Here’s How Inventory Management Can Prevent Theft
Anyone who works anywhere in a supply chain knows how essential inventory management is — it protects your product, ensures everything is where it’s supposed to be when it’s supposed to be there, and allows you to accurately order new and replacement items when they are needed. When properly applied, inventory management can also be a tool to eliminate internal theft in warehouses and distribution centers. What can inventory management do to help you stop theft-related losses?
Password Protect Inventory Data
Digitized inventory data has its problems — it’s impossible to access if the power goes out, and a networked system is always at risk for a hack, just to name a few — but it is arguably the most secure way to store and manage your inventory data.
An additional layer of security — password protection — can both help to protect your information and provide you with a tool to prevent internal theft. First, assign each individual who gets into the information their own unique username and password. Next, ensure employees aren’t sharing their log-ins. This allows you to see who is looking at the information at any given time and who makes changes to the data. This can be useful if an audit is required to determine if inventory has gone missing.
Invest in Additional Supervision
Perhaps unsurprisingly, studies have shown employee theft goes up when supervision is lacking. You don’t need to micromanage your employees every second of every day, but if you are concerned theft is occurring, it might be important to invest in additional supervision, in the form of security, cameras or more staff.
Perform Comprehensive Background Checks
Background checks can be pricey, but if you’re working with large amounts of money or expensive inventory, they are an essential part of discouraging theft. Calling references is also a useful tool, but it doesn’t cover all the bases, so to speak — your hire’s former employers may rave about their work ethic or their skills but may completely neglect to mention the fact that money or inventory went missing during their tenure.
Utilize Proper Equipment
Does part of your shipping process include moving your product from one pallet to another? Many warehouses do this — moving items from a plastic pallet you use in your warehouse to a cheaper or lighter-weight wooden one for shipping. In many cases, this involves:
- Unwrapping the product
- Moving it by hand to a new pallet
- Rewrapping it
Not only does this take an increased amount of time, but it also provides an opportunity for theft.
Stretch wrappers are one tool that allows you secure your product. Machines wrap pallets consistently every time in a way that’s impossible to replicate by hand, which makes it harder to steal products since signs of tampering are easily recognized. Therefore, thieves will be deterred because there is a higher chance of getting caught.
Do Not Announce Your Audits
Scheduled audits can make it easier to keep track of when you need to start counting, but informal or unannounced audits are a useful tool to determine if there is theft occurring. By performing a random audit, you won’t give any potential thieves the time to cover their tracks or hide evidence of their wrongdoing.
Rely on Numbered Checks and Purchase Orders
One of the biggest sources of internal theft is through purchase orders and checks. If these items are not numbered and highly controlled, it is possible for one to slip through the cracks — depending on how bold your thief is, that could potentially cost you hundreds or thousands of dollars.
Keep careful track of all checks and purchase orders by using pre-numbered items, and ensure only your most trusted employees are allowed access to them.
Open Your Doors to Employees’ Concerns
Your employees may be in position to see things you can’t, simply because they are on the production floor where all the action is. Institute an open door policy where employees can come to you to report suspected theft.
Be very careful with this information, though — you don’t want to risk a lawsuit against you for a false accusation. Take steps to ensure, as best as you can, that theft accusations aren’t made for superfluous reasons such as vengeance, perhaps by instituting a punishment for completely unfounded accusations.
Finally, make sure you protect yourself — consult legal counsel to determine the extent of your rights when it comes to terminating employment or possibly prosecuting someone who has been discovered to be illegally removing company money or property.
Employee theft may not be entirely preventable, but there are inventory management-based steps you can take to lower the chance of them happening. Even something as simple as password protecting your inventory data can help to deter thefts from occurring and make it easier to discover who is stealing when it does happen.