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How Supply Chain Loss Prevention Is Responding to Changing Needs

The need to adapt and change is critical in every area of retail, but in today’s evolving times, perhaps this is most important for the retail supply chain. In an environment where automation and technology have become such a vital part of day-to-day operations, finding the most effective and efficient ways to move retail merchandise from the point of manufacture to the point of delivery to the customer requires strong management, creative processes, and capable leaders. Speed and accuracy are necessary to survive in the realm of the supply chain, requiring a higher level of flexibility and innovation than most realize. With the competitive nature of the business and the mounting demands of the retail customer, the development and implementation of successful supply chain programs has become a mission imperative across the industry.

To learn more about how innovation and technology are influencing the retail supply chain today, we held a roundtable discussion with several board members from the International Supply Chain Protection Organization (ISCPO) to gain their insights and perspectives on how the latest innovations are impacting supply chain loss prevention.

Glenn Master is the co-founder of the ISCPO and currently serves as president and chairman. He is the director of asset protection and security at McLane.
Paul Ganz currently serves as a member-at-large with ISCPO. He is the senior director of supply chain asset protection for The Home Depot.
Tom Meehan, CFI, currently serves as a member-at-large with ISCPO. He is also the president of CONTROLTEK.
Marco Alongi currently serves as a member-at-large, Europe with ISCPO. He is the global head of profit protection at Dyson.

 

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LPM: What do you consider to be some of the most significant innovations to impact supply chain operations over the past several years?

Glenn Master: First and foremost, physical security innovations have evolved significantly. Distribution center security uses a layered approach. You look at your specific risks in a particular center and modify your program based on those needs. For example, a distribution center in a rural area is going to have different needs and risks than one in a concentrated urban area. The way you design physical security in a million-square-foot facility and a 10,000-square-foot facility may be basically the same, but it’s how much you’re going to dial it back or increase the number of layers necessary to protect the people, your product, the transportation piece, and the facility based on the types of issues and the types of crime that are key.

Today, the IT team has a tremendous stake in managing security vendors. There’s really been a huge shift over the past several years. For example, as we keep making technological advances in information security, steps have to be taken with the vendors to protect the network. You have to follow the same guidelines with your physical security tools as you do with your information security systems because it’s so intertwined. We manage the program design, but when it comes to the relationship with the vendors, IT owns and manages that relationship and then brings loss prevention in as the industry expert. It’s a huge paradigm shift that really makes sense. It’s a good marriage between IT and loss prevention, making it more efficient and managing costs.

But it’s not just the technical innovation that’s changing—it’s the intellectual innovation and the managerial innovation that’s leading the way. By looking at things more holistically, we are now using the systems to support multiple functions. By working together and thinking outside the box, we have the ability to tie these same systems with HR-related projects, operations, transportation, safety, security, access control, and so forth in ways to create a full-service enterprise. When integrated, there’s a much greater return on our investment, improving efficiency, productivity, and safety within our facilities.

Paul Ganz: We’ve also made great strides with automation. If you think about all the ways that supply chains are looking to bring in robotics and other technology to simplify tasks, reduce the amount of risk associated with product issues, and, most importantly, protect our employees—we’ve made some extremely important improvements. When you put people in a process-intensive environment, safety must be paramount. While improving efficiency is certainly an important aspect of this, the improved safety aspects lead the way.

Considering the repetitive motions we ask associates to carry out as part of the supply chain function, it requires a significant amount of people power, which can lead to risk. Historically, we are always looking for ways to minimize the risk for our associates and improve productivity, and this is a giant step forward. This same automation also improves the accuracy and productivity of our systems and processes.

Today, what was once seen as lightyears away is now commonplace. For example, many picking processes are now handled in part by robotics. This labor-intensive process has been in many ways simplified and expedited to make everything more efficient, with incredible results. There’s so much more out there, and so much more coming every day.

Marco Alongi: Having greater visibility from the point of manufacture and all the way through the supply chain is another critical innovation. GPS has been around for many years, but it’s useless unless you have a system that allows you to pull that information together in a centralized view effectively. This allows us to manage the information and react appropriately based on the data gathered.

There’s now software that provides granular visibility to identify where a load is along the supply chain. This gives us greater ability to react quickly if something goes wrong. We have had the technology and used it in productive ways, but the only way to remain successful is to continue to build on that technology and the different things it can do to continue to make us better. By taking the data from that technology and applying it to the total supply chain model, you can bring all types of data together under one roof in a transport management solution to provide end‑to-end visibility of our products as they move along the supply chain.

Tom Meehan: I strongly agree that technologies such as RFID, blockchain, AI, IoT, computer vision, and machine vision are highly impactful within today’s supply chain. Among these, I feel that RFID, IoT, and AI might stand out as the most crucial. What makes this analysis more effective and efficient is the fact that these technologies often operate in conjunction with one another.

