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Technology Alone Is Not Enough for LP Success
by Tom O'Rourke, Vice President of Research and Information, Punch Integrated Communications
Like every area of retail, Loss Prevention is being transformed by a proliferation of new technologies. There are a host of exception-reporting software programs, digital video cameras that can be integrated to the POS, RFID solutions, digital audit tools and interfaces to ERP systems available for loss prevention.
While technology has given LP professionals increasingly sophisticated tools for fighting shrink, however, it's only a means to an end. It's the information produced by these technologies -- and the vastly improved speed and quality of data now available to LP managers -- that matters most.
To make real progress in lowering shrink and improving safety, retailers must capture relevant information, quickly get it in the hands of the people who can use it to make a difference (whether it's a vice president of loss prevention or a store manager), then put into place the necessary corrective actions.
Ultimately, of course, that involves changing the behavior of store associates. After all, all three types of shrink -- internal, external and error -- are directly affected by hourly associates. They are on the front lines to intervene with a shoplifter, report associate theft, decide for themselves not to steal or commit fraud and comply with policies and procedures. If you want to make a change, you must understand your associates' attitudes and behaviors, get a clear picture of what's going on in the stores, then use that information to implement change.
In order to do this, one of the nation's best-known retailers uses monthly audits that interface with the company's ERP system. These store-level audits measure the degree of each store's compliance with Key Performance Indicators (KPIs) and issues of regulatory compliance that closely influence shrink and safety. Key indicators must be relevant to the specific organization or environment, objectively measurable or quantifiable, applicable to everyone, actionable, and available in a regular, timely fashion. Indicators can include such things as program compliance, inventory shrink, incident rates and associate comprehension.
The audits are analyzed by a proprietary software system that produces metrics that analyze performance. The system also produces reports are sent out promptly each month, and managers at every level immediately understand which stores are underperforming, who needs help (and what kind) and how to put in place the necessary training and communications programs that are needed to improve associate behavior.
The retail industry is uniquely fast paced, and for retailers, the speed of delivering information, and taking corrective action, is essential for improvement. The sooner problems are diagnosed and addressed, the sooner the associates can begin improving behaviors.
In the past, retailers sometimes wouldn't discover problems until annual inventory, or when situations escalated enough to become really noticeable. Real, substantial improvements only take place with continual monitoring, fast and accurate delivery of information and rapid response.
Another well-known retailer uses an online safety certification program to drive continual improvement in each store. Audit information is gathered monthly from different parts of each store's operations, then analyzed to produce actionable reports. What makes this reporting unique is that, in the case of deficiencies, each store automatically receives a detailed checklist of corrective actions that need to be taken in order to improve their results moving forward.
Are you looking to get the most improvement out of the LP technologies in place in your stores? Then keep in mind these principles:
When justifying new LP technology purchases, consider carefully what you'll do with the information produced. It's great to have technology in place, but not if it's only used to produce reports that go unread and aren't actionable.
Remember that information is only good when it gets in the hands of the people who can do something with it. Deliver the information quickly, and to the people who need it the most in order to make improvements.
Continually measure, analyze and pinpoint how to improve performance. The most successful retailers have a very disciplined and systematic approach for doing this, and it is the key to continuous improvement in driving down shrink.
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