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Critical Components to a Supply Chain Security Program

In my former position as a loss prevention executive for a major retailer, an important responsibility was designing security systems for store locations. My focus was always on the front of the store. I had a camera on each register, a camera on the entrance, several on the exit, and one on the head cashier’s station. I installed EAS systems and POS exception reporting equipment. Tens of thousands of dollars would be spent protecting my front end from thieves looking for any opportunity to pilfer the store.

Looking back, I believe I spent too much money and time in my attempt to thwart thieves that enter stores as legitimate shoppers—and not enough effort on our supply chain security program. An attentive, well-staffed storefront can provide nearly all of the layers of protection needed. In contrast, my receiving area in those days had one camera on the door. That’s it. I now know that was a mistake. .

The Scope of the Problem

As of 2008, industry estimates put the total loss from cargo theft at over $30 billion annually—that’s billion with a “b.” The truth is, a lot of cargo theft is taking place in the rear of your stores. The thieves know the driver must get out of the tractor and knock on a receiving door. They force the driver to give up the load. Nine times out of 10, rear receiving areas are poorly lit and have little camera coverage, making them ideal locations for hijackings.

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Stockrooms are typically understaffed and poorly supervised. I remember my days as a door guard in my first job in the industry. When the delivery truck came, I was to stand at the back door and make sure nothing was taken. I quickly found out there were several problems with this assignment. I got there after the seal was opened. The driver broke the seal, not management, thus eliminating our chance to make sure the load was intact upon delivery. I was not instructed to perform piece counts as the merchandise entered the building. If my LP boss was not there, I was under operations’ direct supervision. If they told me to go to the front end, that’s where I went–but every item you fear disappearing from your storefront is brought in through the back.

Quick Fixes

In most large-value thefts occurring at stores, there are two key components: a store employee and a driver. The employee allows access to the goods, while the driver has the means to transport the stolen freight unnoticed. One key tool in combating this problem is the strict rotation of drivers through various delivery routes. This will ensure that the driver and store employee never have time in advance to set up a potential heist or the time to develop any type of personal relationship between one another.

When possible, try to implement a procedure where the driver calls into his dispatcher and then his dispatcher contacts the store to notify them of his or her arrival. This will allow for an extra set of eyes while the driver makes his way in with the paperwork.

Do not allow drivers to break seals no matter what the weather or circumstance, or to remain unattended in the receiving area. An unattended driver can steal thousands of dollars in merchandise in less than 60 seconds. We routinely see managers checking off a manifest sheet while the driver yells off carton counts. Do you expect the driver to tell you about the two cartons of iPhones he just stole?

Implementing these simple changes in your receiving area does not require huge resources. It’s low-hanging fruit that can make a big difference. Beyond the receiving area, security gets more complicated. Luckily, we have tools that can help us.

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Theft Prevention Tactics

Background Checks. By now, everyone must have an understanding on how necessary background checks are to a supply chain security program. The strict scrutiny of potential employees is critical to eliminating losses. The most important thing I have found is the necessity to run a criminal check in every county that a potential applicant has lived. Many times, you will see carriers conduct a criminal check only in the county of current residence. This is done primarily to save money.

Instead, we run a report showing every known address where a person has lived, and then we run a criminal check in each of those counties. Since beginning this program, the number of “hits” has nearly tripled. This it is not wasted money, but money well spent in protecting ours and our customers’ assets.

Locks. Do not underestimate the value of a good lock on the back of a loaded trailer. I do an informal survey as I drive into work on the New Jersey Turnpike each morning. I find that almost 70 percent of loaded trailers have a seal, but no lock on their load. Imagine closing up one of your stores at night and not locking the door. I know you can’t imagine that. Why then would you allow someone carrying your stores merchandise to its final destination to do that exact thing? By strictly enforcing our lock policy, we have almost completely eliminated thefts in transit.

