Inventory loss can negatively impact your business and profitability. A major loss of revenue has been attributed to inventory shrinkage. Inventory shrinkage can be a result of employee dishonesty, shoplifting, vendor fraud, and administrative error. There are several solutions retailers can utilize to protect their business and assets.
Preventing Employee Theft
There are some ways to minimize the risk of employee theft. Pre-employment screenings are a must and should consist of past employment, criminal background check, contacting references, and drug screening. It’s vital to stay ahead of revenue loss and implement systems to deter theft at every level.
Some ways to deter theft include:
- Electronic security tags
- Security alarms
- Closed-circuit TVs and cameras
- Hiring loss-prevention professionals
- Displaying anti-theft signs (Shoplifters will be prosecuted)
- Cables, locks, and chains
Employees in a brick-and-mortar store should be aware of loss prevention tactics and how to keep the store safe. Providing newsletters and loss prevention webinars can help accomplish this and ensure that they know what to look out for.
Training and Product Placement
Properly training employees is another solution to prevent loss. Teaching them how to effectively handle products during the receiving and stocking process is an effective tactic for mitigating the risks of loss. Placing products in a strategic way, like placing larger items on the bottom shelves and more expensive items in hard-to-reach places or enclosed cases, can further prevent damage.
Further, items that have an expiration date or a shorter shelf-life should be rotated so they can be accessed first. Effectively organizing the products before they reach their expiration dates can further reduce loss.
Having the proper insurance policies in place will help minimize revenue loss. There are insurance options such as employee dishonesty coverage, also known as crime coverage, that protect employers and their clients from employee theft. Basic property insurance won’t provide protection in the unfortunate event an employee steals from the company.
You can add this coverage to your Business Owner’s Policy (BOP) to enhance your protection. BOP insurance are packages available to business owners that combine multiple common coverages.
Some additional insurance options that can be added to your BOP or purchased as a separate policy to cover theft:
- Commercial Auto Insurance – Auto insurance covers the cost of accidents that involve company-owned vehicles as well as theft and vandalism.
- Inland Marine Insurance – Property and equipment in transit typically aren’t covered in commercial property insurance or auto insurance. Inland Marine insurance provides compensation for damage or loss of property due to fire, storms, vandalism, and theft during transit.
- Cyber Insurance – Cyber liability policies offer coverage for data breaches, intellectual property rights, damages to their-party systems, system failure, cyber extortion, and business interruption. This type of coverage is crucial for an increasingly digital world.
Having the right insurance policies is imperative for minimizing revenue loss.
Preventing Loss With Biscayne
With these approaches, you can create a plan to hinder inventory shrink and protect your business and assets. The best way to prepare for theft is prevention. Establishing an efficient employee training program, organizing products in a practical way, and having the right insurance policies in place can offer successful protection.
Biscayne Risk & Insurance Group can effectively analyze the risk associated with your business and industry and curate a customized plan of action while providing appropriate insurance coverage. Contact us today and let Biscayne help protect your business.