Theft Resistant Logistics Systems One

Theft Resistant Logistics Systems

One of the most difficult and complex issues confronting business today is how to stop the theft of products while they are in transit. There are many reasons that stopping cargo theft is a difficult and complex issue. The first reason is that it is difficult to quantify the amount of loss caused by cargo theft. One of the main reasons that cargo theft is difficult to quantify is because it is reported under a variety of different names, depending on what type of theft is involved. Another reason that cargo theft resists quantification is that some of the methods of theft involve changing manifests and order forms, making it difficult to determine how much of each product has been stolen. Another reason that stopping cargo theft presents such a complex problem is that cargo theft can occur at any time while the product is in transit. Because of the many opportunities presented during the transit of most items, it is difficult to determine when and where items are being stolen. Furthermore, cargo transit is perpetrated by employees involved in the logistics system and external offenders. Internal offenders can make it extremely difficult, if not impossible, to identify where in the system items have gone missing. External offenders present their own difficulties because of the variety of people involved in external offenses. External offenders range from individual thieves to complex organized crime syndicates. An additional complexity is that "the modus operandi" of cargo thefts "can involve hold-ups, theft from freight yards, theft from containers, theft off trucks, or documentary fraud" (Mayhew, 2001, p. 1). Because there are so many opportunities for theft, solving the issue of theft in logistic systems cannot be accomplished by implementing a single solution, instead it requires a multi-faceted approach. Finally, because of the nature of logistic systems and cargo transit, it can take extended time periods for a company to discover theft, which makes it more likely that the thieves will have disposed of the stolen items and reduces the likelihood of recovery (Mayhew, 2001, p. 2).

Furthermore, theft in logistics systems is a major problem. "Worldwide, cargo theft losses total $30 billion a year, according to the International Chamber of Commerce" (Chubb Group). While cargo theft occurs across the board, there are some products that are more vulnerable to theft: those that are highly valuable for their size, are easily transportable, and are easily sold at a high profit (Chubb Group). For example, trucks bearing cigarettes are vulnerable to theft because increased taxes on cigarettes have made their black-market sale especially lucrative. Computer hardware and name-brand goods are also considered attractive by thieves, and are particularly vulnerable to theft in transit (Chubb Group). Furthermore, businesses suffer more than direct losses when they are the victims of in-transit theft, such as "lost sales, missed shipments, customer ill well, and the implementation of theft deterrents," which have been approximated at costing roughly four times the amount of the missing merchandise (Chubb Group). Therefore, cargo theft may be costing businesses approximately $150 billion per year.

Of course, the aggregate cost to business, while impressive, is not the driving force behind loss prevention. Instead, it is the thefts from individual businesses that drive companies to implement strict loss-prevention strategies. These strategies can literally mean the difference between success in business and bankruptcy. For example, a Dan Bolger relates a story of a retailer, who previously had sales exceeding ten million dollars, "whose business failed due to inventory thefts exceeding one million dollars" (Bolger, 2002). The retailer had failed to implement the systems and operations procedures necessary to prevent cargo-theft, despite recommendations to do so (Bolger, 2002). The reasons a company might fail to comply with security recommendations are usually related to money; some companies may not want to reduce profits by implementing proper security measures, others may simply not have the finances to implement some of the more expensive security measures. However, as the example above demonstrates, a thriving business can fail solely as a result of cargo theft. It is because of the threat to individual businesses that businesses of all sizes need to take steps to reduce theft in logistics systems.

Despite the difficulties facing companies who are plagued by cargo theft, there are certain measures that companies can take to reduce the risk of theft during transit. One of the first things that a company can do is to provide secure freight yards and warehouses. The next thing a company can do is to make sure that its products are package in such a way that the risk of theft is minimized. In addition, companies can shore up their documentary systems to make sure that the items intended to be shipped are the items that actually reach the destination. Because companies cannot always control who is involved in the actual transport of the freight, including loading and unloading, companies also have to make sure to restrict and document who is entering their storage facilities and limit outsider access to storage areas. Finally, companies can take steps to prevent theft while products are in transit.

