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AAFES Loss Prevention–A Mission with a Challenge

We have the responsibility to be there for our troops—whenever and wherever they go—to ensure they are provided with the goods and services they need to sustain their morale and fighting spirit. To that end, the AAFES loss prevention division includes headquarters and field operational staff of about 800 LP professionals deployed throughout the United States, Europe, and the Pacific.

AAFES is the largest military retailer in the world and because it is a nonappropriated fund instrumentality of the United States government, it receives very little support in terms of appropriated funding or tax dollars. AAFES earnings through retail sales are used to operate the various functions of the organization, including payroll, systems, and the building of new facilities.

AAFES’ mission is to provide goods and services to U.S. service members and their families, and to generate earnings for the Army and the Air Force morale, welfare, and recreation (MWR) funds. These funds are used by the military to build the bowling alleys, gymnasiums, swimming pools, and other recreational facilities onmilitary installations that service members and their families enjoy.

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The loss prevention organization’s mission is to increase net earning byreducing losses. So, not only do LP  personnel protect AAFES assets, but they are protecting the future MWR investments of our service men and women as well.

As the name implies, AAFES is a component of the Department of Defense (DOD) and as such must support the military no matter where they are deployed. AAFES is currently supporting the Operation Enduring Freedom and Operation Iraqi Freedom efforts in southwest Asia. Many times the mission calls for operating nonprofit or loss facilities. As such, the need for controlling and protecting assets and merchandise is even more imperative in the overall scheme of operating profits for the organization.

Reorganizing for Better Control

As head of the loss prevention division, I report directly to Brigadier General Toreaser Steele, vice commander of AAFES. In turn, General Steele reports to Major General Kathryn Frost, who reports to the AAFES board of directors.

The loss prevention division consists of three branches: policy and procedure, operations, and health and safety. Previously, the division consisted of thirty-nine LP professionals directly reporting to me, with 771 LP professionals supported by the division’s three branches. These latter personnel were assigned to the regional, area, and local exchange staffs, as well as AAFES’ distribution centers. Recent changes at AAFES to adopt retail best practices haveplaced all LP resources reporting directly to the loss prevention division.

AAFES Loss Prevention–A Mission with a Challenge

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Realigning all LP personnel under his division was a decision made by Major General Frost and Chief Operating Officer Marilyn Iverson. The move followed other top Fortune 500 companies in terms of how their LP resources were structured. Restructuring LP personnel from the retail facilities and distribution centers, along with the headquarters staff, will provide a means of ensuring an independent reporting and investigating system to the commander, as well as standardized guidance, training, and application of existing AAFES policies. By operating under the same supervisory structure,  e will also create a new cohesive lossprevention team, which can only enhance the overall efforts to prevent losses related to theft, safety and health, and environmental issues.

AAFES LP professionals are faced with a myriad of functions and roles.

  • As a government component, we investigate fraud, waste, and abuse (FWA). In fact, two LP associates are assigned to the AAFES Inspector General’s (IG) office for the specific purpose of investigating IG complaints and coordinating FWA complaints with the LP division.
  • LP policy and procedures are developed and coordinated with other AAFES elements.
  • Our staff provides guidance and training on the elements of our health and safety program as well as the other LP policies and procedures.
  • In addition to managing an LP database, the division also manages a mobile video surveillance program consisting of mobile video surveillance and workers’ compensation teams.
  • Because of AAFES’ status as a government entity, many of the positions in this 52,000 person organization require background investigations for positions of trust(POT), security clearances, or both. While I act as the senior clearance official, we have the assistance of a senior air force security forces noncommissionedofficer whose job it is to process and review all POT and clearance documents, as well as fingerprint headquarters applicants.