GPS Tracking. For years, trucking companies have been able to tell you where the tractor that is pulling your merchandise is at any given time. That information proved useful in making sure that just-in-time shipments were, in fact, just in time. However, for many reasons, this technology often proved useless in the event of an in-transit theft or hijacking. The first thing a thief will do is to disable the GPS unit in a matter of seconds, which he has previously already learned how to do. Furthermore, many thefts occur after the tractor is disconnected from the trailer and another power unit is attached to make sure that no other tracking devices can possibly be used.

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In the past when this happened, freight was lost—until we got tracking for our trailers. These systems, made by GE, Qualcomm, and other manufacturers, give us the ability to track a trailer’s location without being attached to a tractor. Although far from commonplace in the industry as a whole, many carriers are outfitting their entire fleets with this technology. Ask your service provider about it.

In the past two years, we have started to spend a great deal of time testing the use of portable assisted-GPS devices. These devices, that many times are smaller than a pack of cigarettes, now open up a whole new layer of security that was never available before. The units can be purchased and reused on any number of different vehicles or can even be rented for a one-time use situation. These devices can be hidden inside the load within a trailer so they sit undetected from would be thieves. Now even if a cargo theft ring successfully disables every other method of tracking, you will still know the location of your merchandise.

These devices are used in several ways: to keep track of driver productivity, in high-value loads in lieu of expensive escorts, for internal investigations on company vehicles, and more. Now even the smallest trucking companies have no excuse for not using GPS technology.

Partnering with Law Enforcement

Even when you have everything in place, you will still encounter problems. There will always be thieves. Thieves will always come up with new ways to thwart technology, and technology always has some percentage of failure. When this occurs, your relationships with law enforcement around the country will be your last chance for a successful recovery.

The following are two narratives of cases that were forwarded to me by Lieutenant John Antillion of the California Highway Patrol. For several years, Antillion served as the sergeant of the California Theft Interdiction Program (CTIP). This group is compiled of officers from several agencies whose only task is investigating cargo crimes.


1. Investigators located a stolen tractor and loaded trailer (designer clothing) in the city of Los Angeles. Investigators determined it was equipped with GPS technology. The system afforded investigators the ability to track the vehicles via the Internet. The system’s mapping software used satellite photos and traditional street maps. After watching the stolen vehicles for several hours, the suspects returned and drove them from the area. The suspect in the truck was assisted by additional suspects in a chase vehicle. The sole purpose of the chase vehicle was to detect the presence of law enforcement. Investigators, not wanting to be detected, trailed the stolen vehicles for several blocks. They eventually lost sight of the vehicles. The GPS led investigators to a commercial complex in the East Los Angeles area. Unsure where the suspects were in the complex, the satellite photo feature of the system was used. The satellite photo helped investigators determine where the vehicles were parked. This afforded investigators the opportunity to formulate a plan to take the suspects into custody. Investigators executed the plan and it worked flawlessly. Again, several suspects were arrested and the stolen vehicles were recovered. The stolen cargo was also recovered.

2. Subsequent to the theft of a tractor and loaded trailer (electronics) in the San Francisco Bay area, it was determined the company had equipped their trailer with a high-quality GPS. Investigators were able to locate the vehicles after they parked in a city several miles from the location of the theft. Investigators determined the trailer was still loaded. A long-term surveillance of the stolen vehicles was established due to the timing of the theft and the number of stolen commercial vehicles recovered in the same general area. Experience indicated there was a high probability the suspects would return for the vehicles and high-value cargo. Eight days after the theft, the suspects returned to the vehicles and moved them to a nearby warehouse. Investigators ultimately arrested several suspects and recovered the stolen vehicles, the electronics and six additional stolen cargoes.

