in the global retail market. It then rests on the loss prevention professional to take the necessary steps to gain a better understanding of the overall supply-chain process and how the process impacts the business so that he or she can effectively support shrink reduction and profit-enhancement efforts.

In terms of understanding, even the term “supply chain” can be viewed as a misnomer. This is not merely a seamless link of interconnected, proportional pieces that takes us from a point of origin and leads to a single ending destination. It is a sophisticated, interdependent network of positions, processes, facilities, functions, responsibilities, tasks, transport, and technology that all culminates with delivering products and services to our customers.

From a loss prevention management perspective, our attentions must focus on disruptive risk. As described by one industry leader, “Assuming the enterprise has taken the necessary precautions to ensure product quality, integrity, and safety, the primary risk to any organization posed by the supply network is disruption. Any disruption in production or delivery will result in potential lost sales, decreased revenue, margin erosion, and profit loss.” These risks can exist at each origin location, at each intermediate location through which the product travels, and along each transportation link between points.

Companies must design operational plans that will serve to identify potential threats; evaluate how, when, and where they may occur; develop effective approaches to mitigate losses, and build programs that improve efficiency and business recovery. Theft is certainly a primary consideration, but specific risks will vary depending on a variety of factors specific to the unique supply-chain network. Potential risks must be identified and analyzed at each point along the network, building the plan that serves as the cornerstone of supply-chain resiliency.

Download this FREE Special Report from LP Magazine today!

This in-depth, expert guide takes you through supply chain security and solutions where you’ll not only learn how theft occurs, but also where and when, and how you can fight it. You’ll…

  • Understand the threat to your organization that cargo theft represents
  • Master the details of the entire supply-chain process
  • Get up to speed on the LP pro’s role in stopping loss
  • Pinpoint those stops along a shipment’s way where the danger is greatest – including your own distribution center
  • Integrate supply-chain security knowledge into your day-to-day responsibilities
  • Establish practices, processes and a company culture that will save your organization millions of dollars, and put your career on a fast track to success

Download the full report at LPM

Supply Chain Management: It’s 10 p.m. Do You Know Where Your Package Is?

This article was written by Glenn Master and was originally published in Loss Prevention Magazine.

The more we learn about the supply chain, the easier the process is to manage

If you grew up in the 1970s, you may remember the popular public-service announcement for parents that asked, “It’s 10 p.m. Do you know where your child is?” The statement seemed almost nonsensical, but it shared an important message for parents to ensure that they always make a conscious effort to know the whereabouts of their children.

Similarly, how is it that loss prevention practitioners can so often be ignorant of supply chain management and the whereabouts of online consumer orders as they move through the supply chain?

The evolution of e-commerce in retail has been accelerating exponentially in recent years. With the ability for consumers to order anything from anywhere using a smartphone, Americans are now spending over $300 billion annually online. This is challenging retailers to keep up with the demand, and without their own transportation fleets, they must rely on third-party entities to get merchandise to their customers.

What does that mean for retail loss prevention? If you don’t have a clear understanding of supply chain management and how a package moves through the supply chain, your ability to investigate in-transit losses will be virtually impossible.

A General Lack of Involvement

In today’s environment, I have found that most retail loss prevention professionals have a limited knowledge of their supply chain. In most companies, supply chain management is typically managed by the transportation or operations department. Contracts are negotiated with multiple freight carriers, and loss prevention rarely has any involvement with those negotiations or contract review. Furthermore, if freight is lost or stolen, claims are often filed unbeknownst to loss prevention, and, in most instances, settled without the benefit of an investigation being conducted at all.

This way of doing business is standard. When you consider the immensity of the global supply chain, it becomes clear why it’s so difficult to obtain actual loss rates for freight that has been stolen in transit. This standard reflects the notion that whoever handles the freight last is ultimately responsible for paying a loss claim. If multiple carriers are involved, those claims will continue to be filed and paid until ultimately a company at the end of the transportation line will be stuck incurring the loss. This basically equates to kicking the can down the road, and retailers are typically unconcerned about the problem as long as they are made whole on the loss.

