Xterprise

By Joe Davis, director of loss prevention for T-Mobile USA.

Having served in retail for 19 years, I’m not big on endorsing vendors or third-party products. The cardinal rule of showing complete objectivity when it comes to outside companies has been deeply engrained in me. Yet, I’m about to share with you rave reviews of the Wharton/ASIS Program for Security Executives: Making the Business Case for Security, which I recently attended. I am making this exception because in doing so, I believe there is enormous benefit to be gained by my peers. This course delivered such a new perspective and practical insights that I believe living by them can advance security in organizations to a whole new level. For my part, I feel as though I went from zero to Ivy League MBA in 10 days. So what exactly, you might ask, did I learn that was so valuable?

Not New Information, But A New Perspective
The program that I attended is the Wharton/ASIS Program for Security Executives: Making the Business Case for Security, or as I like to refer to it, Wharton’s Executive Bootcamp for Chief Security Officers. Like any executive business program, it is designed to lay a foundation for individuals in business who may not have a comprehensive understanding of all the different functional areas. As you would expect, the program is broken down into several different areas: strategic thinking, leadership, essentials of finance, fundamentals of marketing and a few more. My expectation was to walk in and learn an extensive amount of new information about the functional areas to which I am not typically exposed to in my career. Walking out, I realized that the greatest achievement was taking things that I already knew and refining my understanding of the application of these things into my business in a day-to-day process.

While the program is called, Wharton/ASIS Program for Security Executives: Making the Business Case for Security, there is absolutely no material on security presented. A clever approach by Wharton. Why would they need to teach security experts about security? What they want to do is teach security experts how to most successfully achieve their goals in the whole business environment. I did not necessarily learn new information; what I learned was how to look at my job from a new perspective. Think about the difference in climbing into a helicopter and taking an aerial tour of the Grand Canyon as opposed to experiencing it as a hiker at the bottom of the canyon. Let me tell you, the perspective is starkly different.

Here are some examples of insights I took away from the program that you can bring to your organization as well.

The Need To Define Strategy Differently
Think of how many different books and articles are written on strategy: what it is, how to define it, how to create it. At Wharton, they teach that the definition of strategy is simple: “A plan to win.” Too often, business executives focus on strategy as a process: A means to an end rather than the end itself. But strategy is ultimately about achieving outcomes. In security, that means reducing losses, expanding the revenue model, increasing sales, or any other number of enterprise business objectives. If you don’t infuse your team with the ultimate goal, strategy quickly digresses into the realm of implementing tactics, with focus lost on winning. We don’t want participation trophies, we want championship trophies.

Too often we are overcome with the process that may hold us captive. At Wharton they encourage the development and implementation of a sound business strategy, but, more importantly they stress the critical nature of defining what winning looks like to you and your business. In my business today winning is hitting key financial metrics as well as the overall protection of the assets of my company. Taking strategy out of the visionary realm and placing it into the tactile world of specific outcomes will drive ownership and accountability within your business.

Logic is not always the best tool
Security professionals have a tendency to respect logic above all else. After all, it’s essential to success in our own jobs. We have to follow a path of facts to their logical conclusion to identify and solve problems. And while logic is a critical tool in security, it is not always the best tool when working with other functional areas in the organization.
Sit down. This isn’t going to be easy. But sometimes you have to let go of logic and focus on relationships. While it might sound eerily like something off of the Oprah Winfrey show, it’s the truth. When it comes to getting buy-in from different groups or winning over skeptics to your way of thinking, logic is not necessarily the most effective tool. It is true for communities, families, businesses and any human network: people do things for people they know and like. Asking for a favor as a friend is likely to yield better, quicker results than trying to enforce action through formal channels. What does this mean for security professionals? Well, it means getting out and getting exposure to colleagues across the organization and interfacing with them on a regular basis. Often, security professionals limit their exposure to executive leadership and other functional areas unless it’s required by a specific project or event. This is often done in the name of efficiency. So when security needs or wants something, they are reduced to delivering dry arguments for action, which produce little enthusiasm and gain a paltry following. An investment in colleagues and relationships is an investment in your strategy.

Let’s say you want to change the way you are protecting a distribution center and want to increase guard coverage. Many times, a security professional will pull together a plan and give a list of reasons why additional guards are needed. But without relationships, the executives see you as a walking blank check. Knowing you personally, and the value you are adding, and what you are trying to accomplish for the organization, makes accepting your proposal much easier, a more personal affair.