A Criminal Assault Squadron

One might say that AAFES has a criminal assault squadron in the form of our mobile video surveillance (MVS) teams and our workers’ compensation (WC) teams. The MVS teams operate with a fleet of covert vehicles as well as covert video equipment. Our covert operations are used to detect theft and identify and prosecute violators. The WC teams likewise operate covertly, but instead of installing equipment in AAFES facilities, they are on the road to conduct surveillance of claimants who say theyare partially or totally disabled and unable to work.

In one situation, the WC team utilized the shell of an electrical transformer to house a covert camera that was remotely controlled from a mile away. Workingwith the local power company, the transformer was put in place on a pole and provided electrical power. The pole just happened to be located across theroad from the claimant’s house. Even though the claimant complained of total disability, the camera revealed an individual who just couldn’tresist the temptation to play football in his yard. The claim was settled and a lifetime of disability payments—representing a loss to AAFES—came to a stop.

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Safety and Health

Where accidents and injuries occur, safety and health is always a problem for any company, and AAFES is no different. With roughly 3,400 facilities requiringannual occupational health and safety surveys, not to mention environmental assessments, our safety and health branch stays busy trying to ensure that guidance provided to the supporting LP personnel in the field is the most current.

To assist field personnel, a safety and health web site was established with data and information that not only includes statistical information, but provides“what’s new” information, on-line tutorials, safety checklists, posters, links to safety equipment, and safety articles that will enhance the awareness of the reader.

Just maintaining the current AAFES guidance on occupational safety and health can be a never-ending task with the federal standards that are revised or created on a frequent basis. AAFES isalso a member of the DOD Safety and Health Forum, DOD Ergonomic Working Group, and in the Dallas-area Federal Safety and Health Council.

We are currently testing a behaviorbased safety program at our Waco, Texas, distribution center with a goal of reducing accidents at that location and the possible application of a similar program at our other DCs.

Wearing Multiple Hats

The LP professionals at the region, area, and local exchange level are the women and men who face the daily challenges of protecting AAFES assets on three fronts. The LP associate may be working a shoplifting or internal theft case one day, conducting a security compliance inspection the next, and at the same time completing anoccupational safety and health inspection to comply with federal law. Speaking of federal law, on the third day the associate might very well be conducting an environmental assessment of a local garden shop or car care center to ensure that laws under the purview of the Environmental Protection Agency are being compliedwith. Diversity and flexibility are the name of the game in AAFES loss prevention.

The responsibility for maintaining statistics and information for this $7.3 billion in sales per annum company is spread throughout several different directorates, as well as the LP division. Although AAFES has its own internal systems division, which is married to many of the company’s operations, LP does have several tracking and recording programs pertinent to specific LP functions.

Incident Reporting.

Our incident report system (IRS) allows LP personnel worldwide to enter any information into the system related to employee theft, shoplifting, or any other form of criminal misconduct or fraud. The system captures information on the perpetrator, accomplices, type of incident, amount involved, date, location, and other pertinent data needed to track violators, loss trends, and top refund violators. Currently, the IRS houses over a decade of information that is available on a realtime basis.

Exception Reporting.

AAFES recently implemented FraudWatch, a cash register exception reporting system from Triversity. The web-based software package allows LP to analyze cash register transactions to detect theft and fraud. It also assists with training and policy compliance. The system monitors cashier’s trends at retail registers and automatically sends reports to LP personnel and general managers to alert them of cashiers showing trends and traits that could indicate theft, lack of training, or failure to follow established policy and procedures. The system is actively used by not only loss prevention personnel, but accounting, audit, and cyber personnel for research and investigation. It was implemented in retail stores in October 2002 with future plans to expand the application to cash registers at food facilities in mid- to late- 2003.

LP Audits.

Our loss prevention survey checklist program was designed and implemented as a web-based system to provide loss prevention personnel in the field a way to enter LP security, safety and environmental surveys into the AAFES system via the web. The completed surveys are then distributed to the facility managers and general managers via Outlook email. The system allows users to track the status of corrections to findings and analyze trends at any level within AAFES from an individual facility to worldwide. The system speeds up the entire LP process by doing away with the old paper-trail method.

