Why should we, as loss prevention practitioners, consider modelingthe loss prevention enterprise? After all, our job is to stop theft and otherlosses with cameras, tags, alarms, and all the many types of technologicaltools at our disposal.
It is precisely because of the ever advancing technology as well asthe many possible preventive and investigative tactics available to us thatrequires us to clearly understand our mission. Modeling can help us visualizethe process, illustrating the interrelationship of technology and tactics thatwill help us effectively build an efficient, successful, integrated lossprevention strategy.
Loss Prevention Technology Integration Model
Integrating technology within the loss prevention enterprise can berepresented by several different models. In order to simplify the approach, themodel chosen for this discussion is a high-level view of the portion of the lossprevention enterprise designed to impact theft and fraud. In most retailers, lossprevention is the only entity specifically charged to control theft and fraud. So,as we explore ways to be effective in our responsibilities of reducing theftand fraud, and in utilizing data and technology intelligently and effectively,it is helpful to understand the visual representation illustrated in figure 1.
The enterprise begins with preventionand the impressions of control. This is where loss prevention spendsmost of our time and a majority of our capital budgets. If done successfully,then the rest of our workload is measurably reduced. But, our success is caughtin the dichotomy of our corporate mission.
The mission of retailers is to buy and sell highly desirable goodsat a profit. In the brick-and-mortar world of retailing, we open the doors ofour stores everyday and beg customers to come in and shop. These same customersrepresent both our success, if we can provide an environment to promotepurchases, and our potential loss, if that environment promotes theft.
And to represent our retailing brand to our customers, we aredependent upon our sales associates. These are the people whom we screencarefully prior to offering employment and then monitor equally carefully oncethey are on board. Again, they represent both our potential success andfailure.
So, because of the nature of the business the loss prevention enterprisesupports…access to highly desirable goods, transacting valuable financial data,and exposure to highly tempting opportunities…we must successfully integratepeople, processes, and technology to promote sales and control loss.
Intelligence is raw data from various sectors within the retail environment thatcan become effective information for action. It is from this intelligence thatdetection of loss is realized. This intelligence could be as simple as theauditory alarm triggered by an EAS tag or as complicated as the exceptionreports that indicate refund fraud.
This data is collected from various sources, such as point-of-sale, receiving,human resources, vendor files, physical observations, tip lines, and so on. Thedata is then stored in numerous repositories, including ASP models, datawarehouses, digitized CCTV, and other data storage facilities. But all of thisdata is not useful until it has been analyzed, sorted through, sanitized, andformatted in a user-friendly design that becomes information for action.
The information referred to here is case information and the actionis the act of investigating the case. We call this process “case development”.
When the case is thoroughly, legally, and swiftly investigated, itterminates in case closure. Dataextracted from closed cases is usually derived into lessons learned, which thenbecome extremely effective in developing new intelligence and methods of preventionand impressions of control.
The end result from this model is a continuing upgrade to ourstrategy for preventing loss as well as new tactics for detecting and gatheringintelligence when loss does occur. The overall effect of a fully integratedloss prevention enterprise is a reduction of loss.
Five Tactics that Impact Theftand Fraud
There are five basic tactics employed by the loss prevention enterpriseto impact theft and fraud.
Prevention—Asmentioned above, if we exploit this tactic intelligently, then we measurablyreduce the rest of our workload. Prevention is both the beginning and end of afully integrated strategy.
Detection—When our prevention tactic has failed and an act of theft or fraudoccurs, we must detect that act the very first time it occurs and as near realtime to the occurrence as possible. The more time that occurs between the firstincident of theft or fraud and the resolution of the incident, the more lossesthe retailer suffers.
Investigation—Immediately upon the discovery of a theft or fraud incident, theanalysis of the data surrounding the incident will lead into the investigationof the incident. It is always helpfulto remember that the investigation must occur both swiftly and legally, two terms that are often in conflict with each other.
Resolution—Thetactic of resolution occurs when the investigation leads to who did what, how,when, where, and why, and a confrontation takes place with the individual responsible.For example, if we are talking about a dishonest associate, the resolution isusually an interview, followed by employment termination, and, in alllikelihood, prosecution.
Recovery—Thistactic is essential to make the retailer whole again. While recovery of thestolen merchandise is certainly desirable, civil recovery statutes enable theretailer to offset some of i
ts costs incurred in the loss prevention enterprise.
Whenever we are selecting a new technology to employ in the loss preventionenterprise, it is essential to understand which of these five basic tacticsthis new technology would support. Figure 2 is an attempt to illustrate howcertain sample technologies support each of these tactics described.
As you consider what is represented by this illustration, you shouldalso think about how the integration of these technologies will compliment eachother in the enterprise and how ultimately the people, processes, and systemsbecome interdependent.
As the captain of the loss prevention enterprise, the LP directorand his team will be most effective through maximizing the utilization of asmuch intelligence as you can possibly collect and use that intelligence tosuccessfully carry out these five basic yet critical tactics.
Application of the Loss Prevention Enterprise Model
Now that we have produced a model and understand the five basictactics used within the model, how do we apply this theory to practice?
I have advocated utilizing multiple means of intelligence to carryout the five basic tactics of loss prevention. I have also shown that rawintelligence without analysis does not result in actionable information.
As you evaluate your sources of intelligence, which may be variedand technologically up-to-date, you may find that you lack the means to readilycombine and analyze the data. This may indicate where you need to focus youracquisition of new technology.
At the same time, by knowing that one data analysis technologyversus an alternative solution can also provide you with the informationnecessary to facilitate your civil recovery efforts, you have the opportunityto more easily justify the expenditure. If you did not take into considerationthe interrelated aspects of your various tactics, you may fail to realize thefull potential of various technologies and not gain maximum usage of yourcapital dollars.