How to Ask for Money
Our instructor for this session, John R. Percival, PhD is a professor of finance at Wharton. Dr. Percival provided some excellent case studies on building shareholder value within your business. His real life examples and engaging delivery had me more interested in Finance than I thought was actually possible. Asking for budget dollars in the security realm is a tedious annual process that is many times bane of a CSO’s existence. I learned that it’s easier to ask for funding if you can do it in a manner that drives value into your organization by delivering the message in the language of the finance team. Shift your focus from asking about financing for your project to telling how your project will positively impact financials. This is about communicating in the language of your audience. Instead of asking for money and justifying why it should be spent, position your projects in light of the value they will drive to the bottom line: the reduction in loss, the savings in personnel, the increase in time spent focusing on the customer.

Security is often pigeon-holed as a cost center, when in reality it can and should be marketed as a competitive advantage. Think about how security positively impact the business. For example, by mitigating risk, the company can deploy more stores in the market. By reducing shrink, the business can invest in growth initiatives. By streamlining operations to reduce loss, security improves efficiency and helps save labor costs. It’s easy for security professionals to focus on what’s inside their area instead of focusing on their true impact to the outside organization.

Prepare for Meetings
“Really?” you’re asking. “Prepare for meetings?” It seems obvious, but amidst the frantic pace of business today, think of how inefficient most meetings are. How many times have you been to a meeting at a set time and the only preparation time you have is the time it takes from you to walk from the last meeting into the next? The executive course really delves into the value of being prepared for meetings. The prepared person is more effective at gaining their expected outcome than the person with no agenda. It’s a small, seemingly unimportant concept, but the result of poor preparedness is simply that all your time spent in meetings gets thrown down the drain. When you think about how many meetings you have each week, that’s a significant loss.

In Conclusion: Escape out of the security silo
In short, the big lesson I learned was how to avoid getting caught up in the security silo and how to start viewing my work as a program that aligns with the company’s strategy. I know that what I am doing in security is helping the organization achieve its goals, but often I reduce my programs to tactical plans that I fail to communicate to others in the organization on a regular basis.

Security is its own animal. It’s not like sales or marketing and will not be treated like those things. In some ways, it’s the least understood function in the organization. Therefore, our job of explaining how security supports the overall strategy of the organization is much harder than it is for others. We have to look for points of integration as opposed to points of differentiation. The good news is that as security professionals, we have many strengths that we can leverage to better communicate our messages and objectives. We know people. We understand interviewing and picking up on body language and other clues. We can easily tell how people are responding to our interaction. Use this skill to guide you when presenting proposals and communicating with others.

The program’s academic director, Mario Moussa, told us, “Reality is a liquid, not a solid.” It’s the truth. In the security world, we pine for a firm foundation from which to work. We must learn to be willing to step into the liquid and immerse ourselves in the fluid reality in which business exists. We have to gain flexibility outside of the self assurance that we have developed in our specialty over the years and recognize that there is a different way to doing things. Failure to do so limits our success and that of our companies.

Joe Davis is a director of loss prevention for T-Mobile USA. He manages a team of corporate and field level investigators focused on enhancing profitability within the enterprise. Joe’s team is responsible for all internal and external operational improvement and investigative programs in the business. Since joining T-Mobile in 2008 Joe has designed and implemented numerous cutting edge programs from risk mitigation in the retail stores, to reducing operational expenses by $30MM.

By Al Jacobs, former physical security manager at Babies R Us and Linens n Things

This article is dedicated to the unlucky regional retail loss prevention manager who was suddenly given the full responsibility to install cameras in a new store. For this article, let’s call this manager Zack [all the characters listed here are fictitious]. We all can learn from Zack’s story.

As a sign of the times, most of Zack’s corporate loss prevention support staff was laid off. Each regional loss prevention manager was tasked with installing their own cameras.

What did Zack do first? Not much. Zack should have taken the time to create a comprehensive and formal project plan. There is an old Marine Corps mantra that says “prior planning alleviates confusion…” You will see how this still holds true.

