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2013 DNC Food & Beverage Summit Corporate Loss Prevention Program “ A Culture of Integrity”

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Presentation on theme: "2013 DNC Food & Beverage Summit Corporate Loss Prevention Program “ A Culture of Integrity”"— Presentation transcript:

1 2013 DNC Food & Beverage Summit Corporate Loss Prevention Program “ A Culture of Integrity”

2  To establish a strategic loss prevention program leveraging multiple internal partnerships (Internal Audit, Treasury, IT and Risk Management. Collaborated with various business partners.  To provide clarity regarding shrink and loss rates by unit (SSUS,THS,P&R,G&E, BOS, P&S,UK,AUS) with DNC LP Visibility. Scalable phased in program.  Limit Exposures to DNC by Internal Occupational Fraud Schemes & External Loss Sources primarily through increased education.  Decrease Controllable Losses and Negligence through a comprehensive Associate Awareness Campaign.  Leverage Technology, Training and LP Best Practices

3 Based on 100% global base :  10% of all people will never become dishonest even when given the opportunity to be dishonest without detection.  80% of all people will engage in dishonesty if they believe the dishonesty will not be detected. Each person has a level of dishonesty based upon their own moral code. (This is whom we want to effect).  10% of people’s sole reason for joining the organization is to steal, misappropriate and engage in dishonesty from the onset of employment.

4  Not all losses are a result of theft.  The challenge at DNC is measuring loss. This include reduced profits through wastage, spoilage and damages.  Failing to control or quantify loss leads to increased COGS and lost profitability.  Inventory levels become affected when these key items are not being measured correctly.  This can add several percentage points to the COGS and impact the business significantly.

5 CORPORATE VISIBILITY  As of 6/25/13, DNC operates 123 locations globally, approximately 20% are SKPI eligible  13% out of the 20% SKPI eligible units have not reported inventory variance for this year  DNC Corporate currently has visibility of 6.5% of unit inventory results globally  No centralized inventory monitoring system in place. Masterfiles do not exist  Reporting ability for 80% of DNC units is not visible to LP

6 SHRINK RATES DNC SHRINK RATE % 1.58%  US average retail shrink rate in 2011 is 1.58% of sales 1.39%  EU average retail shrink rate in 2011 is 1.39% of sales 1.63%  US average F&B shrink rate in 2011 is 1.63% of sales, liquor 2.95% of sales  EU average F&B shrink rate in 2011 is 1.57% of sales, liquor 2.25% of sales Source: 2011 Global Retail Theft Barometer  Unknown Shrink Rates in 2013 due to:  Variance reports not being sent back to DNC Global HQ  Inventories not being completed properly  Poor Pre-Inventory preparation

7  Ability to educate the 50,000+ employees quarterly with LP/CS related topics  Each quarter LP/CS will concentrate on a particular cover theme  Advertise employee dishonesty apprehensions in a “Gotcha” section quarterly  Can be distributed in both virtual and paper copies to reduce printing costs Fall 2013 Newsletter

8 Theft Deterrence through Transparency GOTCHA’S Winter 2013 Newsletter

9 Loss Prevention Awareness Poster This poster is designed to complete awareness at several levels: Provide an avenue to confidentially report concerns or observations without the fear of reprisal or non- action Increased environmental awareness. Helps establish ownership in the business operation by all stakeholders Encompasses messaging to engage in active observations of both internal and external Deterrence for internal theft and visiting vendor dishonesty Advertises the Associate Hotline number for other employee related concerns

10 FRAUD TRIANGLE DETECTION OF INTERNAL THEFT  43.3% Employee tips  14.6% Management review  14.4% Internal Audit Detection  7.0% Accidental Discovery  4.8% Account Reconciliations  4.1% Document Examinations  3.3% External Audit  3.0% Notified by Police  1.9% Surveillance/Monitoring  1.5% Confession  1.1% IT Controls  1.1% Other  Source: ACFE 2012 Report to the Nations

11  Physical Security is not a deterrent to theft & dishonesty  Most internal thefts occur for 18 months before detected  Peers in most cases have strong suspicions regarding theft and/or fraud but do not report to a supervisor  87.6% of all reported corporate thefts were asset misappropriation cases  87.3% of dishonest employees were never charged or convicted of a crime previously Source: ACFE 2012 Report to the Nations

12  A multi-disciplinary approach to deter criminal behavior through environmental design.  Theory developed in the 1960’s in the Chicago Housing Authority to address security concerns.  Criminologist C. Ray Jeffrey highlights the theory in a 1971 book called “Defensible Space”.  Largely developed through the “Broken Windows” theory. (Abandoned houses, lead to broken windows, which lead to decreased housing values). This same theory can be applied to businesses.  Controllable thefts and criminal conduct will increase in units not properly maintained, have poor housekeeping and are lacking strong internal controls.

13  Natural Surveillance : increases the threat of apprehension by taking steps to increase the perception that people can be seen (placing more expensive merchandise closer to the register).  Natural Access Control : limits the opportunity for crime by taking steps to clearly differentiate between public space and private space (Proper lighting, designated points of entry/exit).  Natural Territorial Reinforcement : promotes social control through increased definition of space and improved proprietary concern (Motion Detectors, Alarms, Integrated Camera Systems).  Maintenance : is an expression of ownership of property. Deterioration indicates less control by the intended users of a site and indicate a greater tolerance of disorder (Broken Windows Theory).  Activity Support : increases the use of a built environment for safe activities with the intent of increasing the risk of detection of criminal and undesirable activities (understanding normal course of business, so outliers can be more readily identified).

14  Affordable alternative to deter theft of lesser priced merchandise  High Impact  Immediate visual deterrent  Customizable Text  Decreases thefts of opportunity  No need for deactivation by Sales Associates  Less customer service issues vs. conventional RFID systems

15  Reduce inventory labor costs  Real-time perpetual inventory results  Measure product life  Forecast Optimization  Inventory Profitability  Integrated technology identifies and reduces internal thefts.

16  Radio-frequency identification (RFID) is the wireless non-contact use of radio- frequency electromagnetic fields to transfer data, for the purposes of automatically identifying and tracking tags attached to objects.  Tags may either be read-only, having a factory-assigned serial number that is used as a key into a database, or may be read/write, where object-specific data can be written into the tag by the system user. Field programmable tags may be write- once, read-multiple; "blank" tags may be written with an electronic product code by the user.

17  Completion of SAFE Assessments at Units to increase controls of the Cash Rooms and General Offices  Case Management System for follow-up of Associate Hotline calls  Integration of CCTV, Card Access and Intrusion Systems  Workplace Violence Program  Alcohol Compliance Program in Sportservice

18  DNC Corporate Crisis Plan  CCRP Reporting Guidelines  When Do I make a call to the Associate Hotline?  What happens once I make the call to report an incident?

19  Dennis Thomas Corporate Security Loss Prevention Operations Manager (716) 858-5678  Richard Santucci Corporate Security Manager (716) 858-5321

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