Hands off the merchandise!

April 4, 2013
By: Eric Lundin

In early March, my colleague Vicki Bell wrote a blog about a common and highly dreaded problem these days: Metal theft. I am sure the main target is copper, which typically fetches more than $3.00 per pound (spot price), and it probably started with stealing plumbing pipe from abandoned buildings. Thieves have gotten bolder and, while the evidence is largely anecdotal, fully functional HVAC systems and other copper-rich items have become targets.

And the thieves have gotten bolder still. Vicki cited a specific instance at Metcam, metal fabricator based in Alpharetta, Ga. In this case, the suspect was loading sheets of metal into his truck and, when questioned by a deputy whether he had permission, he said, “I didn’t know I couldn’t do this.” Hiding behind a building, on private property, under cover of darkness, taking things that didn’t belong to him. And he didn’t know it was wrong. Bold.

No doubt that fabrication shop owners have given this a lot of thought. Not just outside the building, but inside too, because it’s not just outsiders who might be tempted to liberate some high-value items. Options abound. Put the highest-value inventory under lock and key, install security cameras, watch for suspicious behavior, and so on. It’s mutually distasteful—no employee wants to work under a cloud of suspicion, and likewise no business owner wants to think that he has provided training, a livelihood, opportunity, and paychecks, only to have it repaid by theft. Still, it’s a reality, and it must be addressed.

An article in the New York Times discusses how some companies in the retail world are fighting back. Comparing retail trade with manufacturing might seem off base, but they do employ similar numbers of people, 13.3 million in retail versus 12 million in manufacturing; some are small, family-owned outfits and some are large corporations; and both employ broad demographic groups.

The National Retail Federation estimates that merchandise worth $15 billion disappears annually. Nearly half of it, 44 percent, is thought to be stolen by employees. Many retailers provide the names of suspected employees to companies that compile databases of such information, which then is made available by subscription. If you’re a business owner, this might sound like a worthwhile investment, but the databases themselves have fallen under suspicion.

The main problem is that the employer doesn’t have to take the employee to court and wait for a guilty verdict. This system doesn’t rely on due process, the employee doesn’t get any sort of representation, and the employer doesn’t need much in the way of evidence. Even an employer who attempts to be impartial might have to make a decision on a bad day, inadvertently ruining an innocent employee’s future chances of retail employment.

Theft is ugly, but this sort of blacklisting isn’t much better. If you’re interested in less-draconian measures, a few authors might be able to help:
•    Preventing and Detecting Employee Theft and Embezzlement: A Practical Guide
•    Solving Employee Theft: New Insights, New Tactics
•    Reducing Employee Theft: A Guide to Financial and Organizational Controls

One more book, Practical Handbook of Warehousing, might sound like it doesn’t apply, but inventory is inventory whether it’s in a warehouse or a fabrication shop, and the book does have sections on preventing mass theft and collusion theft. These might be worth a look.

Nobody has easy answers, but a little research might do your business a lot of good.
Eric Lundin

Eric Lundin

FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-227-8262