The Truth About Loss Prevention

By Thomas E. Dyar Loss Prevention Director Builder Marts of America

ANY HOME center and building material dealers think they know about loss prevention. They think in terms of fences, guards, TV cameras and cash registers. They think about locking the gate at night to solve their problems.

But they are only scratching the surface. In truth, the large percentage of all security problems are not related to outside thieves-they come from your own employees.

Employees steal five times as much from their companies as outside shoplifters. And the tab from dishonest employees exceeds $50 billion per year.

Let's examine the major causes of employee theft and outline some recommendations to ease this major problem.

Employeetheft may start with giving items to friends or conspiring with regular customers. It can include issuance of fake cash refunds or credits, and overloading company or customer trucks.

Theft continues with unposted sales invoices, unauthorized credit memos and voided customer sales tickets. Other potential losses relate to employee purchases, CODs, direct shipments and cash handling. And remember that anything that can be stolen with a pencil or by hand can be "harvested" with a computer.

At the gate, losses may stem from the absence of or improper load checks, poorly controlled shipping and receiving operations, and special orders not being handled properly. Undocumented inter-yard transfers may save pennies in paperwork but may cost thousands in disappearing inventory.

While it's true that employees steal, owners may give them the opportunity. Managers often "make it easy," and don't realize what's happening until the books won't balance at year-end.

Losses can be discouraged through a proper management attitude and a visible effort. Here, tight controls and procedures, required documen-

Story at a Glance

Employees steal five times more than shoplifterc .pro. per management attitude can deter theft. constant surveillance, control necessary.

tation and creating the image of a "tight ship" will truly discourage losses. Hire good employees, conduct background investigations, and maintain the kind of climate that encourages employees to stay honest. Remove the opportunity to steal and half the battle is won.

Looking closely at some examplesone significant loss exposure relates to not posting a customer sales invoice. Remember that a sale is worthless until it's listed on your books.

Builder Marts recommends the following posting procedures to help slash opportunities for losses: o All unposted manual charge customer sales invoices should be protected during working hours and secured in a safe or vault after closing. o Each sales ticket must be accounted for.

Posting should take place daily. One employee should prepare adding machine control tapes before another posts the invoices.

If computers are used, but manual tickets are written, batch totals should be compared to computer totals after the posting process. Audit regularly. Remember that auditing helps locate errors and awareness of a proper audit procedure keeps employees honest. (Please turn to page 57)

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