Logistics Loss Prevention: Securing Your Company from the Inside Out

Logistics Loss Prevention

Logistics loss prevention is essential to longterm success of any business. You lock down your office and maybe even your warehouse. But are you keeping an eye on inventory? Surprisingly, this is often overlooked by most companies — even big ones. Here’s what you need to know about protecting your company from the inside out.

Running an Inventory Audit

One of the easiest things you can do is run an inventory audit. Occasional inspections and audits of your inventory help prevent fraud and theft. Just like your accounting audits, you should make these inventory checks a complete surprise for both employees and vendors. You do not want to establish a set pattern or schedule.

Why?

Simple reason: because if you do, any dishonest employee or vendor will learn the pattern or schedule and then devise ways to get around the audit. By making it a surprise, you catch dishonest people off guard, which is what you want.

If you outsource to an ecommerce fulfillment provider, make sure they give you a transparent audit report, have internal security protocols, and that it’s something you can independently verify.

Create Inventory Control Policies

If you’re keeping things in-house, make sure you have inventory control policies in place. Different industries require different controls. Make sure your business institutes some basic steps, like:

Matching actual unit counts to shipping documents before releasing them to a shipper.

Never allowing merchandise to leave without an invoice or shipping documentation.

Putting expensive components or tools in a locked closet or cage, limiting access to the area.

Numbering all purchase orders and invoices, including shipping documents, reviewing them regularly for missing documents

Keep your purchase orders secured.

Have employees exit through a secure location at the end of their shift, supervised by you or a member of management.

Check the Trash

You’d be amazed what turns up in the garbage.

Employees who want to steal from you will come up with very creative ways to do so. Some of those ways involve throwing away merchandise or tools. Then, they’ll return when the office is closed and “take out the trash.” Conduct regular spot checks of your garbage after hours. You might find evidence of theft in the dumpster.

Have someone flatten all trash cartons so they can’t be used to steal inventory or merchandise.

Keep Close Eye On the Keys

Who has access to the building? Only specific employees with security clearance should have access to sensitive areas. Make your employees fill out a form when they receive keys to the office. Record the number of the key and any other important information. The original should be returned when the employee leaves your company.

If the keys are lost, change the locks immediately and have a locksmith mark every office key “Do Not Duplicate.”

Setting A Good Example

It’s difficult to make your employees behave if you do not. Be careful to create a positive corporate culture that discourages fraud. Employees look to their managers for direction. If they’re lax about security, or they joke about ripping the company off (or they openly defy orders from you or other management in front of employees), it creates a culture that says, “I don’t have to take management seriously.”

Employees will be emboldened. And, any dishonesty lurking in them will “suddenly” come out. Some people don’t even think of themselves as being dishonest when they steal. They may just be “opportunistic” and pragmatic about it all. If something seems sanctioned by management, then they think it’s OK.

Check References

You should always check references before hiring anyone. Take extra precautions with anyone you hire who will have financial responsibility or will manage your books. Have a private investigator check them out, but do not tell the employee you’re investigating them. Have them sign documentation saying you’ll be conducting a background check for employment purposes and that it may include extensive background information and criminal background checks at multiple levels.

Consider Bonding

A fidelity bond is a kind of insurance. It protects you in the event an employee steals from you. The bond may be used to reimburse you for a loss. Fidelity bonds are used to cover cash losses. They can also be used to cover merchandise.

As an added bonus, some bonds check an employee’s background before bonding, which can help you weed out potential problems before they are hired.

Conclusion

Background checks. Security. Employee and inventory tracking. Seems like a lot, doesn’t it? It’d be nice if you could trust everyone that walks through the door, but you can’t, and you can’t know beforehand who will be the one to rip you off. While you should always give employees the benefit of the doubt, you also have to implement standard security protocols to protect yourself.

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  1. Hi! Great article! I just wanted to let you know that the word “logistics” is spelled incorrectly in the title image. 🙂

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