This guest article was written by ISCPO Board Member and past Chairman, Glenn Master.

I was having a light-hearted discussion a couple of weekends ago with my attorney, who just happens to be a 20-year friend of mine. We were discussing news media hype about self-driving cars, artificial intelligence, and packages being delivered by drones. He had mentioned that he could not stand going to the store and having to deal with the ‘shopping experience.’ A typical guy thing, right? He then mentioned that several days prior he had ordered salt and pepper shakers from an online retailer because the ones his wife bought never provided the exact amount of salt or pepper that he desired. He continued to explain that on the following Saturday, a day after he placed his order, he received a call on his cell phone from an unknown individual named Gary who wanted to confirm the correct address for the delivery because my friend lives in a rural area. Thirty minutes later Gary showed up in 1982, powder blue Olds Cutlass, which was stuffed with as many packages as humanly possible in a vehicle of this size. My friend got his salt and pepper shakers and an oil stain left on his driveway from the Cutlass.

This scenario, albeit amusing, happens every day around America and the world. Although self-driving cars, artificial intelligence and using drones to deliver packages is where we are going, it’s not embedded yet into the mainstream of business. Therefore, for now, at least, you are getting Gary at your doorstep.

Consumers currently spend an estimated $2 trillion dollars annually online. That number is expected to double in the next five years as third-world countries are now enjoying the luxury of internet connectivity. This means that any company who is doing business online is scrambling to find the quickest and cheapest way to get that parcel from their distribution center to your doorstep. So what happens to that internet order then, which you expect to be delivered after you click ‘confirm’? Let us go back to Gary and a few questions. Who is he? Does he work for the company that you ordered the item from? Does he have a criminal record? Is he mentally stable? Not to mention is his 82’ Cutlass going to leave a huge oil stain on your driveway. The average consumer frankly, does not really care. They just want their order.

These questions, however, should be asked by every Loss Prevention professional responsible for ensuring package integrity once it leaves their company. What I am finding though is that most of my colleagues do not have a clue and here is why they should. What if Gary has a criminal record and for every five packages he delivers, he steals two other packages. What if Gary is mentally unstable and decides to assault the customer during a delivery. What if Gary decides that by 2 pm he is tired of making deliveries, so he drives to the back of a mini-mart and tosses the remainder of the undelivered packages in the dumpster? The following scenario not only has become problematic for the transportation provider but also now has become a priority for the Loss Prevention department to figure out. 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.

These are just a few examples of thousands that take place daily in the world of the supply chain and will continue to grow as the consumer is choosing to point and click versus getting in their car and traveling to a store.

These are the five things you need to do today if you have any responsibility for Ecommerce.

Understand your business.

I believe it is in our inherent nature to focus only on what our scope of responsibility is with respect to work. If there is any belief that another company has responsibility for that customer order then the mind set becomes a ‘kick-the-can’ scenario or that it’s someone else’s problem. Take time to understand the full scope of your operation, especially outside the four walls of your organization.

Include the full Ecommerce Supply Chain in your LP Strategies.

Unless your company has a fleet of airplanes, long-haul semi-trucks or parcel vans, you have to rely on other service providers. This means that although the package your customer orders may be picked packed and shipped from your distribution center or store, your company must contract out with other service providers to get that package to your customer’s doorstep. That means that package might touch two to four different companies prior to your customer receiving it.

Make Analytics Your Best Line of Defense, and Offense.

I have learned a valuable lesson in the world of Supply Chain Ecommerce Loss Prevention. It does not matter how many companies, countries or sets of hands touch that parcel. If the parcel is scanned by each entity capturing a barcode/order number and you have the ability to review that information, you can figure out where it has been lost or stolen.

Don’t Sweat the Small Stuff, Literally:

You cannot waste your time chasing one-off packages in a supply chain environment. In addition, this philosophy must be conveyed to the folks in other departments within your organization, who are frantically sending 100 plus emails searching for one package. Develop a comprehensive analytics report from missing scans in a simple excel spreadsheet. Include all the touch points. If packages are being stolen or continually lost, the trending will stick out like a flashing neon sign. Spend your valuable time chasing the trends in your network.

Learn to be a Teacher & Advocate Within Your Organization:

I have spent countless hours working investigations that involve other Loss Prevention departments and Law Enforcement. I have found that many of my peers in both industries do not understand how a package goes from point A to B and the complexities that it entails. Here is some simple advice from my college Algebra teacher years ago when I could not understand a complex problem.  “Glenn, I am going to explain this to you like a five-year-old.”

