When it comes to inventory shrinkage, the victims tend to have something in common: They've usually committed one or more of what I refer to as The Seven Deadly Sins of Distribution Center Security.
Barry Brandman is president of Danbee Investigations, a Midland Park, N.J., company that provides investigative, loss prevention and security consulting services to many of the top names in the logistics industry. He has been a guest speaker for the Department of Homeland Security, CSCMP, and WERC, and is the author of Security Best Practices: Protecting Your Distribution Center From Inventory Theft, Fraud, Substance Abuse, Cybercrime and Terrorism. You can reach him via e-mail at
or (201) 652-5500.
Hackers get headlines. So do terrorists and people caught engaging in questionabl e accounting practices. But in many ways, internal theft committed quietly behind the scenes poses just as real a threat to corporate profitability. In fact, nearly 25 percent of the respondents to a survey taken by a national accounting firm reported that employee theft had cost their companies more than $1 million.
When it comes to inventory shrinkage, the victims tend to have something in common: They've usually committed one or more of what I refer to as The Seven Deadly Sins of Distribution Center Security. What follows is a look at these costly mistakes:
1. Relying on alarms, guards and cameras. Ask most executives how they protect their inventory and they'll assure you they've installed alarms, employed guards and set up closed-circuit television systems. But if these controls work, why do so many companies that have them in place report losses?
Alarms are designed to p rotect against break-ins, not theft committed by insiders—which is how inven tory loss usually occurs. Most uniformed guards aren't adequately trained to recognize or respond to theft and collusion. Closed-circuit television is only effective if i t's been strategically designed and consistently monitored … and that's rarely the case.
2.Getting lax about dock supervision. Because they don't know how to prevent internal theft,many distribution managers inadvertently make it too easy for drivers to make shady deals with people who routinely work on the dock—shippers, receivers, checkers and loaders. These theft schemes are silent—no alarms will go off—but they can cost a small fortune.
3. Reacting to problems (rather than preventing them). A large percentage of companies that report shrinkage have done little to prevent theft in the first place. By the time they wise up and decide to act, they've already suffered a substantial loss.
It's been repeatedly proven that preventing loss is far less expensive than reacting to it.
4. Soliciting tips in-house. A confidential hotline can be an invaluable tool for gathering tips on individual theft, collusion, fraud, workplace substance abuse, arson, product tampering, harassment or discrimination. But it has to be truly confidential. Too many companies continue to rely on open—door policies or inhouse tip lines and then wonder why employees who become aware of unethical or illegal activity remain silent.
In our experience, outsourced tip-line programs are far more successful because they allow workers to speak to people who won't recognize their voices. Employees are more likely to confide in someone outside their company, rather than using an inhouse system.
Equally important, callers should never have to provide their names.The best response comes when you offer complete anonymity. For example, our Danbee Hotline, which has collected information that's exposed millions of dollars of losses for our clients over the last several years, provides every caller with a code number.
5 . Failing to check your checkers. Too many companies have made the mistake of not keeping their checkers accountable. Unfortunately, without rigorous oversight, a percentage of checkers drift into negligence or dishonest behavior overtime, and that's when companies can rack up substantial losses. One effective way to monitor the accuracy and integrity of your checkers is by performing regular loss prevention audits. There are a number of ways to do this: One might be to arrange for a security representative to arrive (wi thout advance warning) during the time your trucks are being loaded, select one (or several) and audit the product found on the vehicles vs. the shipping manifest(s).
Another technique would be to arrange for surprise audits to be performed on your trucks as drivers begin their route deliveries. We refer to these as non-covert surveillances. By having an investigator meet a driver at his or her first stop and list each piece delivered throughout the course of the day, you will uncover product that's been over-loaded.
Both of these security techniques are excellent ways to not only detect collusion or negligence, but also to prevent it from taking place.When workers know there is a high risk of being exposed,they'll be far less likely to steal.
6. Allowing substance abusers to remain on the payroll. Nearly 90 percent of all employee drug users either deal or steal to support their addiction. As many distribution executives have learned,if you have a drug problem inside your company, you can expect to have a theft problem as well.
Two of the best ways to identify drug users and distributors on your payroll is through the use of a tip-line program or by inserting an undercover investigator into your operation.
7. Failure to provide the right training. All too often, losses occur because managers and supervisors are not educated on how to recognize the subtle, ingenious ways that theft takes place in a distribution center. Simply put, if your key people don't know what they're looking for, they probably won't see it.
If you're not sending your managers and supervisors to conferences or arranging to hold in-house security seminars that teach techniques for detecting and preventing various types of theft, you're not giving them the tools they need to protect your assets.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.