The Human Factor

In a merger completed just over a year ago joining two of the largest office supply product companies, Boise Office Solutions and OfficeMax, a lot of things changed, but one thing remained constant for the new organization’s loss prevention program—teamwork.

According to John Voytilla, vice president of global loss prevention and chief security officer at the new OfficeMax, the most important component of the loss prevention department is its people.

“Technology, auditing, and investigations, those are all very important mechanisms that support the work of loss prevention, but it’s our team that truly makes our LP program so successful,” Voytilla says.

Digital Partners

Beginning with its hiring practices, the OfficeMax loss prevention team seeks out the best people and then works to keep them through employee development. By placing a premium on employee retention, the OfficeMax LP team has enjoyed a level of continuity that many other retailers don’t often experience.

“Our team’s stability is a product of the program’s quality and comprehensiveness,” he says.Voytilla attributes the OfficeMax LP team’s success to five key areas: training and development, business integration, integrity, communication, and technology

Training and Development—Building LP Leaders

Since September 11 and the passing of the Sarbanes-Oxley Act of 2002, competition to find qualified LP staff has increased as more companies have ramped up security efforts. Although finding qualified individuals is difficult, Voytilla does not budge on his hiring standards.

“Team is the most important component of our loss prevention program. In fact, it is our differentiator. So we look for and develop people who can take ownership and lead the way in loss prevention. We want people who can ultimately help evolve our program,” says Voytilla.

One of the reasons associates stay according to Voytilla is the LP program’s dedication to training and improving the team dynamic to achieve success.

Their strategy includes setting up “think tank” meetings twice a year. The think tank groups discuss and debate organizational challenges, such as inventory shrink analysis and action, business assessment and visit planning, and improvement of store operational execution. The groups then develop a strategy based on their discussions. Loss prevention directors are on hand solely as facilitators.

This type of brainstorming creates a sense of ownership says Voytilla. Follow-up through regular conference calls ensures that ideas won’t die before they are implemented and keeps teams focused on their core business objectives.

Tracking Performance. Performance reviews and succession planning are other key elements of the OfficeMax LP training and development strategy. Twice a year, loss prevention management meets to discuss each team member’s performance. They debate strengths, opportunities, and growth potential, while discussing the needs of the individual and the organization.

To assist in this process, OfficeMax’s LP program provides members with formal training and guidance regarding how to move up within the LP structure. The formal program includes a description of core technical and leadership skills required at each level of professional development.

Team members, with the approval of their direct supervisors, complete an individual development plan (IDP). Supervisors evaluate the associates on an ongoing basis, providing feedback and suggesting changes to the individual’s IDP. Once a team member achieves the required core skills, they are evaluated for promotion.

Directors find special opportunities to challenge top performers and encourage growth says Voytilla. Take Shannon Hunter, territory loss prevention manager in the Midwest, who was recently asked to temporarily fill the role of loss prevention director in the western territory—a role he has been in for more than ninety days.

“You can’t simulate being a director,” says Hunter. “The challenge of running a territory loss prevention program plus communicating at a high level with our vice president has broadened my capabilities. It’s the best way to learn and grow.

”Often, these opportunities cross over LP territory lines into other departments. Associates might be asked to write corporate policies or manuals, create reports for field use, develop new loss prevention programs, or test new equipment. “Every assignment builds and hones our team members’ experience,” says Voytilla.

The OfficeMax LP team also supports a learn-by-doing approach. Senior team members are encouraged to mentor newer associates, and team members help train new district loss prevention managers (DLPMs).

Building New Leaders. Voytilla points out that the OfficeMax LP team is not only interested in developing team members, but also leaders. OfficeMax LP management receives specialized training each year at an annual weeklong leadership summit designed to develop and harness their skills. Seminars include situational and results-based leadership, improving communication, and the Gallup StrengthsFinder® program, which focuses on personal development and honing leadership skills, interviewing and advanced phone interviewing, which LP field personnel used to close several cases in remote store locations without the expense of traveling.

Training and development also is in full force on the frontlines at the store level. Using OfficeMax’s intranet web site, the LP team reaches employees by posting LP awareness materials, internal and external theft alert signals, and tools to assist with store training. DLPMs use the same material from the site to train personnel during store visits.

Business Integration—Merchandising and Operations Welcome LP

OfficeMax’s LP team has become an important partner with operations and merchandising. “Many companies’ LP teams can only dream of having a symbiotic relationship with their merchandising departments. We took a simple approach to the traditional battle; our answer was to become united,” says Voytilla. “We get involved with merchandising on the front end to devise plans and strategies around design and placement rather than on the back end after vital decisions have already been made.”

