merchandise distribution and loss prevention

8/8/2019 Merchandise Distribution and Loss Prevention

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Merchandise Distribution

and loss prevention


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Methodology and technique used for merchandise distributionfrom vendor to retailers premise depends on the size of themerchandise.

In house receiving : Small operations with few outlets have ordersent directly to the units. Eg: Oshkosh Bgosh

Centralized receiving: Large department stores and specialtyorganization, catalog operations, e-retail ventures and homeshopping receive their goods at a centralized location in whichall of the product go through a receiving procedure.

Advantage:

More space for merchandise on the selling floor

Better control of goods

Cost reduction

Regional receiving: Brick and mortar operations having large no. ofunits dispersed throughout a range of geographical locations,most opt for regional receiving.

Advantage :

Merchandise reaches selling floor in less time

Individual store receiving: happens in case of individual


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Merchandise distributiontechnology

Technology interfaces with suppliers.EDI and VMI

EDI computer to computer exchange of data in aformat specified by retailers and vendors.

No human intervention at either ends of thetransaction.

Advantages:

Better inventory management

Reduced expenses, improved accuracy, betterbusiness relationship, increased sales andminimized of paperwork.

VMI involves use of scanners at the retail operationsfor inputs on sale of product and replenishinventory. The onus is on the vendor to restock thecustomers inventory.

These technologies collectively are known as Quick

Response inventory systems.


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Merchandise checkingprocedures

Quantitative and qualitative checks are done onthe incoming merchandise.

Direct checks: checker physically counts themerchandise and make adjustment at this

point. Matches content with the purchaseorder. It is the fastest technique but dishonestchecker may verify the content withoutactually counting. Hence once verifiedcompany has no recourse on shortages

Blind checks

: merchandise checker preparesa list of items that are in the package.

Semi checks: combine best features of othertwo. Checker are provided with a list of itemswithout quantity.

Quality checks are also done. Substitutionshipping


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Marking Merchandise

Individual items must be marked for a number ofreasons:

Eliminate possibility of charging different price.

Give pertinent information: price, size are beneficial toretailer such as Target and Wal mart and off pricerslike T J Maxx and Burlington Coat Factory that relyupon customers to make their own choice.

Assess price and determine their range

By placing information such as vendor name , stylename, color, merchandise classification, size, and

price on the tag retailer gets to know the customersresponse to the merchandise.

Proper information on tag allows merchants to use EDIand VMI systems to automatically adjust inventorylevels of the stock

Evaluate stock turnover.


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Marking Procedure

Handmarking

Handheld equipment

Computerised tags


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Process

failures

Inter-

companyfraud

Internal

theft

External

theft

Shrinkage

Definition Shrinkage


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What Does Shrinkage Mean?

Inter-CompanyFraud

ProcessFailures

InternalTheft

ExternalTheft

Deliberate Under/Over Delivery Invoice Errors Quality and Weight of Items

Inventory Errors Promotion Errors

OPricing Errors Stock Going Out of Date Damage to Stock Product Delivery/Scanning Errors

Theft of Stock and Cash Collusion

Shoplifting Till Snatches Burglary


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New Shrinkage Typology


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Shrinkage Retail Iceberg

51%

49%

Lack of visibility

Lack of awareness

When did it

happen? Where did it

happen?

How did it happen?

Who wasresponsible?

Lack of accountability

Prioritisation of the most

visible/acceptable


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Causes of Retail Stock Loss

Study External Internal Process Vendor

Otago Univ (New Zealand) 68 12 20 3

European Theft Barometer 49 31 14 6

ECR Europe 38 28 27 7

Retail Council of Canada 35 40 18 7

Food Marketing Institute (US) 35 38 18 8

ECR Australia 35 25 29 11

NRSS (US) 33 47 15 5

National Smarket (US) 20 57 ? ?


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Location of the Problem

24%

Manufacturer

Distribution

5%

Retail

Distribution

71%

Retail

Stores


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Retailers Missed Profit Opportunity

0%

1 %

2 %

3 %

4 %

5 %

Current Potential

Av

erageRetai l

er

Mar g

in

AverageRetailer

ProfitMargin

2.99%

62%M

arginG

rowth

1.84%

AverageRetailerShrink

Margin

4.83%

1.84%


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Deterrents and controls

Retailer employ different deterrents and controlto address the problem of shoplifting

Electronic articles surveillance systems alsoknown as tag alarm systems. Found to be the

most effective anti shoplifting tool available. Electromagnetic systems : The strip is notremoved but deactivated by a scanner.

Acousto Magnetic: use RF systems

Video surveillance

Merchandise anchoring

Magnifying Mirrors

Try on room


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Employee programs Screening of applications

Checking references

Testing for drugs Psychological Testing

Merchandise control: lockers foremployees personnel belongings

Shopping sales associates: mysteryshopper

Recognition programmes

Offender persecution

T d i M h di


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Trends in Merchandisedistribution and loss

prevention Expanded use of Technology Increased use for computerized tags

Updating of EAS systems Applicant screening

Information dissemination for fraud

prevention: eg: www.protx.com

merchandise distribution and loss prevention

Documents