Eroding the Customer Experience

But what is the real cost here? The customer never received their original order, forcing them to contact the retailer and complain. The retailer then has to initiate another order in the system, which results in additional labor costs when the merchandise has to be re-picked and shipped once again. More importantly, the customer experience has been eroded because they did not receive their order in the first place.

We have all ordered products online and know exactly what it feels like not to receive the order on time. We understand the frustration that mounts when we have to contact the retailer and complain. Now imagine if that customer’s order was stolen, perhaps with similar thefts occurring with other customer orders in the same geographical area. If all your company is doing is filing a claim for the lost packages and not involving loss prevention to investigate the matter, how are the thefts going to be stopped? They won’t … and therein lies the problem. This is why it is so crucial that retail loss prevention becomes an active participant in the supply chain aspect of the business.

The Transportation Process

The first step is to gain an understanding of the supply chain management process. As mentioned earlier the majority of retailers that do business online do not have their own transportation infrastructure. This means they have to contract out transportation companies to move freight. One of the most costly services in business is transportation. Therefore, most companies will look for the most cost-effective way to move that box from the warehouse to the client.

This cost will vary greatly depending on several factors, which would include the time it takes to deliver the package, the distance the package has to travel, and the method of delivery. Typically, the more convenient the process is for the customer, the higher the transportation cost will be for the retailer. As a result, most companies will look for a balanced approach that will satisfy both the customer expectation and the costs associated with transporting the order.

This is where the choice of a transportation provider will come into play. Some providers have a large, global network with their own state-of-the-art warehouses and a comprehensive global fleet comprised of both trucks and airplanes. Furthermore, these companies often have comprehensive loss prevention programs that include both personnel who can investigate loss and physical security that meets industry standards. Because this method can accommodate the convenience of all shipping requirements, costs are normally higher.

In addition, the ability to negotiate claim payment if the package is lost or stolen can also become more difficult. In essence, you’re placing a lot of trust that the package will transit through the network without a problem. If it is lost or stolen, there is little recourse for the retailer because such contracts are often worded in such a manner that payment will not be pursued on claims unless a predetermined loss percentage threshold is met.

Because of the claim payment restrictions, the retailer may then consider contracting with a third-party (3PL) transportation provider as an alternative method to collect the merchandise from the warehouse, consolidate with other freight throughout the client’s network, and complete the delivery process. These carriers are generally regionalized using an independent contractor model for their driver base. This means that the drivers are not the transportation company’s own employees, and in turn, they contract the route out to a provider that works for them. That route owner, or “Independent Contract,” then may have several contracted drivers working for them, covering multiple routes within the 3PL.

Taking it even a step further, the company might subcontract all the routes to a fourth-party transportation company with a similar model, totally unbeknown to the retailer. These companies are designed to move freight at the parcel level and specialize in last-mile delivery to the customer. The problem these carriers face is their operations rarely have any loss prevention personnel on the payroll. They lack basic security standards, such as CCTV, burglar alarm systems, key control, or criminal background checks completed on their contractors. They also lack basiinventory control practices to monitor the retailer’s freight within their network or when it’s turned over to the driver.

This is a recipe for disaster when it comes to theft, and you will often find high-percentage losses when dealing with these carriers. While they are willing to pay loss claims to retailers, they rarely have methods to determine the root cause of the losses. Furthermore, the loss issue is only resolved after thousands of dollars of losses have occurred, and the carrier is threatened with losing the retailers’ business. This is why it is so crucial for retail loss prevention to be involved in the transportation process from the beginning.

Six Steps to Building a Proactive Supply Chain Management Plan

Following are some key steps that should be taken to build a proactive plan.