Zack’s corporate seniors gave him full responsibility to hire a vendor to install a new camera system in one of his soon-to-open stores. Zack faced rapidly approaching deadlines. His store's grand opening date gave him three weeks to complete this project. One way he found to “transfer” the risk of missing this deadline was to quickly hire a camera installation vendor and punt the project to him. If anything went wrong, he had a scapegoat. If not, he was a hero.

Zack promptly emailed out a few simple specifications and an indecipherable hand drawn camera plan to four security integrators. Zack knew he should have provided his bidders a highly detailed and scaled computer-crafted camera plan along with specific equipment configuration. Zack rationalized that he could not afford to take the time to do that. He also did not have the foresight to hold a “bidder conference” so that all the vendors he contacted could interactively confirm his job’s requirements. As a result, Zack’s vendors replied with wildly disparate proposals.

Zack’s project clock ticked loudly and he was forced to quickly pick one vendor. He selected the firm with the fastest response, least detailed proposal, cheapest price and a few select but deceptively comprehensive “notes.” Zack did not realize it at the time, but the “notes” were the golden eggs that would eventually permit Zack’s chosen vendor to charge him “extra” fees later on.

With the contract inked, Zack and his approved vendor, Fred from I.M. Cameras, LLC, reviewed the project. Fred detailed his perceived scope of work. He also asked for Zack’s help in coordinating his interaction with Zack’s new store general contractor. In short order, it turned out that Zack ignored Fred’s pleas and the GC remained an aloof wild card.

Zack’s GC had other priorities. He felt no pressure to integrate his plans and schedule with Fred’s. As a result, Fred was not able to meet preliminary installation milestones. It got worse. Electrical outlets, lighting, exit doors, signage and fixtures were moved due to changed fire codes and merchandising plans. Nobody told Fred.
Fred hated being ignored by Zack’s GC. In absolute desperation, Fred called Zack’s boss, an old friend he met at a charity golf outing last year. Predictably, Zack got an irate call from his boss directing him to get Fred on the GC’s schedule or else. Zack called his GC and gave him the riot act.

Finally, the camera installation was on track. However, the delays wasted thousands of labor dollars. These charges ended up in a change order. Fred’s profits increased.

With Fred’s persistence, the job was done before the store’s grand opening. A final inspection walk through was arranged. At the walk through, Zack realized that the camera layout was not perfect. Some cameras needed to be moved. Zack realized Fred did what he could with a plan that Zack never got around to updating despite GC changes. Fred was good but not clairvoyant.

Zack accepted responsibility for the “misalignment” and created a punch list with Fred. Fred turned around and created another expensive change order to finally get Zack’s cameras system squared away. Zack’s budget was blown but the system was all squared away; at least that was what Zack thought at the time.

A parting thought, Fred, like any experienced installer, told Zack to change his camera system’s default password. Zack, in his haste to get the camera system turned over to the new store staff, forgot to change it. The default password, the one that had unrestricted authority to change any settings, was spelled out in the system’s equipment manual and online at the manufacturer’s website for the world to see. This included, at least one of Zack’s future employees.

Weeks later Zack hired a new hard charging loss prevention investigator named Willie to watch the new store. That was a big mistake.

On Willie’s first day, he had a highly caustic run in with the store’s General Manager. That prompted Willie to quit at the end of his shift. As a parting gesture, for his aggravation, he easily found the camera system’s administrative password, surreptitiously changed it and deleted all the other users.

It was Friday evening, a day later, and life sent Zack a catastrophic wake up call. His office phone rang and he found out the new store was just “hit.” It was held up. There was a crazed man with a gun who barged in, brutally pistol whipped two managers and stole all sorts of cash and merchandise. The police and an ambulances were called. Guess what happened next? 

Zack’s told his boss and then tried to remotely log-in to the store’s camera system to see what just happened. He could not connect. He called the store and asked a store supervisor to try it on-site. He had no luck. Panic set in. Zack called Fred and the manufacturer’s technical support help line. Fred was on a cruise taking advantage of his change order windfall. He did not answer his phone. The camera system’s support help line was closed for the weekend. The police would have to work without video. Zack’s boss was fuming.

The story was fabricated or was it? When it comes to camera surveillance systems, spending time up front to create a comprehensive RFP, fairly bidding out the job, verifying the deliverables and then properly following up on all the loose details afterward may seem like overkill. Invariably they prove to be necessary.

To hammer this point home, remember another old Marine Corps expression: “Sometimes it is entirely appropriate to kill a fly with a sledge-hammer!”

