Jennifer Garner and Kiefer Sutherland probably won't be showing up at your distribution center any time soon. But some of the ultra-cool espionage-like technology used by secret agents on the hit TV shows "Alias" and "24" might. Desperate to stem inventory "shrinkage," companies that store high-value items like jewelry, electronics and pharmaceuticals are securing their premises by installing high-tech antitheft devices.
Time was when high security meant a chain link fence. But no longer. Barrier fences are still in use, but the new versions are gussied up with microphonic cable sensors that sound an alarm at the merest hint of vibration. Inside the facility, you're likely to find the latest access verification technologies like fingerprint scanners or biometric technologies. Biometric systems can recognize people based on a physiological or behavioral characteristic—whether it's facial features, fingerprints, hand geometry or handwriting or even a subject's iris, retina, veins or voice.
True, it's expensive. But protecting your inventory is cheaper than the alternative. Supply chain theft has been pegged at anywhere from a $10 billion to an $80 billion industry, reports security consultant Barry Brandman. One company Brandman's familiar with was absorbing annual losses that reached well into the seven figures before it finally signed on with his service. That's a lot of laptops or tennis bracelets.
The perpetrators? They could be strangers. But they could just as easily be the people you see every day. Theft is committed by employees, vendors and contractors, confirms Brandman, who is president of Danbee Investigations, based in Midland Park, N.J. They don't even have to be disgruntled employees, vendors and contractors. Many people view inventory and cargo theft as a victimless crime, explains John Tabor, director of security at National Retail Systems, a trucking and logistics services company that hauls products for most major retailers. "The theory is that people like retailers and importers are more than capable of incurring the losses and that they have the insurance to cover it."
Then there are the professionals. "Product theft truly represents an entire underground economy," Brandman says. "There are organized crime rings that specialize in distribution and logistics. They will plant workers in the system and they can be there for months before [striking]."
That type of operation can be insidiously difficult to detect . "Much of the theft in distribution centers today looks just like standard operating procedure; if you have people working in collusion, product can just vanish into thin air,"says Brandman, who is currently investigating a $1.4 million theft from a DC in the Southeast. "Unless you carry a product with little or no intrinsic value, it's got to be a concern. If you carry things like apparel, fragrances or computers, then you'd better be sure you are protecting those goods. Because it's not a question of if, but of when and how much."
Access denied
First Data Resources, which ships six million credit cards a month, is taking no chances. The company has made its warehouse in Omaha, Neb., virtually impenetrable from the outside (the facility, in fact, was built to withstand winds of over 200 miles per hour). Before an employee can even enter the warehouse, he or she must submit to a handscan. After employees have gained entrance, their movements are tracked by one of the 127 cameras in use throughout the facility.
But it's not enough just to turn the DC into a fortress. At some point, most—if not all—inventory becomes cargo. Goods are particularly vulnerable to theft when they're in transit. To keep closer tabs on trailers, many truckers are installing high-tech tracking systems. National Retail Systems recently began installing global positioning system (GPS) tracking devices on its trailer units. The location of each trailer is monitored on the Internet, and authorities are notified immediately if the truck is powered up when it shouldn't be or if the truck's seal is breached at an unauthorized time. The technology typically runs $1,000 per trailer, a hefty investment.
Will truckers shell out that kind of money? "Transportation companies work on such small margins that getting them to commit to new technologies is tough,"concedes Tabor, "but the industry leaders are starting to move in that direction. The GPS system has been a pretty easy sell from a security standpoint, but then you get the added benefit of being able to utilize the trailer better if you know its where abouts. You might have a trailer tied up now for three or four days, instead of sitting for weeks somewhere."
Ready for their close-ups?
Of course, not everybody is convinced that dazzling technology will bring dazzling results. Some companies swear by the virtues of vigilance: maintaining a strong management presence in the distribution center and making sure employees know that the company will take a tough stand on theft.
"We have a very good presence on the floor with supervision," says Bruce Mant z, director of operations for Automated Distribution Systems, a third-party provider that handles high-value items like footwear and apparel. "We have a lot of controls in place, and we cycle count the entire building every week so if something is going on we'll find it quickly. They might be able to conceal some small items, but they are not going to get any big items."
Mantz likes to keep things simple: "We have one door in, and one door out," he says. "We limit the way in and out of the building and when we do have penetrations at truck doors, everything is on 24-hour circuits. If there is an alarm, it goes out over the radio and within 30 seconds we have somebody within that location." And while they're at work, employees are watched at all times by very visible closed-circuit TV cameras. "We don't hide it, " Mantz says of his company's decision to use surveillance. "It's a deterrent."
Editor's note: The Department of Homeland Security's Web site offers more than just fresh uses for duct tape. It also provides a checklist of ways to secure warehouses from intruders—whether terrorists or thieves. To view the list, go to www.customs.ustreas.gov/xp/cgov/import/commercial_enforcement/ctpat.
Gartner, Inc.
