A major source of inventory shrinkage occurs when vendors short deliveries or steal merchandise during the course of delivering and stocking their company's products. Whether this shortage is accidental or intentional, the impact can be significant.
Vendor fraud is one of the easiest ways someone is able
to steal from a business without being detected as they
become “trusted” suppliers with a willingness to stock
shelves as a “courtesy.”
Truth is that when the vendor stocks the shelves, it becomes difficult to distinguish between the existing stock and that which has supposedly just been delivered.
U S Businesses losses from vendor fraud amounts to $107
billion or 5.5% of total shrinkage however the National
Association of Convenience Stores estimates that vendors
account for between 15% and 20% of inventory shrinkage.
According to Rutgers University there are 4
common types of fraud:
- Short Deliveries—The vendor is not delivering
the correct amount of inventory on the shipping
invoice.
- Small amounts of inventory removed from
packaging or boxes
- Fewer boxes delivered than on the invoice
- Smaller sized inventory delivered than
was ordered
- Delivery Reloads—Delivery person removes
merchandise from recipient once delivery is completed.
Delivery person waits for the inventory to be
counted and then removes the merchandise from
the store.
- Inventory Swapping—Vendor steals directly
from the stockroom. Swapping is a common technique
where delivery person exchanges good merchandise
and replaces it with bad or outdated merchandise.
- Over Charging—Vendor steals by directly
taking cash for the store. This happens if payment
for the delivery is done on-site rather then billed
later. The delivery person may alter an invoice
by adding additional inventory or changing the
final price resulting in an overpayment that he
pockets.
Solution:
The implementation of a custom designed digital video surveillance system
with specific attention to monitoring the stockroom
delivery areas and back door.
This combined with awareness training for employees and managers along with a specific “receiving” policy will prevent vendor theft.