About the author:
Al Jacobs is a certified project management professional. He held positions as a physical security manager at Babies R Us and Linens n Things. He also worked for Stanley Convergent Security Solutions and Universal Surveillance Systems. Early in his career he was a Marine Corps communications-electronics officer.

By Eric White, Wren Security

Each year as the holiday season approaches, retailers prepare for the exciting prospect of profitability as well as the challenge of managing merchandise, event and customer overload.  While every holiday season requires special attention, loss prevention managers must predict how the latest trends and the economy will dictate the types of risks most prevalent this holiday season.  Here are three of the top trends we see now and how they will impact LP’s job this Christmas.

Trend: Money’s still tight

While retailers have a reason to be optimistic that the worst is over, the economy is still on the rocks. While expectations for holiday spend have not yet been released, NRF’s Back-to-School and Back-to-College Trends 2010 report shows consumers are still holding onto their money. The bottom line: While the worst of the Great Recession may be over, times are still tight and there’s no margin for error.

Response: Guard every penny

LP must protect merchandise from the moment it is delivered until it is purchased by the customer. This is forever LP’s challenge, but can be a particularly daunting task during the holidays when the volume of merchandise in and out of the store is much greater, promotions run non-stop throughout the season, and staff is stretched thin.

First, LP should ensure any losses in received goods are noted immediately upon delivery. Shrink in the supply chain is very common – some loss may be due to damage, theft of goods by individuals who touch it along the way, or the result of an unintentional miscount. LP should put processes and resources in place to systematically check in shipments to ensure proper items were received, in good condition, in the correct amounts. Any damaged or missing product should be noted on the invoice and signed off on by the driver. This is an early opportunity to stop shrink on holiday merchandise.

Once merchandise is received, it should go directly to the shelf. Because the nature of merchandise build-up is to have enough on hand for escalating demand, a large amount should be carefully marked and stored. Moving overstock from the storage area to the sales floor is critically important, especially if trailers or off-site storage units are necessary. As the season passes, merchandise will be marked down to sell. Merchandise should, whenever possible, be marked down on the floor as opposed to discounts being assigned at the point of sale. This process takes more time, but items properly bar-coded and price-marked on the floor are more likely to be handled correctly by cashiers. With excellent processes in place, LP can avoid much of the administrative shrink that can negatively impact profitability.

Trend: Safety is top-of-mind

Particularly in light of the legal battle that is unfolding between Walmart and OSHA (Occupational Safety and Health Administration), safety is top-of-mind this holiday season. With these two debating and setting precedent regarding who is responsible for safety oversight and how much effort is enough, retailers have a particularly heightened awareness of the risks associated with retail special events like Black Friday.

Response: Plan and protect

LP professionals should make it a point to get “in the loop” early regarding the number, type and timing of special holiday events being planned. With advance notice, LP can more effectively plan for these events, preparing strategy, communications, allocating resources, and even notifying local law enforcement to ensure a safe event. LP managers should look at elements such as crowd control, resource allocation, diffusing competitive situations, maintaining emergency plans, and building contingency plans. Good and frequent communication is the golden rule prior to and during every event.

Trend: Lots of available help

Unemployment in the U.S. is still high, meaning lots of people will be available for part-time and temporary retail positions. But seasonal hiring can be a tricky business: It’s easy to do, but difficult to do well. Retailers’ processes can make the situation worse by failing to screen candidates with the same rigor used to hire full-time, permanent employees. Without the proper training, guidance and oversight, these temporary employees can either knowingly or unintentionally cause losses throughout the holiday season.

Response: Hire the right way

LP managers can help reduce losses by ensuring that retailers stick to their complete employee verification processes including preemptive screening, background checks and reference checks. Once temporary employees have been hired, training is essential. Another best practice is to assign temporary help in areas where they have least access to systems and cash, such as greeters, or shelf stockers. More experienced employees who are familiar with the POS system and the store’s merchandise and policies are less likely to inadvertently cause shrink.

With some forethought and best practices in place, LP can help deliver a safe and profitable holiday season.

Eric White serves as director of retail strategy for Wren, providers of physical security solutions used by some of the world’s most innovative and respected retailers including Walmart, The Home Depot and Target.  White has 20 years of experience in loss prevention, asset protection and physical security.  White can be reached at eric.white@wrensolutions.com.  To learn more about Wren’s solutions, visit www.wrensolutions.com.  