Although providing secure freight yards and warehouses seems like a simple first step in reducing the incidence of cargo theft, in reality it can be the most difficult area to secure because of the fact that so much of the theft is carried out by employees. A company is faced with the problem of creating an environment where employees have the freedom to access facilities in order to work, but do not have the freedom of movement that would permit them to steal from the company. One of the most basic things that a company can do is to make sure that storage facilities are well lit; this can include making sure that warehouses have plenty of natural and artificial light. In fact, proper lighting may be the best way to reduce theft; "by not adequately lighting your place of business you could give a would-be intruder one of the basic requirements- time" (Horovitz). By providing proper lighting, a business makes it more difficult for a thief to hide and greatly reduces for opportunity for theft. Merely providing lighting is not sufficient; indoor and outdoor lighting should be structured in such a way as to "prevent dark corners or hidden storage racks" (Mayhew, 2001, p. 3). Another way that a company can reduce or prevent theft is by storing cargo in a manner that makes it more difficult to remove. Loose cargo can be placed in an area of heightened security and additional security measures can be implemented for expensive cargo, for example, safes or cages (Mayhew, 2001, p. 3). In addition, containers can "be stored with doors facing each other so that cargo is difficult to remove" (Mayhew, 2001, p. 3). Any points of ingress and egress, such as doors, windows, and loading docks, should be monitored. Exterior doors should be locked when not in use, sturdily constructed, and equipped with dead-bolt locks and peepholes (Horovitz). Companies should make sure that their perimeter fencing is secure. Alternatives to chain-link fencing should be explored, as ports in the Far East and Northern Europe use mesh fencing that is constructed of tougher material and has a tighter weave than chain link, which makes it more difficult to breach the fence barrier by climbing or cutting (Hoaglund, 2003, p. 41). Finally, a company can use security and surveillance systems to track the movements of employees and visitors within freight storage areas.

At first glance, product packaging may not seem like it would have a dramatic effect on the loss by cargo theft. However, proper packaging can have a significant reduction on the number of successful theft attempts. First, packaging materials should not identify the type of material being transported. Packaging should be well-constructed and able to "stand up to the normal rigors of handling and transit" (Chubb Group). A company should use seals and barrier-type locks on trailers and containers, which cannot be removed without using a special tool, and "place impenetrable metal plates under boxes on pallets to reduce entry from underneath" (Chubb Group). In fact, the use of seals may be one of the most forward-thinking areas of cargo protection. Universeal USA has developed an electronic seal which doubles as a tracking device and an alarm. When:

vehicle or container is declared missing or stolen, a red-alert message in the system will activate an alarm as soon as the seal goes through an antenna site. Within two minutes, the authorities (customs or police) are notified by fax of the location and direction of the vehicle. The seal will also emit a continuous radio alarm that is easily picked up by mobile units using hand readers (Clark).

Use of this type of seal would not only reduce tampering with containers, but aid in the tracking of thieves and the recovery of property.

Finally, companies should introduce tamper-evident measures, which will reveal if tampering has occurred (Chubb Group).

Although securing cargo-storage areas can help reduce some types of theft, it does little to reduce employee theft via documentary fraud. Instead, companies must take steps to make sure that all points of their documentary trail are easy to audit and make random, surprise audits. One of the most important things that a company can do is to "make sure that one individual doesn't control receiving, inventory, disbursements, and adjustments" (Bolger, 2005). By making more than one individual responsible for various aspects of cargo transit, a business may not decrease the likelihood of theft, but they will at least increase the likelihood of a leak if a crime ring develops in the business. When theft is detected, companies should investigate it immediately, due to the fact that many incidents of internal theft are part of larger long-range schemes; investigating a single theft incident may uncover greater losses and point to security breaches that need to be remedied. In addition, companies need to make sure that their cargo contracts clearly specify security procedures (Mayhew, 2001, p. 3). Before a company accepts delivery of cargo, any documentation or packaging that appears questionable should be investigated, and if questions remain about the validity of documentation, the company should refuse delivery (Mayhew, 2001, p. 3). Furthermore, companies should take steps to make it more difficult for the employee-thief to duplicate documentation. For example, companies can make sure to send electronic versions of their shipping records at the time of shipment, eliminating the possibility that a driver can create duplicate paperwork with reduced cargo counts. Even if a company can not afford an electronic cargo management system, almost every company today has access to e-mail and could send customers shipment e-mails when cargo is loaded onto a truck. In the event that a company uses a computer system for inventory control or shipment notification, it needs to "control access to company computer systems that contain information on shipment dates, bills of lading, shipping invoices, customer requirements, carriers to be used and values" (Chubb Group). Finally, cargo should be subject to inspection both prior to being shipped and at the time it is received, to make sure that all of the cargo that was supposed to be shipped was actually shipped and that the same amount of cargo was received.