A little patience and proper communication will go a long way in breaking down the complexities of the packages traveling in the supply chain.

Now is the time for Loss Prevention professionals to embrace the shifts in consumer buying behavior and realign their teams and focus on meeting the needs of the consumer.

Glenn is the Co-Founder and inaugural Chairman of the ISCPO. He currently is employed with Newgistics as the Director of Loss Prevention, Environmental Safety & Health and as an Adjunct Professor at Texas Christian University. He has over 20 years of Loss Prevention experience both domestically and internationally with companies such as Motorola, Henry Schein and Office Depot. Glenn’s educational background includes a Master’s Degree in Criminal Justice from the University of Cincinnati and Bachelor’s in Criminal Justice from the University of Texas-Arlington.

This guest article was written by ISCPO Board Member, Scott Cornell, 2VP Transportation Lead, Crime & Theft Specialist at Travelers. Check out Travelers’ Supply Chain Management hub for comprehensive transportation resources.

No matter how effective your loss prevention team and systems are to protect your cargo and transportation networks, you’ll ultimately get the call, at some point in your career, to learn that your cargo has been compromised.

Cargo theft happens fast. It’s difficult, at best, to give concise, specific tips on cargo theft investigations. My disclaimer at the outset is that these will be high-level insights, which can be applied to several scenarios where there are some similarities as well unpredictable differences. While some consistency is needed in any approach, there also needs to be flexibility to adjust to the unexpected differences in any given case.

Disseminate Information

The first thing you’ll want to do following a theft is quickly getting out as much information as possible. The likelihood of recovery drops off considerably after the first 48 hours, so you’ll want to quickly determine what police department will have jurisdiction over the theft and make contact with them. Depending on the loss scenario, this is not always simple – you need to know who to call and develop the right industry contacts. Additionally, you can share whatever information you can with industry resources such as the regional security counsels, which will get your theft information out to a large audience of people. Use all available industry resources, like CargoNet, for example, and share the information with them. In my experience, they will help you get the word out regardless of whether or not you’re a member – the cargo theft community is a tight one, and people will try and help if they can.

Not only will this information reach private sector personnel and resources across the country, and even internationally, but also law enforcement resources who have experience in cargo theft. The security counsels share the alerts so the information will quickly spread across the country. You’ll want to include as much information as you can – provide the truck and trailer identifying information, the location of the theft, what was taken, any information you may have already been provided or gathered, and how it took place. If possible, include as much detail as possible about the stolen commodities so law enforcement knows what they’re looking for.

Where to Start

After thoroughly distributing information about the theft to all available resources, your investigation will almost always need to start in two immediate locations. The first is obvious – where the theft occurred. The second location, which may be less obvious if you’re not familiar with these types of investigations, is the area you suspect the cargo may be headed. As you conduct more investigations over time, you can develop a good feel for who may have taken your load and where they may be headed. It’s important to begin your investigation in both locations. If you don’t have any idea, reach out to someone who may. Your load is almost certainly not the first load they’ve stolen and most groups have a pattern of behavior.

One of the first things you’ll need to do is to scan the theft location with a fine-tooth comb and then work your way out. Were there any witnesses or possible video captures on-site or on the most likely routes as you expand your search outward? Quite often there are video resources outside of the theft location that you can identify and request recordings from – you could also enlist the help of law enforcement to make the request. While the videos may not always be of the best quality, you don’t know what they may show unless you get it. Even if it’s from someplace outside of the theft location it may at least give you an indication of what direction your load was headed when it was taken.

“All Hands On”

The third tip is the “all hands on” method. You must talk to everyone who touched or worked on moving that load. The driver is the most obvious, but who else knew about that load? Who arranged for it, packed it, loaded it or was involved in the deal in any way? In today’s world of cargo theft and specifically in what we call “strategic cargo theft” – methods such as identity theft and fictitious pickups – someone may have been involved in the deal with the intent of stealing your load. There may have been a breach in informational security, and you may find someone somewhere along the way had some involvement in the theft. It’s imperative to be thorough in pursuing all possible leads.

While I wish it was as straightforward and easy to conduct cargo theft investigations as it may seem, it really never is. It is my hope that these tips will at least get you headed in the right direction. More than anything, the value of networking cannot be stressed enough. If you know the right people and have the right resources available, you’ll know what to do and who to call first in that awful moment when you discover your load has gone missing. Organizations like the ISCPO can help you do just that.

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

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.