By Steve Sell, Checkpoint Systems

We’re all familiar with the “beep” heard when someone walks through a retail store exit, which could indicate a theft attempt or cashier error. While the beep is an audible indication that a theft could be in progress, today’s integrated loss prevention systems can do much more than beep. So with rising theft rates of both small and large items, the expansion of organized retail crime gangs and mostly ineffective shoplifting laws, many retailers are now asking, “What lies beyond the beep?”

In reality, the challenge of guarding the front door and driving down shrink is about better visibility long before we ever hear a beep. In fact, if all you have is a beep, that sound is probably heard a little too late. Instead, retailers should consider that EAS beep a required cost of entry in a security system, a last line of defense. The new essential is the data. What happens before the beep, and after the beep, is what matters most. Even how the beep is triggered will make a big difference.

Before the Beep
Taking a range of actions before the beep will make it far more useful. For example, source tagging ensures that each item is properly protected before it reaches the store. Items can be covertly tagged inside packaging at the point of manufacture, in such a way that packaging/branding aren’t affected, and tags can’t be removed or damaged by shoppers or thieves. Source tagging is a prime example of a best-practice “before-the-beep” action.

Another important action is to link your EAS system to other in-house systems such as surveillance cameras, which enable you to conduct faster and more comprehensive investigations that can link the beep to video footage of a thief leaving the store with your goods. Using this combination, retailers have been able to more quickly identify and prosecute shoplifters and dishonest employees.

Still another strategy is to employ high-theft protection devices, such as Keepers and Spider Wraps, which provide a different audible beep to distinguish higher risk or higher value items. This enables staff to prioritize investigations once they hear a beep. Some of these specialized devices even provide three separate alarms: one if the items are tampered with, another if they exit the store without being properly deactivated and a third that blasts for up to 30 minutes after leaving the store.

After the Beep
If you only have a beep, then all you know is that an event has occurred. But by capturing data around events, EAS systems can help reduce future shrink. For example, integrating EAS systems with newer technologies can help track reasons for why an alarm occurred – be it actual theft, improper tag deactivation, or another reason. EAS systems can also help track the number of people coming into and out of a store, by day or even time of day. Compiling this data can help security directors determine staffing requirements for high-traffic periods, show conversion rates for marketing purposes and help merchandisers plan the most effective use of displays for high-traffic areas.

How the Beep Is Triggered
Today, RF-based tags are generally used to trigger alarms. In the not-so-distant future, RFID technology will offer additional benefits. For example, once adopted at the item level, RFID tags will not only beep, but will tell retailers exactly which product triggered the beep. This means retailers can approach departing customers knowing exactly which item is leaving the store. When integrated with video systems, a stock photo of the beeping item could automatically be sent to monitors or hand-held devices so a retail associate would know exactly what to look for when approaching a departing customer. Additionally, by gaining real-time visibility into stolen items - which aren’t accounted for at the POS counter - retailers will be able to order additional inventory so shelves remain properly stocked, thus avoiding additional damage from lost sales due to out-of-stock merchandise and customers going elsewhere to find the items they are seeking.

Beeps will always provide a basic level of security. But the key to garnering more value from EAS systems is integrating them with other technologies to provide better protection as well as new insight and visibility into what inventory is being lost. In this way, retailers can focus more on predictive loss prevention, thereby reducing shrink and enhancing their LP operations.

Steve Sell is vice president of marketing for Checkpoint Systems, a leader in shrink management, merchandise visibility and apparel labeling solutions.

By Eric White, Wren

As hurricane season approaches, it’s a great time for retailers to take stock of their emergency preparedness. This may seem like an overwhelming task, and certainly the more sophisticated the plans and training, the greater the effort required. However, the foundations of a strong emergency preparedness plan begin with a few, simple tenets, which are relatively easy for any retail organization to put in place, with the enormous payoff of being better prepared. This top-three list is a great place to start.

Communicate the priorities
The top priorities should be two to four simple statements, in order of priority, that reflect the directive of the company and can be a basis for sound decision-making from anyone from the CEO all the way down to the part-time cashier. These simple messages may seem obvious to some, but by ingraining them in every single employee, the retailer sets clear expectations and provides a basis for every associate to gut-check their decisions against the company’s message.

