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Technology and Shrink

Today's companies see the need for access to real time reporting. Marketing managers have loved this technology from the beginning and have used it to determine product movement, to identify the top selling items in a specific store or the entire company, and to easily obtain gross profit margins.

The introduction of item level inventory, which informs the marketer of specifically what is missing, and systems to generate ordering has also been extremely beneficial. The information available is endless and has truly helped many companies learn more about their stores.

Now, more than ever, retailers are using technology to also assist them with controlling shrink. Many companies are using their transaction logs to assist them in identifying customer service representatives (CSR's) who are impacting the profitability of the store. Profitability is impacted by employee dishonesty or poor CSR performance that could be a result of improper training.

I have long been a proponent of cash over/short logs; void/no sale/refund logs; and most importantly, shift analysis. Shift analysis should inform store management who, what, where, when and how an employee is impacting profits. However, the problem with this approach is store managers have to spend the time to "analyze" this report and most managers have not been properly trained on how to look for theft correlations. I find most managers do not look for theft correlations, but instead simply look for the person who has the most voids or no sales.

On the other hand, technology has allowed companies to automate this process giving managers the ability to print out reports from back office packages saving valuable time. Some have also implemented "exception reporting" to alert a manager about questionable employee behavior.

The following are some loss prevention technology tools to consider and tips on choosing them.

Data Mining:
Data Mining is a component of identifying shrink and developing evidence for associate dismissal or prosecution. This process is much easier than spending endless hours reviewing journal tapes and rolling them back up. Data Mining allows the user to build queries and look for behavior that impacts the profitability of a store. Also, alerts are capable in most applications where a query is set to auto interrogate the data on a regular basis and notify the appropriate personnel when particular thresholds are exceeded.

When selecting a data mining tool, a decision point should include understanding who the end user is going to be and how comfortable the end user will be using the tool. A second decision point should be how effective the end user can access the data and build effective queries.

Electronic Journal with Query Capability:
Electronic Journal that contains query capability is relatively unsophisticated. It generally contains the ability to search the raw electronic journal data looking for activity that is stored in line item detail. Some back office packages have more sophisticated query capabilities than others and are more user friendly. Many back office providers today see the importance of providing an effective loss prevention package.

Transaction Level Profiling:
A relatively new sophistication of the data investigation process allows for certain types of transactions to be assigned values. As an associate creates transactions that are suspect, the CSR’s assigned value increases. This process minimizes the "hunt and seek" process common with most data mining solutions, and can be used at various levels in the organization by end users.

The use of cameras in the retail detection and observation process began with devices that required video tapes, requiring users to swap out tapes on a disciplined basis, and very few retailers had the discipline for effective use. As a result, a single tape could be copied over many times thereby losing the history keeping value. Also, these devices have little sophistication and image quality could be questionable.

Digital camera technology has transformed the visual capability. Stores can now keep the history on their hard drive or a selected file, and not worry about tapes. Images are crisp and can be set to view only a specific area in the image when it changes. Digital imaging has also allowed for consolidation of multiple views on one screen and even the tracking of an incident only when something has changed in the frame being viewed. Digital imaging continues to evolve and there will be dramatic enhancement to the surveillance capabilities while the cost continues to be driven down.

POS Transaction Overlay provides the ability to overlay a POS transaction on an image capture. This first appeared with the analogue video tape systems, and the process has advanced today to where a specific type of transaction, a void for example, can be captured and stored on digital imaging systems. While this minimizes the amount of viewing by the user, there are still a number of steps that must be sorted through to find that specific transaction although the steps are generally user friendly.

Remote Monitoring is used by companies who outsource the viewing of activity recorded digitally and have the ability to go live and view sites. This type of monitoring provides a real support capability for high risk stores and provides associate and facility security. Some have used this as a replacement tool for uniformed security guards. A further enhancement to the remote visual is to add audio capability where the remote viewer actually hears activity in the store and can speak to individuals at the store location through mounted speakers. The associate can also send alert signals silently to the observation location to make them aware of developing suspect conditions.

Electronic Article Surveillance (EAS):
This technology has been around for many years and primarily includes the attaching or embedding of a radio frequency device to a product. The value is to cause an alert if the package has not been desensitized, turned off or removed by deactivation through the checkout process. EAS Auditing now allows for data to be collected from the EAS system that can be married with cashier activity to identify events that could indicate suspect behavior patterns.

New technology continues to save time for store managers by easily gathering data and creating reports. Store managers can now monitor trends of those CSR’s that are impacting the profitability of the store. However, even with the best technology, managers must be properly trained to use these advanced tools. I find that "Technology" does not stop losses. People Do!

Bill Ritter is a native of Toledo, Ohio where after graduating from high school, he served in the United States Air Force. After receiving an honorable discharge in 1972, Bill returned to Toledo and attended the University of Toledo majoring in Criminal Justice. In 1974, Bill attended Gormac Polygraph School, Pasadena, California and after graduation began Ritter & Associates.

Ritter's career has been devoted exclusively to retail loss prevention and specific loss investigations for the convenience store industry. During his 31-year career, he has conducted in excess of 8,000 investigations and interviewed over 40,000 employees for various convenience store companies. These investigations and interviews have led to successful prosecutions and well over $4,000,000 in restitution. Bill is a nationally recognized speaker and workshop leader specializing in the area of convenience store loss prevention and consults with companies regarding all areas of loss prevention. Bill is also founder of the Retail Loss Investigation Institute which offers seminars to managers about loss control and employee theft.

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