Sensor fusion combines data from different sensors to improve the accuracy and reliability of the information. It takes the strengths of each sensor’s readings and merges them into a more comprehensive and accurate understanding of an environment or situation. Think of it as putting together pieces of a puzzle to get a clearer picture. The ability to see and use that information as part of a larger vision helps create an image that can benefit the entire supply chain network.

LPM: What do you consider to be some of the most significant innovations to impact supply chain loss prevention over the past several years?

Meehan: Many of the same technologies that support supply chain operations have also had a direct influence on supply chain loss prevention. For example, internet protocol (IP) cameras installed in and around warehouses or on vehicles can monitor cargo and provide visual evidence if theft occurs. IoT sensors can detect changes in conditions like temperature, vibration, or light inside a cargo container. While this may help identify damage or spoilage, unauthorized opening or tampering might also trigger these sensors.

Using Blockchain technology, the entire supply chain can be securely and transparently monitored. Any unauthorized changes to the cargo or its route can be detected. There are innovations in biometric security such as fingerprints or facial recognition programs that can be used to ensure that only authorized personnel have access to cargo areas, reducing the chance of internal theft. Technologies such as machine learning and artificial intelligence programs use advanced algorithms to analyze patterns and predict potential theft by recognizing anomalies in routes, delivery times, or other factors. These technologies can be used individually or combined to create a multi-layered defense against theft and help keep the facilities safe.

Alongi: The evolving use of GPS devices that can be placed on vehicles or individual cargo items to monitor their location in real-time has made a significant difference. From an LP perspective, it gives you the ability to trace items and track problems back to their roots. Understanding the flow of raw materials and where they end up is always a big piece of the puzzle. Understanding the liability—when you take ownership—is really a significant part of that as well. While a lot of that is based on individual contracts, having that information can significantly impact a business in many different ways. Tiering a response to risk based on liability and reputational risk helps businesses develop solid security operating frameworks. Knowing when to deploy the right solution is critical for immediate response and action, should something go wrong.

Ganz: It’s not necessarily a new innovation, but I agree that RFID technology is really being refined and finding a home, whether tracking trailers or products. GPS tracking of equipment has taken a leap forward where we have visibility at all times. We’ve been able to track products through the UPCs’ barcodes. Additional innovations would now include technology that keeps certain products from being usable until they’re actually sold, which removes a whole market of theft opportunities.

The license plate technology that we’re using today is another innovation that’s really making a difference. Considering all the last-mile deliveries and the delivery of products to the customer’s home, the use of technology to monitor both associates and the delivery process itself has taken a giant leap forward. There’s so much more out there to monitor and manage. The mobilization of a lot of the things we used to rely on heavily between four walls now can be managed anytime and anywhere for any reason.

LPM: How have recent trends in technology impacted the way that loss prevention teams function across the supply chain?

Ganz: You must make sure you’re evolving with technology and the times. Things are moving forward quickly, and you must ensure you’re moving forward with it just as quickly. With the criminal minds out there always looking for ways to get ahead of the game, it’s important as a leader to stay in the know. You must know what works and what doesn’t for your organization—always be curious and ask questions, learn the value of innovation, and then embrace it.

We have a seat at the table much more so than we ever have in the past, and keeping that in perspective is critical to success. When you think about the dynamics of growth, you must understand the importance of working together as partners. That part of our innovation as a profession is just as important as anything else. As technology and innovation move forward, we must adjust and grow as professionals. It’s more than just telling the teams what they can’t do—it’s just as important to help them figure out what they can. We have to be willing and able to ask, “How can we help, what are the things we can do to help meet business needs, and what are the things we can do to help mitigate the exposures?”

In today’s day and age, shrink in general is a primary part of the conversation around most organizations and it’s important we remain a part of that discussion. We have to explore ways that we can contribute as partners and influence the business in creative ways that push the limits and make us better, truly listening and addressing those concerns relative to the needs of the business.

Master: Supply chain is one of the fastest-growing spaces on the planet. Traditionally, supply chain has been very slow to make significant changes, but the changes taking place today are leading to tremendous gains. We’re leveraging technology to create a yard management application. We’ve gone paperless, using technology to manage trucks checking in and out to streamline the system. We can then leverage the information with data that supports both the security function and transportation operations, making both more efficient and cost-effective. This also allows us to focus on other things, pushing our teams to do more productive tasks to increase the safety, security, and overall productivity of the team.

Meehan: All these innovations allow for a wide array of opportunities that were not necessarily available in the past. The ability to take nontraditional ideas and approaches to leverage more progressive solutions allows for a quicker response to issues and a more proactive approach across the entire supply chain enterprise.

LPM: How have these innovations helped in the fight against cargo theft and similar criminal activity?

Alongi: When it comes to cargo theft, some of the more important questions that need to be answered focus on the time it takes to be notified and the time that it takes to react. Solutions need to have an immediate notification to a 24/7 control point, and that control point needs to react very quickly. Without those functioning effectively, all we will end up doing is filing a lot of police reports and not working toward solutions and recovering goods.