The top three list may look something like this:
1) The safety of people ALWAYS comes first
2) Return to operations as quickly as possible
3) Promote welfare of the community

There may be some variation to this list, depending on the corporate culture and priorities. However, safety of employees and customers should always come first. These primary messages will guide every decision made. For example, if a local store manager is questioning how he should respond to employees contacting him after the hurricane asking when they are expected to report to work, he will think back to the priority list and provide an answer based on: “the safety of people always comes first.” He will notify associates that they need only report to work if it is safe to do so. Or, judging the situation on-site to be too dangerous, he might make the call not to open the store at all. And he can feel confident in the decision, knowing that life safety is always the priority.

Plan in Advance
Loss prevention professionals are extremely good at planning. And nowhere is planning more critical than prior to an emergency. Contingency planning, specifically, is needed because by definition, an emergency will result in disruptions to all normal operations, processes and circumstances. However, the specific nature and extent of disruption is unknown until after the fact. Think about the situation following a hurricane – power lines, communications and other technologies are down, greatly hindering communications. With some advanced planning, the loss prevention team can help the retailer get on their feet as quickly as possible. Every aspect of the business will be impacted and should be involved in planning prior to the hurricane to secure the best possible outcome and speediest possible recovery. Procurement can predict the types of goods that will be most needed after a hurricane and order extra provisions to be stored in local area warehouses for quick and easy access following the emergency. Human resources can set up support networks and communication lines for employees in the impacted areas to report their condition and communicate needs for them and their families following the disaster. Loss prevention can contact local law enforcement and discuss collaboration after the disaster and how they can exchange information. Corporate can establish fund-raisers to support the devastated area. This planning can help the retailer return to operations as quickly as possible.

Empower people
Empowering people goes hand-in-hand with good communications and planning, but it also relies on good management, training and good corporate culture. Normal decision-making processes are turned on their head in an emergency. There is neither the time nor the means for those on the ground in a hurricane-hit area to communicate with corporate to make split decisions on how to get the store up and operating, how to respond to urgent local needs, or how to guide the efforts of local employees. Retailers that empower their people with confidence and training have the best results.

Following Katrina, Walmart employees demonstrated the impact of empowered employees. A Kenner, Louisiana employee used a forklift to knock open a warehouse door to get water for a local retirement home. In Marrero, Louisiana employees allowed local police officers to use the store as a headquarters and a sleeping place as many had lost their homes. These are just two examples of retailers’ associates responding effectively when directed and empowered to do so prior to the event.

By taking steps to put these three small efforts in place, retailers can ensure their organization is better prepared to deal with a hurricane or other disaster. With so many unexpected events marking our time, this effort should be a priority as opposed to an afterthought. It can happen to you.

Eric White serves as director of retail strategy for Wren, providers of physical security solutions used by some of the world’s most innovative and respected retailers including Walmart, The Home Depot and Target.  White has 20 years of experience in loss prevention, asset protection and physical security. 

By Eric White, Wren

Along with April showers and May flowers, spring ushers in a flood of seasonal merchandise as well as – unfortunately – potential losses. As the snow melts and the weather warms, retailers beckon customers to the store with feel-good, summery merchandise prominently displayed both outside and inside the building. From plants to pool accessories, lawn mowers to lounge chairs, seasonal merchandise brings revenues and profitability, but also challenges and great potential for loss.

In order to reap the maximum benefit and minimum downside when it comes to offering seasonal merchandise, loss prevention professionals should recognize the risks and build programs to manage error out of the process and reduce the risk of loss.

Operational challenges
Due to limited space inside stores and the large size of many seasonal items, often spring/summer merchandise is both received and displayed outdoors. These items may be delivered to and processed in areas other than the receiving dock. This anomaly in the receiving process may result in the inaccurate verification and processing of shipments. Employees trained in receiving merchandise may not be immediately available or even aware of the shipment’s arrival, leaving untrained employees in charge of this critical process. These employees’ lack of knowledge of correct procedures can result in loss-causing problems such as inaccurate number of products delivered, the delivery of damaged goods, or the receipt of incorrect items.

For retailers that carry plants, their perishability can present an entirely new and unfamiliar challenge. Losses can pile up from failure to properly care for plants. Employees may not be familiar with the merchandise because it is inventory that is carried for only a short time each year and can change dramatically with each new merchandising plan. Plants may look alike, but be priced differently and every incorrectly keyed or scanned SKU can cause loss. These operational challenges are a natural consequence when processes stray from the normal pattern and untrained employees are left to improvise.