Organized Criminal Rings

We can’t keep every shipment safe from theft. Cargo theft is a nationwide issue with a significant impact on the U.S. economy. This is not a crime perpetrated by random street thugs and inexperienced thieves. Instead, organized cargo theft rings exist everywhere across the country and especially around the major port cities. Serious criminal gangs haunt South Florida, the New York metropolitan area, and Southern California. In recent years, regional crime rings have sprung up in Dallas, Houston, Chicago, Atlanta, and Oakland.

Cargo theft task forces are appearing all over the country. It is critical to get to know these officers on a personal level so they have a more vested interest in getting your merchandise back.

There are several other ways loss prevention departments can help their law enforcement partners. These task forces need bait merchandise, commonly known as “bait freight,” for sting operations. Return goods that are going to be destroyed would be perfect for these types of operations.

Law enforcement officers also need money to pay informants. This is one of the quieter, but critical components of task force success. Third-party logistics provider National Retail Systems often pays for travel expenses for officers to attend industry-related events, for example.

“The loss prevention team at NRS is truly an extension of our task force,” explained Detective Phil Navarro of California’s CTIP task force. “They afford us the ability to get around the country to network with other detectives that our municipal budgets simply could not afford. The intelligence shared at these meeting goes a long way to bringing down the top cargo-theft rings in the country.

“NRS also serves as an extension of our fleet vehicles. It simply does not make fiscal sense for us to buy a tractor and trailer to use for sting operations that may only be used once a month.’’

In addition to money for informants, reward money is just as critical in the successful recovery of a load. Every day I see insurance companies offering $500 for information leading to the recovery of a trailer. I have to ask: “Who is going to risk their life by ratting out a fellow gang member for $500?” The answer, of course, is no one. Unless retailers ante up money in the $3,000-5,000 range, my suggestion would be don’t bother at all.

Critical Strategy Components

Based on our experience, following are some key items to consider when developing a supply chain security program for your company.

Comm3_copy_copy_copyunication Is Critical. Effective intelligence gathering and information sharing is a critical part of any supply chain security program. In many cases, law enforcement will recover a vehicle with all of the contents stolen long before the theft is reported to local agencies. While there is a definite need for timely cargo theft information sharing between law enforcement agencies, you can help the process by promptly reporting thefts to enforcement officials.

Develop relationships with law enforcement in the areas where you operate. Several multi-jurisdictional cargo-theft task forces around the country do nothing but investigate trailer-load thefts. They know who the thieves are and where they like to take their stolen bounty. Make it a point to know every one of these groups. Quick action and communication are the keys to successful recovery and preventing future crimes.

Don’t React Passively to Loss. After a theft has been committed, have it thoroughly investigated rather than simply filing a police report or insurance claim. Because many companies do not aggressively investigate, cargo thieves strike with little or no concern for being caught. In fact, crime rings often focus on the same companies, hitting them continuously until they are no longer easy targets.

Establish Security Compliance Standards. Clarify your expectations. You want to be sure that your carriers are doing enough proactively and, equally important, will do the right thing if a theft occurs.

• Do they have the latest GPS technology and IT systems for tracking shipments?
• Are their facilities safe? How safe?
• Do they have the right personnel and processes in place to address their supply chain security program?

Do not assume your shipments are safe in the hands of a third party. Make it your responsibility to ensure they are protecting your cargo the way you want it done.

Commitment to Cargo Theft

I’m often asked by retailers, “Why should I care so much about preventing thefts when I don’t own the merchandise until you deliver it?” The answer is because you, the retailer, stand to lose the most. You lose potential sales when the merchandise is sold on the black market in your neighborhoods. If the load happens to be “hot” ad freight, you lose customer loyalty when the items are not in stock. You lose when the stolen merchandise is used for fraudulent refunds in your store.

There are countless ways that retailers stand to lose from an unsecured supply chain. It behooves retail loss prevention departments to partner with their internal transportation departments, outside logistics contractors, and law enforcement to develop a supply chain security program and work to stop cargo thefts.

This article was originally published in 2008 and was updated January 20, 2016.

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