  • Have a strong relationship with your transportation department and be part of the carrier approval process.
  • Develop a comprehensive security protocol that the carriers must adhere to and ensure that protocol is added in the contract with the transportation provider.
  • Visit some of the locations and conduct an audit of their operations. This should include evaluating their security and, more importantly, the operational controls in handling your freight.
  • Develop loss analytics that can identify loss trends before you start receiving customer complaints about loss. These analytics should identify trends by carrier and driver route.
  • Be proactive in meeting with the carrier’s facility management so they understand your expectations, loss trending analytics, and method of investigation. You will be surprised how receptive they will be for your help to identify problems before they get out of hand.
  • While visiting provider locations, see what other clients’ freight they are moving. If losses are occurring with your freight, they are probably occurring with other retailers’ freight as well. This allows a perfect opportunity to work a joint investigation with other loss prevention peers.

The supply chain can be a very confusing entity and one that many retail loss prevention professionals avoid. But the more we learn, the easier the process is to manage. Rather than assuming that a package is safe once it leaves the confines of your four walls, get engaged in the supply chain management process. You may be surprised to find that with a little effort and some planning, your ability to identify these losses and work with the carriers that handle your freight is a relatively easy process.

BSI’s Annual Global Supply Chain Intelligence Review

BSI’s Annual Global Supply Chain Intelligence Review

We’d like to invite you to join us for BSI’s Annual Global Supply Chain Intelligence Review on March, 22th, 2017 at 2:00pm Eastern Time, US.

 

This webinar will provide a high-level overview of the top security, corporate social responsibility, and business continuity risks, threats, and trends from 2016 as well as an outlook on emerging supply chain risks in 2017. BSI’s Annual Supply Chain Intelligence Review will provide data and analysis on an array of supply chain topics and disruptions in 2016, such as:

  • China’s Environmental Issues and Enforcement
  • Factory Water Pollution in Vietnam
  • Cargo Theft Trends Across Europe
  • European Migrant Crisis Risks and Impacts
  • Drug Trafficking into Western Europe
  • Growing CSR Regulatory Framework Across Europe
  • ISIS Supply Chain Terrorist Attacks
  • Impacts of Western Populism on Supply Chain Continuity
  • Political and Economic Situations Driving Cargo Theft Trends

To learn more about BSI’s supply chain intelligence and register for the event, please click the link below:


 

BSI’s full 2016 Annual Global Supply Chain Intelligence report will be released following the webinar. Registrants will be sent a copy directly once available.

 

 

2017 ISCPO Conference Announcement

Mark Your Calendars!

The 2017 ISCPO Conference will again be held in Dallas, Texas on September 12th and 13th.   The conference will be two power packed days addressing topics related to supply chain security, industry theft trends, global trends and investigations.

The conference will provide a great venue to network with global industry peers, transportation/logistics professionals, law enforcement, and select vendor partners.  ISCPO members and other interested parties should consider attending.   More information to come!

Are you interested in looking at the 2016 conference presentations, 2016 Conference & Presentations

USPack Logistics Acquires JS Logistics

ST. LOUIS, MO–(Marketwired – Dec 8, 2016) – USPack Logistics (USPack) a NewSpring Holdings portfolio company and leading same-day courier and transportation company, today announced that it has completed the strategic acquisition of JS Logistics. JS Logistics is widely regarded as a premier resource for product, storage, distribution and on-demand rush delivery services.

Headquartered in St. Louis, MO, with offices in Kansas City, Indianapolis and Memphis, JS Logistics has a long-established presence across the Midwest, which will serve as the regional operations base for USPack. The company’s state-of-the-art communications and fleet management systems feature next-generation route optimization software and unfettered supply chain visibility that will provide USPack and its clients with a greatly enhanced experience for tracking shipments in real-time.

“Joining forces with USPack Logistics expands our capabilities and provides the means with which to offer a more expansive suite of services to a wider demographic,” said John Cochran, JS Logistics, who will be joining USPack post-transaction as vice president of operations and special projects.

USPack has also acquired Woodridge, IL-based Best Courier and Delivery Service, whose years of ecommerce and trucking experience, and established best practices will resonate across USPack operations.

“Consumers now expect the option of same-day delivery, which helps bridge gap between shopping online and the ‘in-store’ retail experience,” said Brad Poulter, Best Courier and Delivery Service, also joining USPack post-transaction. “Being acquired by an industry leader like USPack bolsters our competitiveness and strengthens our position as a leader in ecommerce delivery.”