Security challenges
Storing merchandise outside of the building always presents a security challenge. Perimeter security such as fences - if present at all – are often easy to breach, leaving merchandise out in the open air for the most part. Integrating alarms, security cables and other protection tools used on merchandise inside the store is often difficult with outdoor merchandise such as grills, mowers, and plants. Some retailers have deployed outdoor storage trailers, but these may require permits, must be properly secured, and generally bring with them a litany of problems and administrative work. Storage facilities create an additional operational challenge of requiring associates to move the items in and out of storage daily, which often results in errors, damage to merchandise, or simply failure to display merchandise, which makes purchase impossible.

Outdoor merchandise is also an easy target for shoplifting or employee theft. There is generally limited video coverage of outdoor areas, often the area is under-staffed or not staffed at all, and there is easy access to get-away transportation. These security challenges call for creative solutions and special work-arounds.

Safety challenges
Often, seasonal merchandise means cluttering otherwise clear walking areas with potential obstacles or tripping hazards. Plants stored outside may be regularly watered, creating slippery walkways. In addition, water runoff from enhanced soils, chemicals, and cleaning processes is regulated in several states. Runoff from plant watering or any cleaning processes must be carefully maintained and documented to meet compliance, where required. Other safety hazards could include potential risk to employees working outdoors who may be at greater-than-usual risk for robbery or assault by shoplifters.

When risk abounds, retailers must take deliberate steps to prepare for and successfully manage spring merchandise.

Train employees
The first step is acknowledging the problems. Each retailer is aware of the types of seasonal merchandise they do and don’t carry. With that in mind, they should identify likely problems based on experience from years past, and conduct a session to make all employees aware of those issues. For example, associates assigned to assist customers with seasonal merchandise may be cross-trained on receiving processes so that they can properly process receipts when they are delivered to the front of the store. They should also be trained to ensure that cleaning and watering be done at off-peak hours or at store closing to avoid creating safety hazards. Product training across the store may also be necessary to ensure that items are not confused and rung up incorrectly at the register, an enormous potential loss-causing problem. Cashiers play a particularly important role and familiarity with the merchandise and an understanding of the cash register operations - especially hand-keyed transactions and quantity key usage - is critical for them to understand.

Get creative
Other creative tricks can help employees handle seasonal merchandise with care. For example, consider color-code tagging seasonal merchandise; mark store-owned plants with a red dot and vendor-owned with a blue dot. If a plant dies, the employee knows to take all red dot plants and enter the markdown for proper recording in the books, and to set all blue-tagged plants aside to return to the vendor. This small step helps reduce shrink that occurs when losses are not properly recorded.

Consider also a loss prevention incentive program offering a small prize or bonus to employees who successfully minimize the causes of shrink during this particular season.

Audit often
Audit everything from returns, to receiving, to pricing, inventory and sales. By keeping an eye on the numbers, LP professionals can spot loss trends quickly and early, before losses mount. If merchandise is counted weekly and items are showing up unaccounted for, it’s a sign that processes need to change – and quickly! If items are being lost overnight, it may be necessary to identify a storage space indoors and put in place a policy to move merchandise in each night and out each morning. If markdowns are up on plants, investigate the reasons why. If they are dying too quickly, establish if they are being cared for or if their location is unsuitable and change it. If things are disappearing from storage, start building a trail. Add access control and video surveillance to monitor storage areas to determine if people are going in and out. Cameras tell the whole story and a small investment this year can pay off for several years to come.

Watch out for problems
Monitor the area and address problems early. If there is after-hours activity in the parking lot, then hire security guards or ask for police patrols to keep unwanted traffic out of the area. Protecting people requires particular focus at this time of year. Crimes against persons, such as assault and muggings along with property and violent crimes like vandalism and robberies all increase as the weather heats up. Think through work schedules and never leave an employee alone as an easy target and train people how to respond if they do become a victim. If items are being taken in broad daylight, assign more associates to occupy the area. If accidents occur due to trip and falls, consider relocating merchandise or post signage directing traffic. The important thing is to address issues quickly and effectively.

With these tips in mind, LP managers can sit back and enjoy the fruits of their labor.