Solving Sales Issues. Over the last two years, a main objective for OfficeMax merchandising was to place more ink cartridges and high-value electronics items, such as PDAs, digital cameras, and computer memory upgrades out on the floor. Previously, OfficeMax stored these items in a secure lock-up

Other annual meetings offer technical and professional training, such as interviewing and interrogating skills, exception reports, and computer skills and planning led by WicklanderZulawski & Associates. Two important training seminars recently completed by the OfficeMax LP team covered behavioral

While that helped prevent external theft, it also negatively impacted sales because products could not be easily viewed or accessed by customers.

To come up with a solution, the LP team partnered with merchandising and operations to develop a win-win strategy that safely brought these items to the sales floor to grow sales while reducing theft.

The first part of the strategy involved installing a new electronic article surveillance (EAS) system in certain stores to protect ink cartridges. The test ran several months while cycle counts of the ink were compiled monthly. When inventory counts were completed, shrink had decreased.

The data from the EAS-enabled stores was then compared to the data in the non-EAS stores, and the results were indisputable. With EAS, stores could sell ink on their sales floors, and the extra revenue from the ink’s improved product placement could pay for more EAS equipment. In addition, the positive results from the test allowed the LP team to secure a capital appropriation to install EAS in the remaining OfficeMax stores during the first half of 2004.

By putting a new EAS infrastructure in place, the LP team achieved several key objectives. First, the Office Max merchandising department contacted its electronics vendors, challenging them to begin source tagging. The request netted stunning results—all but a handful of OfficeMax’s electronics vendors’ SKUs are now source tagged, including ink cartridges.

Second, the LP team purchased Spyder wraps from Alpha Security. All Office Max stores with a new EAS system received 200 Spyder wraps, which allowed merchandising to place more live product on sales floors.

As a result of this success, the LP team now regularly reviews SKU profitability reports to assess vulnerability and shrinkage to determine whether LP programs need to be expanded to other SKUs.

“The LP team’s successes with merchandising illustrates that it’s not about saying we can’t do something, it’s about finding a way we can do it, and do it profitably,” says Voytilla. “This approach has been successful because our corporate team gives us the resources we need, and they challenge us to continually improve our operations.

” In the summer of 2004, the LP team conducted another test, placing digital memory upgrades into merchandise display boxes also known as Alpha keeper boxes. The new display boxes, made of polycarbonate material, are used to display high-theft electronics items on the sales floor. Each box houses a coil that triggers the EAS alarm system if the item is stolen.

Similar to the ink test, the results demonstrated to OfficeMax’s merchandising department that it could safely place high-theft electronics on the sales floor, thereby increasing sales and decreasing shrink. Feeling confident with the EAS infrastructure in place, OfficeMax merchandising used the LP team’s findings and rolled out floor displays for the digital memory upgrades in fall 2004.

LP Part of OfficeMax Fabric. Loss prevention at OfficeMax is woven into the fabric of the company’s business at all levels. LP team members are involved in hiring and promotion decisions for district and store managers as well as offering performance review feedback for retail associates.

The high degree of LP integration at OfficeMax means that key initiatives, such as training, merchandise display standards, EAS, and awareness programs, share the spotlight in store business plans. During store visits, LP team members partner with district managers to review these important areas.

“When district managers or operations deliver the same message as the LP department, it becomes that much clearer,” says Voytilla. Ultimately, he’d like to see stores become “LP self-sufficient, so that the LP team becomes a problem-solver and a developer of people instead of an auditor.”

Cross-Training the LP Team. Part of the OfficeMax LP team’s success comes from its emphasis on cross-training its members to gain stability and flexibility by testing their skills in new environments.

Recently, long-time LP director, Ulysses Williams, was offered a director position in human resources. Williams took the job, saying it strengthens his overall development as a retail professional.“My loss prevention experience has served as the foundation for my success,” says Williams. “For example, in loss prevention, team members are constantly faced with the questions of who, what, where, when, why, and how. Learning to find answers to these questions first and foremost helps to provide permanent solutions rather than quick or easy fixes. I still use that approach in my current job.”

“Seeing one of our team members that is well-rounded enough to make that kind of transition makes us proud,” says Voytilla. “It also gives the OfficeMax human resources department a loss prevention perspective.