USPack, with a unique combination of leading-edge technology, best practices and service performance, provides transportation services to ecommerce, pharmaceutical, automotive, financial services, airline, legal, and healthcare organizations whose success depends on special handling and high levels of security. USPack is the first transportation company in history to earn Security Certification by the International Supply Chain Protection Organization (ISCPO). ISCPO Compliance is a highly coveted distinction given to third-party logistics carriers that meet the intense scrutiny of the ISCPO Carrier Security Audit, a framework for collaboration between customer and service provider, to mitigate risk and provide universal controls for secure package transport.

These transactions extend the breadth and depth of services USPack offers its clientele, and support the company’s continued expansion in both target regional and vertical markets nationwide.

Best Courier and JS Logistics are the seventh and eighth acquisitions for USPack, the third and fourth under NewSpring Capital, after most recently acquiring Parsippany, NJ-based Flash Courier, and Alexandria, VA-based Washington Courier in March 2016 and September 2015, respectively. With these transactions complete, USPack’s service footprint now covers 27 states utilizing more than 1,200 independent professional drivers across the country.

“These acquisitions mark the next phase in USPack’s expansion, both geographically and in vertical expertise,” said Mark Glazman, Executive Vice President, USPack Logistics. “Best Courier and JS Logistics are tenured service providers, each of which bring specialized services and highly-coveted attributes that not only reflect USPack’s commitment to customer satisfaction, but also align with our strategic roadmap for both the current environment and future growth.”

A recent study examining the highly competitive delivery market that caters to the rise in online shopping, showed that two-thirds (66%) of consumers have chosen a retailer based on the number of delivery options, and more than one-quarter of respondents (26%) said they use at least three parcel providers to ensure the best price and to mitigate the risk of lost packages or delayed delivery that might result from relying on a single provider.

“Same-day delivery services have become a key differentiator for brands hoping to distinguish themselves in a crowded, hyper-competitive market,” said NewSpring Holdings General Partner, Jim Ashton. “These acquisitions further USPack’s ability to capitalize on exponentially increasing demand.”

 ABOUT USPack
USPack, founded in 1986 by current CEO Peter Glazman, is based in New York, New York and provides custom transportation solutions for ecommerce, pharmaceutical, automotive, financial services, airline, legal, and healthcare organizations nationwide. Recognized as an innovator and service leader in the same-day transportation industry, US Pack operates in 27 states across the Eastern Seaboard, the Midwest and the Pacific Northwest regions of the United States.

About NewSpring Holdings
NewSpring Holdings, LLC, NewSpring Capital’s dedicated buy and build strategy, focuses on control buyouts and platform builds, targeting profitable, growing companies seeking a financial partner to better assist them in achieving their goals. NewSpring Capital, based in Radnor, Pa., collectively manages more than $1.5 billion of committed capital supporting more than 110 portfolio companies across its growth equity, control buyout and mezzanine debt strategies. Combining deep operating knowledge with financial and investing expertise, NewSpring Capital provides growing companies the financial resources, advice, network of contacts and strategic partnerships necessary to be successful. To learn more about NewSpring Capital, please visit http://www.newspringcapital.com/.

With Cargo Theft On The Rise, Retailers Must Double Down On Protecting Their Goods

 

Liz Parks  September 14, 2016

This article was published in the September 2016 issue of STORES Magazine.

Those in charge of security for cargo belonging to retailers are up against some of the wiliest and most sophisticated criminals in the country.  And the situation is getting worse, according to Anthony DiPasquale, senior vice president and U.S. marine cargo product leader for Aon Risk Services. This is particularly true during holidays, when retail cargo thefts have increased by as much as 40 percent versus non-holiday weekends.  DiPasquale’s responsibilities range from covering the cargo as it moves from overseas to distribution centers to retail stores, but also includes goods stored in distribution centers and on store shelves. “We refer to it as cradle-to-grave coverage,” he says.

The products he insures are owned by high-end retailers, department stores, jewelry, apparel, cosmetic, appliance, electronics and furniture stores, as well as mass market stores that carry a wide variety of high-value products like pharmaceuticals.