Eric White serves as director of retail strategy for Wren, providers of physical security solutions used by some of the world’s most innovative and respected retailers including Walmart, The Home Depot and Target.  White has 20 years of experience in loss prevention, asset protection and physical security.  White can be reached at eric.white@wrensolutions.com.  To learn more about Wren’s solutions, visit www.wrensolutions.com.  

By Jim Caudill, SVP Marketing & Strategy, Xterprise

Recently reported sales at U.S. retail stores showed a significant improvement over the same month last year. These results are better than expected at many apparel chains and department stores and likely were aided by easy comparisons to sales of last January, when the recession really took hold in retail. Overall, leaner retail inventories meant retailers didn’t have to resort to steep markdowns to clear unsold merchandise as often as in years past. But simply slimming down inventories alone isn’t a sustainable solution - forward-looking apparel, specialty retailers, and department stores are leveraging RFID-based store inventory management applications to drive down costs, eliminate waste, and improve customer service and store security.

Why RFID?
In the 1980s the industry ushered in the age of standards and barcodes by adopting the UPC and the use of barcodes with store POS systems to increase efficiency and accuracy. In the 1990s the retail industry eagerly adopted sophisticated planning and optimization tools for forecasting, merchandising, warehousing and distribution, and pricing functions. The 2000s saw the advent of cross-channel integration, retail ERP platforms, online storefronts, more pricing/markdown optimization tools, and many specialized applications like retail PLM. Yet, for all the technology investments in these areas, in-store and distribution center-to-store inventory processes have remained largely unchanged over the past two decades. Recent advances in reliability and performance of a new generation of RFID tags and hardware, combined with a much lower price point, have given rise to a class of applications that applies lean principles, RFID technology, and item-level inventory management to address this gap and create value in the retail merchandise life cycle.

Item-level RFID effectively creates a high-definition view of inventory levels for the retailer, ROI of one year or less, and other significant benefits including:

• 90% or more efficient inventory counting processes
• 7–15% more accurate inventory as a result of effective measurement processes
• 10–25% improved service levels from the distribution center because of real-time replenishment and demand-driven ordering
• 15–50% reduced sales floor replenishment effort/stocking time
The business impacts include higher customer satisfaction, increased revenue, reduced labor, and reduced shrink.

RFID for Loss Prevention
A key benefit to keeping a closer eye on retail inventory as it moves from the supplier or factory, through the supply chain all the way to the ultimate consumer at the point of purchase, is a marked reduction in internal and supplier theft. Published case studies from leading retailers and academics point to 90-95% reductions in this area. This is a significant value point to a retailer as estimates suggest that close to half of all dollars lost to shrink are attributable to employees, the largest overall portion when compared to consumers, vendors, or errors.

Retailers have recognized an opportunity to take significant cost out of their store infrastructures with a standardized inventory and a simplified tagging process - leveraging the same RFID item-level store solution infrastructure for EAS item-level consumer l theft deterrence, detection and protection. Unlike traditional RF-based EAS solutions widely deployed today, RFID-based EAS gives apparel, specialty and other retailers visibility to theft incidents when they are occurring, but goes further by identifying exactly what was stolen and from where in the store. This invaluable information allows the retailer to quickly restock the otherwise unknown merchandise and avoid missed sales opportunities due to out-of-stocks. The fidelity of the data also gives the retailer insight into theft patterns and trends that might otherwise take weeks or months to see. Retailers also gain a tool that, when combined with CCTV, becomes evidence against shoplifters, even if they are not ultimately caught until a subsequent incident.

Standards to Increase Adoption
A recently published standard by GS1 EPCglobal represents just how far the promise of RFID-EAS and LP has come. This standard was developed and ratified by the members of this standards group, which includes RFID hardware and technology providers, retailers, application providers and traditional EAS market leaders Checkpoint and Tyco who now clearly accept RFID as the inevitable successor to their existing solutions and technologies. The next phase of the standards development will include updates to address tags that are embedded in products (sewn in for example), and the applications and product categories that will leverage these embedded tags that may require electronic deactivation or tag alteration.

Item-level RFID solutions provide many retailers the tools they need to maximize their lean operating advantage. From better inventory management and more efficient use of store employees’ time, to loss prevention improvements, item-level RFID solutions are making better execution a reality at the store level.