This week’s blog post is an excerpt from our eBook Blocking & Tackling: Principles, Policies, and Tactics for Crushing Shrink and Creating a Loss Prevention Culture.
The phrase “blocking & tackling” is commonly used to reference a commitment to excellence on the fundamentals of the game. While every loss prevention manager is aware of these fundamentals, it is easy to lose sight of them due to an ever growing project pipeline.
Not every project you take on to cut down loss has to be time consuming, expensive, or challenging. Many times, all it takes is an afternoon spent revisiting one of your loss prevention fundamentals. As you review each of these, reflect on the following three questions:
- Do I have a process in place to manage this challenge?
- If so, how would I score our team on executing this program?
- And, when was the last time we reviewed this program?
For any of the following policies and tactics, if you aren’t happy with your answers to any of the questions above, perhaps it’s time for some good old fashioned blocking & tackling.
Known Loss vs. Unknown Loss
Shrink is represented by two components—known and unknown loss. Unknown loss happens when there is a real way or no current process to measure when there is no real way or no current process to measure where the tracking breakdown is taking place. Known loss is where a store has implemented processes and systems that identify opportunities to make losses known and therefore actionable steps to correct the breakdowns.
The primary goal for a loss prevention team and as a business is to put as much focus and effort into managing losses that can be measured. By getting the most into the known category as possible, you are able to put controls or different procedures and effective practices in place to reduce this loss. Shrink is not necessarily a bad thing but enables businesses to make smarter decisions with proper management and processes.
Unpacking known loss further, there are two buckets within that are either non-malicious loss—or shrink that occurs as a result of normal business operations, or malicious loss that occurs from internal and external theft. As an organization, it is imperative to have programs in place for both of these known loss categories.
The biggest impact loss prevention associates and management teams can make is focusing on operational shrink. You can easily control when a shoplifter is going to come into your store, and only hope to deter them as much as possible and reduce the opportunities, but this will never go away. The same can be said about internal theft. Refining your business practices to be efficient and effective is how to control operational shrink.
For example, associates can catch shoplifters and perhaps recover the stolen items. However, reinforcing good business practices, such as greeting and offering shoppers help, will consistently deter shoplifters far more effectively. While catching thieves may be fun and less routine, it is the day-to-day operations that make the biggest impact.
Front End, Cash Shortages and Overages
Overages and shortages refers to the money in cash drawers that are either over or below the opening balance of a register— typically handled by cashiers and money center associates. If a register is over or short from the beginning balance, shrink can occur because of a direct loss to money that is on-hand.
There are multiple reasons as to what causes a register to be over and short: from a coupon not working correctly, product not being scanned, the wrong change given back to a customer or the cashier is stealing the money directly. Recording these overages and shortages will help identify if there are consistent problems within the checkout area of the supermarket. In some cases, a cashier may need further training on counting and handling bills given that there are occasions when the bills will stick together which ultimately causes a shortage.
One proper measure to take is setting a threshold where the management and/or LP associates track the shortages and overages daily and conduct investigations more thoroughly when the number surpasses what is acceptable.
For most shrink conscious stores, if a register shows on a report that it is over or under $10, LP and front-end management will look into the cashier via video right away to investigate what happened.
- Another measurement is frequency. If it’s a lower dollar amount, further investigation may be required because of the consistency in which the register reports being over or under.
- While performing these video investigations, LP is looking into breaking down the causes and putting them into categories such as coupon errors, incorrect change, and theft. After creating these buckets, LP will code the reason for the overage or shortage, creating the ability to track the loss.
Implementing this type of tracking and action plan for register cash shortages results in proactive management to prevent future losses. Having the ability to see where the loss is occurring can properly direct the management team as to where they need to put their efforts and attention towards. For example, if the majority of loss came from coupon errors, management would be able to put a training program together for cashiers on properly issuing and collecting coupons. Ultimately, this is a system of gathering data to identify root causes and then implementing a control or training to improve that particular process or behavior at the front end—giving a defined daily tactic on reducing shrink.
To read more from Blocking & Tackling: Principles, Policies, and Tactics for Crushing Shrink and Creating a Loss Prevention Culture, and to learn about the topics listed below, download the entire eBook HERE:
- Monitoring Returns
- Center Store & Empty Packages
- Sampling & Grazing Policies
- Food Liability Issues
- Simple Actionable Solution
- Receiving Policies
- Trash Compactors
- Controlling Back Doors
- Key Controls
- Camera Systems
- Using Appreciation Programs to Decrease Shrink
- and Tracking Product Expiration Dates & Losses