One thing that almost all of Aon’s clients have in common, he notes, is that they often have limited financial resources for cargo loss control. The choices they make about how to best provide cargo security must be very strategic and backed, whenever possible, by research and data that helps them react as proactively as possible to what cargo thieves are planning.  However, not all retailers are prepared to plan strategically, and some are not operationally adept at ensuring that security policies are well-known and well-executed throughout the organization.

Watching and waiting

 Retailers with high-recognition brand names are “key targets for thieves,” DiPasquale says. “There is a lot of work that goes into protecting and developing a formal security plan.”

Although it can seem to some that cargo theft is random and opportunistic, the opposite is the case. “Cargo thieves are actually very sophisticated criminals and they tend to run in gangs. They are very organized, very specialized groups that go after cargo theft.” In the United States, cargo theft is estimated to be between $12 billion and $15 billion a year, DiPasquale says.  One of the attractions for thieves is that products stolen from retailers are easily moved on the black market.

Retailers, especially those who haven’t given a high priority to cargo theft, perhaps because they have not been hit that hard yet, need to understand that “these very sophisticated criminals are watching the trailers while they’re on the move,” he says.

“They are watching specific facilities where they know there is desirable cargo. They are watching, and they are often a step ahead of the security people assigned to protect the cargo. They are planning and waiting for the optimal opportunity to get the goods.”

Holiday weekends are “obviously more vulnerable,” he says. “There are less people around and the thieves are ready for any opening.”

Based on their surveillance, the thieves know when guards are around; they know who comes in and out of the facilities and when the guards make their rounds — when the lights go on at night and off in the morning.  “They watch all these things and they develop patterns, and from that, they determine the best time to strike.”

But if a retailer has invested in a good security team, he says, “they know what’s going on around their facilities so surveillance maneuvers can be compensated for.”

‘Need-to-know’

 Problems arise because retailers don’t always have good security, DiPasquale says. “A lot of retail companies are dealing with limited budgets so they do the best they can with the tools they have. It becomes a cost factor for what they can actually do.”

And retailers are vulnerable whether they manage their own transit or use third parties.  DiPasquale describes one case where thieves tripped a security alarm “on purpose, just to see what the response would be,” he says.

“If the response is slow, they might hit next time. Sometimes, though, they will trip an alarm two, three or more times, just to make the guards think the alarms are false. Then when no one responds the third or fourth time, they hit.”

Between 70 and 75 percent of the time, DiPasquale says, “the theft is based on the help of an insider, some inside information that the criminals get. They may have learned where a particular load is going to be, or where the designated rest stops will be. Then they’ll be ready to hit those particular cargos.”

Retailers need to be scrupulous in protecting documentation. “Only the people who need to know should have documentation information,” he says. “Retailers don’t want the documentation touched by many people. Only on a need-to-know limited basis should people have that information.”

A good practice, he says, is to give drivers “just the information to get to their destination following a specific route and to let them carry further information within a sealed security envelope that can only be opened when they reach their destination. This way the drivers don’t know the specific contents in their trailers. They have only the information they need.”

This is especially important, he says, for cargo being transported across high-crime areas like California, Florida, Texas, New York, New Jersey and even parts of Tennessee and Kentucky, “any place where criminals know the goods are.”

 

Same-Day Courier, USPack Logistics, Earns Coveted Security Certification From ISCPO

NEW YORK, NY–(Marketwired – Jul 12, 2016) –  USPack Logistics (www.gouspack.com), a leading same-day transportation company, today announced that the International Supply Chain Protection Organization (ISCPO) has granted it Security Certification. The ISCPO Carrier Security Audit is a framework for collaboration between customer and service provider, to mitigate risk and provide universal controls when using regional third-party logistics carriers.

USPack provides transportation services to ecommerce companies and healthcare organizations whose success depends on special handling and high levels of security. Following a thorough examination of operating procedures, systems and access control, security of deliverables and returns, loss and theft prevention, hiring, workforce training and facility management, USPack has earned the distinction of being the first transportation company to achieve full compliance with the ISCPO standards.