”In another example of cross-functional talent, the OfficeMax LP team gained the services of Gerald Smith, formerly a district manager in the San Francisco Bay area, who now serves as director of LP for the western territory.

“I sought to broaden my experience in retail loss prevention by integrating my operational expertise,” explains Smith. “During my short tenure in this new role, I have enjoyed the intense training, various challenges, and continual support from other LP team members. It’s also rewarding to be able to interject new ideas from my operational background into processes and plans that make our team more effective in the field.

”Voytilla never passes up an opportunity to bolster his team’s experience by promoting from within his ranks. At the end of 2004, Perry Resnick, previously the LP director of the southwest territory, moved into the role of vice president, field loss prevention, retail. In his new capacity, Resnick drives loss prevention strategies and execution in the field.

In addition, Nancy Erickson was promoted to senior director, logistics loss prevention, where she oversees loss prevention activities throughout OfficeMax’s entire supply chain.

“People like Gerald, Perry, and Nancy are what we look for—talented individuals who possess great leadership skills. Experience is one thing, but finding people with a knack for leadership takes our department from good to great,” says Voytilla.

Open Communication and Integrity

Voytilla says the OfficeMax LP team maintains direct and honest communication lines between field and corporate levels, district manager partners, territory partners, and corporate partners. The team schedules regular business meetings to discuss objectives and exchange feedback. Continual two-way communication helps the team make sound business decisions.

“The organization won’t improve if we just tell people what they want to hear. Executives are looking for real feedback to improve the business,” says Voytilla.

One of OfficeMax’s core values is integrity, and that is reflected in the LP department.

“We empower team members to say what they believe in,” says Voytilla. “We are expected to deliver brutal loss prevention facts to our partners, peers, supervisors, and subordinates in a professional manner with the ultimate goal of benefiting the company.”


High-Tech Loss Prevention

Technology gives OfficeMax loss prevention faster and more complete reporting options, and helps the department keep up with, or even stay ahead of, new theft tactics.

Exception Reporting. A DLPM can run a report for an entire district to immediately determine what stores are completing the most inventory adjustments, or known theft. Thanks to a partnership with OfficeMax’s IT department, exception reporting created in the SAP system is specifically designed for the LP field team to analyze. Now, when LP identifies problem stores, team members can drill down to when adjustments were made and what SKUs caused the majority of the loss. This information allows the LP team to start investigations. After stores take inventory, the LP team generates category and article shrink reports that zero in on the exact causes of the shrink. These reports are used at the store, district, and territory levels to create future shrink action plans.

Field members are equipped with state-of-the-art laptops and use Aspect Loss Prevention’s point-of-sale investigation software program that reviews sales and refund data to identify unusual transactions or trends. LP members use the program to run exception reports, and initiate and resolve cases. These reports are then analyzed on a weekly and monthly basis.

“Thirty-seven percent of OfficeMax’s shrink cases in 2004 were identified using the Aspect program,” says Voytilla.

Public View and Digital CCTV. Technology is not limited to providing better reporting. It also helps the LP team become more efficient at the store level. “Public view is used to deter shoplifting by having visible TV monitors in the live ink cartridge aisle and near store’s front entrances,” says Voytilla. “Our stores used VCR and multiplexer technology for their CCTV systems. Now we’ve implemented digital CCTV in several stores and we’re conducting further testing in additional markets.” The biggest reason for the switch to digital? “We can now monitor our stores remotely and link the digital CCTV feed with point-of-sale and exception reporting.

”Radio Headsets. Store-level technology also benefits from OfficeMax’s “boundless service” culture. Every store associate uses a radio headset. Then, each store’s sales leader communicates with associates on a regular basis, directing them to customers who need help, suggesting add-ons to purchase, offering selling tips, and observing the store overall.Loss prevention uses the radio headsets to help deter shoplifting and reduce the chance of losing a customer who may need assistance. The headsets also are used to communicate monthly shrink topics, track suspicious customers, and assist with front-end procedures.

The LP team’s success with these types of technological advancements creates opportunities to conduct more tests and broaden their expertise. Currently, they are looking at special software that links to the EAS system to remotely monitor program execution, review exceptions, high alarm activity, and assess training issues.

One Step Ahead

In 2005 and beyond, OfficeMax will continue to place a high priority on loss prevention. An emphasis on hiring, training, development, and retention continues to give the OfficeMax LP program an edge over its competition. It also helps OfficeMax stay one step ahead of internal and external theft.

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