Wholesalers and Retailers: Save on Losses by Control

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Wholesalers and retailers lose a lot of money due to stock losses. At stock takings the amount of missing stock is very high and nobody can explain how the stock got lost between stock takings.

They annually spend a lot of money on loss control managers and security companies to compare invoices with stock at exit doors. Details are missed because the loss control managers and checkers do not always know how the losses take place. Even surround cameras do not pick it up because some actions look quite normal.

The staff working at a wholesaler or retailer act together in different departments to get stock out without having to pay for it.

No one suspects them to be in on this stock loss operation.

At wholesalers and retailers clients can buy stock in full boxes. 

Boxes have barcodes and differ from products. It also differs from the single items inside. At most wholesalers and retailers, security companies are used to check the stock and compare it to invoices at exit doors. Full boxes show on the invoice the amount of items inside and the type of stock that is bought. For example, a box of samba chips will read, (48 x 40gr smoked beef). Then the checker let it out by that description as it seems fine. It is the same with cooking oil, (12 X 750 ml cooking oil). It will all seem fine. The checkers just accept that what the sticker says is also inside. They seldom or never open the boxes to see what is inside. 

The shelve packers get a kickback from the client for repacking these boxes with stuff they need and want to pay less for it to make a better profit. 

With the kickback deducted, the clients still make a good profit. Even surround cameras do not pick it up. It looks quite normal to buy full boxes.

Checkers at exit doors must be aware of the action. 

man in gray polo shirt and blue denim jeans standing on grocery store
Photo by Melanie Lim

They must look out for unopened boxes which look suspicious. It is best to open all boxes that exit the door. It will take some time from the customer, but they must be educated that it is important for the company to cut on this type of losses. Companies can employ more checkers to save on time. The losses they prevent will save to cover their salaries. The loss control managers must monitor the checkers to do what was ordered to them. There must be thoroughness all the time.

If the company makes use of delivery drivers, they bring back the money to the shelve packers from the client and also receive a cut. So, it is very important to be thorough at exit doors. The staff knows how to deal with this lack of knowledge and lack of checking at exit doors.

Small items like batteries, superglue, blades, etc. are on carton sheets. 

There are usually 10 or 12 singles on a sheet. The singles have a barcode and the sheet has a different barcode. The cashiers scan the barcode of the singles and not the sheet. The sheet goes out as a single. The checkers at exit doors do not pick it up because they only read the item and take the sheet as a single. The cashiers do this action to help the street hawkers to make more profit for themselves.

At most retailers there are no checkers at exit doors. 

Checkers can not open every bag of maize that goes out. Floor managers must check these shelves. You can also suspect this or any other action when a shelf packer is over friendly and keeps on talking to the checkers to avoid him from checking properly. Surround cameras can also be used now that you know what to look for.

Mostly all wholesalers and retailers use printed invoices when customers buy at the company. 

These invoices are shown to the checkers at the exit doors who have to compare the invoices to the stock bought. After they are satisfied that the stock is on the invoice, they let it out.

Staff working at such companies start to bond with their customers. This is when they start to work together to get stock out without having to pay for it and with a kickback for the staff member. During our investigation we found that a cashier, a shelf packer and delivery driver are in on this move. If a customer comes to fetch his own stock, the packer deals directly with the customer.

The cashiers make a reprint of the invoices as the customer leaves the pay point.

The cashier then gives the reprint to the shelve packer. The shelve packer gets the stock on the invoice on a trolley and gives the invoice to the checker who compares the items with the invoice and finds it in order. The checkers do not find that the invoice is a reprint. Then the driver takes the stock and sells it to his customer. He then brings back the money he received and shares it with the cashier and packer. 

They usually get less than the normal price, but it is how the customer scores and they score a few bucks for themselves to a loss for the company. Even surround cameras do not pick up this detail and it looks normal.

Some companies use a computer system at the exit door where the checkers have to put in the invoice number after they check it. 

blue shopping cart on street during daytime
Photo by Eduardo Soares

That system does not work properly because they give less attention to it. They do not put in each invoice as they checked it. They do it only after a few invoices and just put in the numbers. So, by this they do not find reprints as they just put in the next numbers as they do from time to time. 

To solve this problem, the company can put one person only on the computer and the checkers must read their invoice number to that person as they check their invoice. Then a reprint can be found as it is checked again by its number. Even a surround camera does not pick up this detail. It has to be handled thoroughly by the checkers. It is difficult for the checkers to remember if the same stock goes out twice.

After some monitoring it was found that the staff uses some items for themselves. 

Floor managers must monitor this situation. This can also be captured or picked up by surround cameras at the right angle and correct position. When a company has a kitchen inside the store, you have this problem. Not all stores provide an outside tea or lunch room. Staff use an inside kitchen to make tea or to warm their lunch.

Companies must provide an outside tea or lunchroom with all provisions to keep their lunch safe and equipment to help them. Lockers can be installed for each staff member and a place in a fridge for each one. When they leave the store for lunch, they still have to be searched. It will cost some money to equip a room, but the company will save on losses.

When checkers at exit doors compare invoices with stock on trolleys, they use to take the invoice and read it. 

They then look for the item on the trolley. That is so very wrong. All items that are on the invoice will be on the trolley. They have to find the extra stock that is not on the invoice. If they just read from the invoice, they will find all the stock on the trolley but they will not find the extra stock that is not paid for.

They must start at the trolley. They must see what items are on the trolley and then compare it to the invoice to see if it is on the invoice. If it is not on the invoice, it is not paid for. The staff and customers know how to deal with this lack of checking. The managers and checkers must know about this issue and be thorough and do it the right way.

Customers just do not give all items to the cashier to be scanned and it is difficult for the cashier to monitor it. Sometimes cashiers and shelve packers are in on this for a kickback because they are aware of the lack at checking. It is the checkers who must find these extras and that is why they are there to check.

Checkers must also check underneath the trolley. 

They can just feel with their hands or peek under the trolley. Most trolleys have a lip underneath where the bottom of the base ends. A carton of cigarettes or small items fit there and do not fall off. A lot of stock goes out this way. It was found that cigarettes, baking powder, sweets, med lemon, snuff, shoe polish, etc. was taken out this way. The manager can start by turning the trolley upside down and show the checkers where to check.

The receiver at receiving must also be thorough. 

shopping cart filled with items
Photo by Ananthu Ganesh

Deliveries must not be rushed. Pellets must be counted thoroughly. Loose items must be counted each one to see if all are there. Sometimes the delivery is huge and is rushed off. The receiver is responsible for that receiving and that is why he is there. He must be trustworthy and must also be monitored to see that he is thorough.

Companies work on different structures, but with this action detail, they can develop their own way of checking and monitoring and dealing with it.

Checkers get to know the staff and regular customers. If possible, companies must organize with security companies to rotate checkers. It will prevent them from laziness and stop bonding with customers. It is their job to check and keep safe the property of the company. As soon as the managers find any reason, they must ask for them to be rotated. 

Do it politely. It is best prior to this, to meet with the security company and explain why they will be asking to rotate at some stages. Checkers must first learn the stock and know the difference between shrinks, bales and singles before starting to check at exit doors.

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