“USPack has demonstrated an unparalleled commitment to loss prevention, and we are pleased to bestow this well-deserved honor,” said ISCPO Chairman, Glenn Master.

Organizations that depend on last-mile carriers and delivery services demand assurances that each hub of the supply chain is thoroughly and routinely assessed. By embracing these standards, carriers acknowledge the need to comply with collection of best loss prevention and theft detection practices within the Security/Loss Prevention industry.

“Earning ISCPO certification is a tremendous achievement,” said Mark Glazman, EVP of USPack Logistics. “We take great pride in maintaining an impeccable record of near zero loss, which reflects our strict adherence to security protocols and efficient practices, and continuous investment in loss prevention staff and technology.”

ABOUT USPack
USPack, founded in 1986, is based in New York, New York and provides custom transportation solutions for ecommerce and healthcare companies nationwide. Recognized as an innovator and service leader in the same-day transportation industry, US Pack operates in 21 states along the Eastern Seaboard, the Mid-West and the Pacific Northwest regions of the US.

USPack Yahoo Finance News Link

In-Transit Cargo Theft: Impacting the Retail Supply Chain

 

In-Transit Cargo Theft: Impacting the Retail Supply Chain

Cargo Crimes, Supply Chain Disruption Increasing at an Alarming Rate

LPM Insider

www.losspreventionmedia.com/insider/supply-chain-security/in-transit-cargo-theft-impacting-the-retail-supply-chain/

John Tabor • December 11, 2015

A recent survey of retail security directors showed that almost half of those polled had been the victims of a supply-chain disruption directly related to cargo theft in the past year. This is a significant increase from just five years ago.

Envision the following scenario. You are at home around 8:15 at night watching television with your wife or kids when the phone rings. The caller is one of your regional LP managers in the Southeast. He tells you that you just had a tractor load of high-end apparel worth $2,000,000 stolen in Florida while parked at a truck stop. The driver had gone in to use the facilities, and when he came out ten minutes later his tractor and trailer were gone. While no one ever wants to receive a call like this, you can be prepared for it.

In order to fully understand the issue of cargo theft, you need to know why it exists, who is perpetrating it, how you can reduce your risk, and ultimately how to react to a cargo theft loss.

Most of those reading this have had some level of store- or logistics-security exposure. Good loss prevention programs involve some form of a “layered” approach. Based on the exposure, some, if not all, of the following countermeasures may be employed—surveillance cameras, alarms, locks, lighting, EAS, safes, employee awareness training, and others. Loss prevention professionals would be remiss in their duties if they did not explore all of these attributes to secure their stores.

That said, remember that virtually 100 percent of the merchandise in retail stores is delivered by truck. In many cases the only two preventative measures put in place to secure that same merchandise and deter cargo theft in transit is a key to the tractor and a seal on the rear doors.

Texas Senate Backs Felony Cargo Theft Rule

By Keith Goble, Land Line State Legislative Editor

Stiffer punishment for truck, rail or container cargo thieves in Texas took another step this week toward becoming reality.

The Senate voted 30-1 on Wednesday, April 29, to advance a bill that would establish cargo theft as a specific offense and impose escalating fines and punishment based on the value of goods. The bill awaits further consideration in the House.

Texas Sen. Judith Zaffirini, D-Laredo, said that cargo theft by organized crime rings has become a serious problem in the state, as well as nationwide. She put the losses to the state at $23 million between 2012 and 2014.

“Cargo theft is a growing problem nationwide accounting for an estimated loss of $10 billion to $25 billion per year nationwide,” Zaffirini said speaking on the Senate floor. “Because we have one of the busiest ports of entry in the country, Texas is especially vulnerable to this growing problem.”

According to FreightWatch International, in 2013 Texas ranked behind only California in the number of cargo thefts. Florida, Georgia and Illinois rounded out the top five.

Lt. Gov. Dan Patrick has said that two of his biggest priorities are keeping people safe and fostering economic conditions. He said that cargo theft puts both at risk.