Of course, not all theft occurs via documentary fraud; many thieves engage in more traditional forms of theft, including just walking off with cargo. One way that a company can help limit crime is by carefully screening its employees; mandatory background checks for all people involved in the transportation or storage of freight can eliminate employees with known criminal propensities. Of course, companies cannot keep from hiring criminals merely by using background checks; effective criminals may have been stealing from companies for years without being detected.

However, background checks are one way to reduce the criminal element in the workforce. In addition, companies should implement policies that encourage employees to monitor other employee behavior, such as anonymous tip lines (Mayhew, 2001, p. 3).

Finally, companies need to implement zero-tolerance policies towards employee theft; despite the inconvenience of prosecution, employee offenders should be prosecuted as well as terminated.

Of course, there are other methods of limiting cargo theft by employees. One way to do so is to limit the length of time that multiple people can access the cargo. For example, trucks should not be left waiting for long periods of time, both to reduce the risk of theft from the truck and to reduce the risk of the driver accessing other cargo. "Merchandise should never be left on loading docks for long periods of time" (Mayhew, 2001, p. 3). Furthermore, parking facilities, both for employees and visitors, should be off-site, if possible, or away from storage areas. Empty containers, rubbish containers, and outbound vehicles should be subject to frequent, random checks, because they can be used to store or transport stolen cargo (Mayhew, 2001, p. 3). Finally, companies need to maintain separate high-value rooms, where they can isolate property of higher value (Hoaglund, 2003, p. 40). These high-value rooms should have as much security as is feasible, including dual-lock door systems and security personnel (Hoaglund, 2003, p. 41).

While it is difficult to prevent theft while at a company's own facilities, the problems that companies face of theft reduction while cargo is in transit are even greater. Theft in transit can occur either with the participation of the driver or when cargo is taken by force from a driver, and can occur at great physical risk to the driver. In addition, theft in transit can be planned or crimes of opportunity and the incidents vary greatly in planning and levels of dangerousness. Organized crime syndicates, both traditional and modern gangs, are frequently involved in-transit thefts, which increases danger to the victim-drivers, both at the time of the theft and afterwards during any eventual prosecution. In-transit thefts occur when cargo is transported via truck, water, rail, or air. While each method of transport presents thieves with unique opportunities for theft, there are things that shippers can do to limit in-transit theft. For example, shippers can vary their shipment schedules both to keep their shipments unpredictable and to limit the number of stops each shipment must make. In addition, if businesses can limit the amount of time cargo is in transit, they also limit the number of opportunities a thief has to steal the cargo. If cargo is expensive, or particularly vulnerable to theft, businesses can provide security, either in the form of security guards who escort the cargo, or by having the cargo transported in conveys, to lessen the risk to each individual truck. Trucks and railroad cars are particularly vulnerable to theft, because they are accessible from all sides at an almost infinite number of points. One way to reduce the risk of theft, especially from rail lines, is to increase surveillance on the items. This may be done by having a non-conveying surveillance vehicle accompany the shipments, or by having random surveillance points set up along the shipping route. Air transportation, especially in the heightened security that has followed 9-11, may be the most secure way to transport cargo. Airports tend to have better security than docks and freight yards. However, cargo cannot typically be transported solely by air, due to the location of airports and the location of suppliers and consumers. While airports may be able to limit cargo loss, they also deal with issues of international shipments and delays caused by customs, which an increase the time cargo is in transit, thereby increasing the opportunities for theft. Interestingly enough, shipment by water may actually provide the greatest opportunity for theft. Not only are docks and ports difficult to secure, but vessels are subject to piracy once they hit the open-seas. To limit the risk of theft during maritime transport, companies can ship with ports that have the most secure cargo-handling facilities. In addition, making sure that cargo containers are secure prior to being moved to a port can reduce a company's risk of loss. Finally, companies can avoid shipping via sea through areas with known high piracy rates.