Once stolen goods are out in the market, the products become more and more difficult to locate and recover. The further away in time we get from the theft, the less likely it becomes to resolve the theft. You need cooperation from the top down; it can become very tricky. Who is going to own the loss? How will the loss be managed? It’s not just the security solutions to keep in mind. There’s the whole operational aspect of it as well—the application of it, the monetary aspects, the maintenance of the loss—all those aspects cannot be run by loss prevention alone. Building a compliance platform that accurately details how and where the product is moving is very important. It’s not just the technology or the innovation, it’s the management of the technology and the innovation and the way you approach it that truly drives results. There has to be strong communication and cooperation. Without that, the tools don’t really matter.

Ganz: I would add that it’s highly innovative the way we’ve improved our communication with each other. Today we are much more willing to work together to solve these problems. There are multiple organizations today working together to speak about trends and exposures to help solve the issues. Leveraging peers across the industry adds a whole new level by addressing common problems.

That is one of the prime advantages of being part of an organization like ISCPO. We’ve broken down barriers that allow meaningful conversations around how we can get better at protecting products in transit. We can talk about the technology, the processes, and other aspects of innovation so that when something goes wrong, we can talk about it in a meaningful way and work toward real solutions. The door is now open to those conversations and it goes a long way.

LPM: How have these innovations helped fight other general loss issues across the supply chain?

Meehan: More data and visibility benefit everyone. Customers can gain a clearer understanding of where items are in the supply chain. Staffing and scheduling become more precise, allowing finance to bill more appropriately. This increased insight also aids in life safety within the supply chain and helps manufacturers understand the demand for raw materials.

From the manufacturing standpoint, we can manage our supply chain from upstream raw materials to finished goods and all the way to the end user. By utilizing various data points and technologies like RFID, we can enhance control over the process.

Master: This is especially true with processes such as direct-to-customer inventory control and using technology to scan a package to tell where the package is along the supply chain. They’re leveraging the data from a carrier network standpoint, for customer service reasons, and from an investigative standpoint. The different buckets of data along the supply chain network are now being integrated for the benefit of everyone.

Alongi: Being able to consolidate information between shipments helps establish better compliance and detail that creates effective patterns, helping exceptions stand out more prominently. These metrics help improve speed and accuracy, along with the ability to manage that information when it comes in. Transport management solutions are also part of this. That’s the direction the business should be heading. Transport management solutions are going to be the next big thing for businesses using supply chain management, integrating a model that links technology, people, and processes for end‑to‑end visibility of the entire supply chain, while providing operational and cost efficiency.

LPM: How important is it that loss prevention professionals are receptive and appropriately respond to these changes?

Ganz: When looking for a leader to work in loss prevention, you must be able to articulate that you’re not just looking at thieves, reviewing reports, and trying to catch internals. Your influence is much grander in the world of supply chain whether it’s safety or security or any of the other functions relative to what we do when we can demonstrate that ability.

We want to bring in people who are more multi-faceted and broad-based—someone who can be a self-thinker. You can’t have a singular focus; you must be curious, build relationships, and earn a seat at the table. If not, you’ll become obsolete. You’ve got to be willing to learn all the aspects that affect your business. Our view is often about looking for shrinkage in processes—things that are not working in the way that they were designed—not just theft. You want a well-rounded leader. That’s what wins.

Meehan: As technology evolves, so do the threats from malicious actors. You have to be flexible and creative to survive. It’s a perpetual game of cat-and-mouse that requires constant vigilance and adaptation.

Alongi: It’s not only critical from a business perspective but from an industry perspective. Businesses have higher expectations and are asking more from their loss prevention departments. Having a full understanding of what’s going on throughout the supply chain is going to be critical moving forward as well. People in the industry need to change and adapt their approach beyond the incident level and look at it more as total risk.

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Master: The people coming into the industry today must have the basics we all look for, but must also have a comfort level with technology. The applications and how we use them are changing so fast that they can evolve in real-time. Adjusting to change has become an inevitable part of the supply chain business and we must come to a point where we are comfortable with that. You need to bring people on board who are not afraid to ride this rocket.

The average teenager has more information at their fingertips today than the president of the United States had during World War II—instantaneous, immediate information they can use to make decisions. That of course has bled over into business. If you’re afraid of technology, you can’t survive in this business. You need to be comfortable with understanding the technology and with change. You must be operationally savvy to apply the information and accept the role. You have to speak the language, share information, advocate for your team, and put your business hat on first.

The role is much more complicated than most people realize. Not all loss along the supply chain is the result of theft—look at it from multiple lenses. You have to do operational investigations, transportation investigations, and process investigations before you even look at theft. An investigation is still a search for the truth regardless of whether you’re in a store or managing the flow of merchandise along the supply chain.

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