SUPPLY CHAIN

Taking a Bite Out of Organized Crime

by Kelby Woodard

Woodard is a founding partner of trade innovations and the trusted trade alliance, which specialize in security, customs compliance, and supply-chain strategy consulting through offices located on five continents. he also cofounded tRg direct, which provides direct filing of customs entries utilizing an internet-based software solution. Woodard is the former director of supply-chain security at the target corporation and a former board member of the international cargo Security council. he can be reached at kelby.woodard@tradeinnovations.com.

If you have noticed the absence of this column for the past several months, it’s not that I’ve lost my desire to offer my thoughts on loss prevention and supply-chain issues. I promise I have a good excuse…at least I hope you feel this is a positive reason. Last fall I was elected to the Minnesota House of Representatives, and as a result, my free time suddenly became precious and rare.

While I was doing my duty as a citizen legislator, I did not forget the lessons I learned as a loss prevention professional. In fact, I took the opportunity to author an organized retail crime (ORC) statute that adds organized theft to the category of racketeering and was one of the few bills actually signed by the governor this year (as I write this article the state of Minnesota is still under a partial government shutdown).

For far too long organized criminals who prey on U.S. retailers and supply chains have enjoyed a lack of focus on the part of law enforcement. This was due in part to the perception that this was a “victimless” crime and did not warrant the use of scarce police resources. The much greater reason behind this lack of focus was the inability of prosecutors to build a case under existing law. That is beginning to change.

To add a bit of poetic justice to this fine piece of legislation, the governor who signed the statute was none other than the heir to the Dayton retail fortune himself, Mark Dayton. This law will provide prosecutors with the tools they need to finally prosecute organized retail crime in the state that is home to such retail giants as Target and Best Buy.

Organized crime is too often romanticized by Hollywood movies, such as Goodfellas (a personal favorite), Scarface, or the Godfather series, as well as the television series The Sopranos. We all realize that organized crime has an adverse affect on our companies and our economy and is anything but romantic. Our supply chains are not immune to the billions of dollars that are lost by U.S. companies each year through organized crime. In fact, global supply chains have been used as means for smuggling and as profit centers for the mafia since its inception. The weaknesses in supply-chain security that they exploit are often used as blueprints for criminal and terrorist organizations throughout the world to advance their own nefarious aspirations.

Proactive security programs like C-TPAT (Customs-Trade Partnership Against Terrorism) and the awareness of the security threats that we face in the post September 11th world have made a positive impact. That is only one small part of the solution, however.

For far too long organized criminals who prey on U.S. retailers and supply chains have enjoyed a lack of focus on the part of law enforcement. This was due in part to the perception that this was a “victimless” crime and did not warrant the use of scarce police resources. The much greater reason behind this lack of focus was the inability of prosecutors to build a case under existing law. That is beginning to change.

In fact, Minnesota now joins over thirty other states that have passed similar legislation in the past few years. The noose is slowly tightening around those who make an illicit living off of our companies and our supply chains, but the onus is still on us as retailers to protect the assets that can mean the difference between a profitable year and taking one step closer to bankruptcy.