Civil Recovery.

To assist with the AAFES civil recovery program, our webbased recovery tracking system provides LP and exchange administrative personnel a means to track amountsowed from civil recovery and promissory notes. When a payment is made at any retail point-of-sale register, it is automatically credited to the correct account. The system also allows users to format and print civil demand letters automatically and has the ability to run detailed statistics at any organizational level.

Accident Tracking.

The accident reporting and risk management system (ARRMS) allows for immediate accident reporting from anywhere within AAFES. It also provides real-time statisticalreporting for AAFES management at all levels of the organization and currently allows access to forty individual statistical reports. In addition to creating required Department of Labor forms for workers’ compensation, ARRMS now provides for automatic preparation of the OSHA 300 annual report as required by the Occupational Safety and Health Act. Annual statistics that took upwards of two months to manually process in the past can now be processed in minutes.


To augment the existing electronic video surveillance systems (EVSS) in our stores, we are currently testing an acousto-magnetic article surveillance system in several locations in hopes of integrating video and electronic article surveillance (EAS) to reduce shrinkage on high theft items.

The Challenge of Training

When one considers the large area of mission coverage, the diversity in mission requirements, and the large number of LP professionals, the question that comes to mind is, “How do you train all these personnel for the job?”

All employees entering AAFES service go through a three-phase, new-hire orientation that lasts up to ninety days. After that, they begin to specialize in their career area training. For those in the LP career field, as they complete their various new-hire phases, they are also enrolled in a 180-day uniform training plan. This plan covers those areas they’ll be dealing with during their normal work day. Most of the training in this initial 180 days is directed at familiarization with AAFES operating manuals, systems, and email;  understanding military and federal regulations; visiting facilities; meeting local law enforcement and safety officials; and getting a feel for the job.

Also during this initial training period, LP personnel are taught how to detain shoplifters, prepare statements, and coordinate such detentions with the local military law enforcement officials. Training includes learning to conduct internal security surveys, safety, and environmental inspections. As part of a partnering program with the local military installation, they may attend training on fire prevention, hazardous materials, emergency preparedness, and other courses that allow AAFES and thehost installation to work hand in hand during a crisis situation.

AAFES Loss Prevention–A Mission with a Challenge

Training does not stop once the LP professional completes their uniform training plan. Completion merely moves them into the professional-level training portion of their career. An LP associate’s training will include interviewing and interrogation techniques, workers’ compensation, surveillance, accident investigation, and numerous safety and health courses.

The LP associate will work towards certification as a fraud investigator or one of the many certification levels within the safety and health field. Past and present training programs include the following:

  • Reid Interviewing and Interrogation Course
  • Laboratory for Scientific Interrogation
  • Wicklander-Zulawski Interview and Interrogation Course
  • National Intelligence Academy for Video Surveillance
  • Longshore Institute for Workers’ Compensation
  • Federal White Collar Crime School
  • Plus, a wide array of Federal Occupational Safety and Health courses.

LP professionals also attend the annual International Mass Retailer Association (IMRA) and National Retail Federation (NRF) loss prevention and audit conferences, which provide great training seminars and presentations while allowing networking with other LP professionals and viewing exhibits of the latest in loss prevention equipment and services.

The payoff for all this training and education comes in the form of a reduced shrink average of 0.8 percent. Dividends are also realized in the reduction of accidents and injuries and decreased losses in employee theft and shoplifting. AAFES currently enjoys an 82-percent recovery rate for shoplifting incidents and the civil recovery rate continues to prosper.

I am extremely proud of our dedicated LP professionals who work hand-in-hand with AAFES management and military law enforcement and safety personnel to protect AAFES associates and the interests of the service member. Preventing losses means that merchandise will be available for our military customers when they want it. Aswe say in our organization, providing that service and ensuring that level of loss prevention throughout thirty countries and fifty states “is not just a job, it’s a mission.”


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