merchandise distribution and loss prevention
TRANSCRIPT
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Merchandise Distribution
and loss prevention
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Methodology and technique used for merchandise distributionfrom vendor to retailers premise depends on the size of themerchandise.
In house receiving : Small operations with few outlets have ordersent directly to the units. Eg: Oshkosh Bgosh
Centralized receiving: Large department stores and specialtyorganization, catalog operations, e-retail ventures and homeshopping receive their goods at a centralized location in whichall of the product go through a receiving procedure.
Advantage:
More space for merchandise on the selling floor
Better control of goods
Cost reduction
Regional receiving: Brick and mortar operations having large no. ofunits dispersed throughout a range of geographical locations,most opt for regional receiving.
Advantage :
Merchandise reaches selling floor in less time
Individual store receiving: happens in case of individual
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Merchandise distributiontechnology
Technology interfaces with suppliers.EDI and VMI
EDI computer to computer exchange of data in aformat specified by retailers and vendors.
No human intervention at either ends of thetransaction.
Advantages:
Better inventory management
Reduced expenses, improved accuracy, betterbusiness relationship, increased sales andminimized of paperwork.
VMI involves use of scanners at the retail operationsfor inputs on sale of product and replenishinventory. The onus is on the vendor to restock thecustomers inventory.
These technologies collectively are known as Quick
Response inventory systems.
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Merchandise checkingprocedures
Quantitative and qualitative checks are done onthe incoming merchandise.
Direct checks: checker physically counts themerchandise and make adjustment at this
point. Matches content with the purchaseorder. It is the fastest technique but dishonestchecker may verify the content withoutactually counting. Hence once verifiedcompany has no recourse on shortages
Blind checks
: merchandise checker preparesa list of items that are in the package.
Semi checks: combine best features of othertwo. Checker are provided with a list of itemswithout quantity.
Quality checks are also done. Substitutionshipping
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Marking Merchandise
Individual items must be marked for a number ofreasons:
Eliminate possibility of charging different price.
Give pertinent information: price, size are beneficial toretailer such as Target and Wal mart and off pricerslike T J Maxx and Burlington Coat Factory that relyupon customers to make their own choice.
Assess price and determine their range
By placing information such as vendor name , stylename, color, merchandise classification, size, and
price on the tag retailer gets to know the customersresponse to the merchandise.
Proper information on tag allows merchants to use EDIand VMI systems to automatically adjust inventorylevels of the stock
Evaluate stock turnover.
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Marking Procedure
Handmarking
Handheld equipment
Computerised tags
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Process
failures
Inter-
companyfraud
Internal
theft
External
theft
Shrinkage
Definition Shrinkage
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What Does Shrinkage Mean?
Inter-CompanyFraud
ProcessFailures
InternalTheft
ExternalTheft
Deliberate Under/Over Delivery Invoice Errors Quality and Weight of Items
Inventory Errors Promotion Errors
OPricing Errors Stock Going Out of Date Damage to Stock Product Delivery/Scanning Errors
Theft of Stock and Cash Collusion
Shoplifting Till Snatches Burglary
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New Shrinkage Typology
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Shrinkage Retail Iceberg
51%
49%
Lack of visibility
Lack of awareness
When did it
happen? Where did it
happen?
How did it happen?
Who wasresponsible?
Lack of accountability
Prioritisation of the most
visible/acceptable
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Causes of Retail Stock Loss
Study External Internal Process Vendor
Otago Univ (New Zealand) 68 12 20 3
European Theft Barometer 49 31 14 6
ECR Europe 38 28 27 7
Retail Council of Canada 35 40 18 7
Food Marketing Institute (US) 35 38 18 8
ECR Australia 35 25 29 11
NRSS (US) 33 47 15 5
National Smarket (US) 20 57 ? ?
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Location of the Problem
24%
Manufacturer
Distribution
5%
Retail
Distribution
71%
Retail
Stores
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Retailers Missed Profit Opportunity
0%
1 %
2 %
3 %
4 %
5 %
Current Potential
Av
erageRetai l
er
Mar g
in
AverageRetailer
ProfitMargin
2.99%
62%M
arginG
rowth
1.84%
AverageRetailerShrink
Margin
4.83%
1.84%
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Deterrents and controls
Retailer employ different deterrents and controlto address the problem of shoplifting
Electronic articles surveillance systems alsoknown as tag alarm systems. Found to be the
most effective anti shoplifting tool available. Electromagnetic systems : The strip is notremoved but deactivated by a scanner.
Acousto Magnetic: use RF systems
Video surveillance
Merchandise anchoring
Magnifying Mirrors
Try on room
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Employee programs Screening of applications
Checking references
Testing for drugs Psychological Testing
Merchandise control: lockers foremployees personnel belongings
Shopping sales associates: mysteryshopper
Recognition programmes
Offender persecution
T d i M h di
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Trends in Merchandisedistribution and loss
prevention Expanded use of Technology Increased use for computerized tags
Updating of EAS systems Applicant screening
Information dissemination for fraud
prevention: eg: www.protx.com