In a like study published by the University of Florida’s Dr. Richard Hollinger, apparel, specifically shoes, was the hardest hit shrinkage sector. But regardless of the technology of POS, RFID, Auto replenishment, and Sensormatic, the human element is the most difficult to manage.

Retailers, including they supply chain, suffer enormous losses to employee theft and shoplifting. Walmart’s shrink last year was around 1% or $3B! The manner in which most retailers “guard” their merchandise is through Loss Prevention however that staffing is small and continues to decline in allocated payroll. Therefore that leaves everyone else to protect assets. When was the last time you saw an actual stop of someone based on a Sensormatic alarm? Employees are afraid to make those stops for many reasons but primarily because it is dangerous. There is some deterrent value but that is declining as well. Tags are not a deterrent to even the amature pros. Booster bags are too easy to make that shield the antenna. It truly is catch as catch can. RFID would help only is as much as a retailer could know exactly what was stolen and when. At least the information could serve a greater purpose in merchandise security.

From the distribution side, service levels to stores is not necessarily impacted by shrink. Simply, they are out of stock too and stores can’t get the merchandise. Stores “always” blame the distribution centers for their out of stock condition when it’s more the issue of how goods are ordered. Don’t get me started on the buyer’s accountability on top of that.

Bringing store operations and distribution together is a great idea but education, not policing, is the answer. That brings us back to the human aspect. Controls are managed by humans and not technology. The better approach, in my experience, is to bring the store people to the distribution centers for training and awareness. That exposure heals a lot of problems.

The issues have not changed over time but the solutions to address them have. Their level of effectiveness is only as good as the people managing the process. Take some time to learn about Organized Retail Crime too. That will shock you.

Pat Murphy
President
LPT Security Consulting

The issue of theft is one area RFID has a good value, particularly in apparal. Many stores already use Sensormatic type tags for theft control and for them it could be a no-brainer since these tags can do RFID for stock management and theft control. For general retail merchants it becomes more of a cost trade-off issue due to low margin units and issues with tagging location. Embedding tags in packaging or price labels does not eliminate the possible of the thief removing the tag and walking out.

In short, RFID tags could be a great theft deterrent, it is kind of hard for a novice to leave the store unnoticed. Professionals will of course figure out a way to mask the tag signal.

The scanning disipline cans of soup problem is a bit more difficult, and will remain so until someone comes up with an RFID tag as cheap as printing a UPC code on the label.

Steve Murray
Supply Chain Visions