Catching Retail Pilferage

Every year, retailers, businesses has to conduct an annual audit and inventory check of all their merchandise on hand.  To ensure that whatever inventory information they have in their computer system are accurate, to know if they have excess inventories or there has been losses, and more often there are alot of losses due to pilferage, wrong encoding of quantities of stocks, typographical error in inputs sometime in the past several months.

Its a tedious process, more often being done manually.  I have worked for a major footwear brand in the past that after conducting the inventories, we discovered a huge discrepancy in the quantity indicated by our system as against the actual stocks on hand of each stores and after carefully reviewing inventories, deliveries, actual counts, we conducted a thorough investigation on the matter.

I have to personally review input data, financial data, stock records and when I couldn't seem to actually find any probable explanation, I decided to look into our importation records, bill of lading yet still did not significantly gave me an answer, so I have to request records of all past cash register receipts from the accounting department. A tedious, prolonged hours of checking, auditing, analyzing the receipts, Lo and behold, I got my answer, there were several transactions that does not match the actual record.

I was curious why the receipts has shown several transactions that have suspicious void cash transactions, yet several credit card transactions and later also being voided.  This made me delve deeper into the matter and requested top management to do reassignments of staffs, Previous cashiers and store managers has to be transferred to other outlet stores, the old sales staff has to learn cash registering, I hired new staffs to fill the vacancy due to the "promotion" of previous sales and inventory staffs.

I have to observe the behavioral pattern amongst those I have to move to other stores, especially the store managers and the cashiers, and whenever I frequently visit them on a regular basis, gets to hear some complaints of their reassignments, ranting their dissatisfaction and grievances.  They not having a single clue that the very person who had them reassigned was me.

I have to pacify, explain managements decision was for their benefit of future promotions to be area managers, I have to come up with several valid reasoning to show them that their job movement was for their benefit in the long run.

And those that complaint the most, gets my attention and after the investigation was over in 3 months, I found out that those who have shown grievance over their area reassignment were involved in a unilateral intent to defraud the company of stocks, even cash from the coffer of their store sales.

After going through all the due process that I have requested HR to conduct, and the admittance of three of the co-conspirators to defraud the company and pinpointing each and every store managers and cashiers involved, the company filed criminal charges against the accused, for which summing it up, in 4 years, we had been defrauded of over 5 million pesos, in inventory pilferage and cash pilferage.

So bottom line, the saying that its always an insider most often holds true, and to be complacent and too trusting in delegating tasks does not mean well at times.  Though this experience and instance may be a case-in study for us, I have to make new changes in merchandising, inventory management policies within the company to avoid the same from happening.  I also have to institute new policies on rewarding best employees, honest staffs, gave a lot of "carrot on stick" benefits to operational staffs and management.

Necessary Risk to Increase Profit

In business as in any other endeavours in life, we sometimes have to take the necessary risks to make money.  I remember there are times in the course of my work as a merchandising manager, be it in a boutique setting, department store, supermarket or hypermarket banners, I relatively apply the risk-taking instinct in me in doing my budget calculations and purchases.  Even to some extent exceeding what has been allocated in my budget.

Don't get me wrong but my instinct tells me to take the calculated, well analyzed approach in my risk-taking. For example, there was a year when the crisis in 2003-2004, business has been slowing down but on the world stage there is the war between the US against Saddam Hussein in Iraq, after figuring the events and the prevailing conditions at that time, it does not take a genius to that social sentiments and peoples awareness are about the war that is going on.

Having had to handle several importations, my immediate boss, the owner and vice-president for merchandising gave me a last minute call the night before my flight going to Xiamen, China.  She said to me "Stick to the budget and do not buy anything that is not saleable".

Taking that warning as her way of reminding me that if I do not follow her advice and go beyond my purchase power and budget allotted for the categories I am handling, and if I fail in delivering the target sales for the following sales quarter, I assumed that my head will roll and I could possible be losing my job for neglecting to take her sound advice.

And so during the course of my sourcing of merchandise in China, from Xiamen to Yiwu to Shantou and Chenghai, China.  I diligently went through the nitty gritty work of selection of goods, computing the budgets, visualize how each products will be displayed once they arrive in our retail store, I have to remove those that do not fit or has high costing, I test, scrutinize, check every details of a product, see the product information, make sure there are no damages, is not prone to damage during transport shipping etc.

Even for the tedious tasks I am still exceeding my allocated inventory purchase budget by Php 16 million, so I have to reduce again the quantity for purchase of some stock keeping units (SKU), and there are times when the factory would not accept orders that are less than 10 cartons, to this my only resolve is not to buy it at all.  At the end of my 2 weeks "buying" spree I am still way above my budget by a fraction of 10 million.

So I said, I am sticking by those purchase, I will just need to fixed the budgetary overdraft once the first few shipments arrive in Manila.  42 container-full of various merchandise have been expected to be shipped to the port of Manila in stages of deliveries.  Initially I have to give the go signal for the first 6 containers to be shipped out of China in 2 weeks.

The first six containers has to reach the store shelves within 5 days, thus I have to authorize the receiving department for immediate barcoding and tagging of the goods and must meet the 5 days time-table I have set out for operations to carry out.

I went hands-on in training the salesforce, my front-end staffs that has the day to day interaction with the consumers and listen to their opinions, I have to listen how each customers would react, move, roam around the store selling area.  I have to orient them on the new products that have just arrived.

Amazingly, the first 6 containers sold 40% of the inventories within 2 weeks, and so I have to give the go signal for 18 new containers prior to the depletion of the first batch.

In the end, I not only got to stay for the next several years in my job, but that was the year I beat the highest sales ever made in the 27 years of that company's sales history, a whooping Php 175 million.

Did I exceed my budget, i can honestly admit to my boss that I reneged on her advice, but at the end of that meeting, she told me "I don't know how you did it, but from hereon, i trust you know your own judgment, Just rake in as much money as the company needs, You are really a magician".

And so I was called the miracle magician by my peers for being defiant in maintaining the budget, yet was able to hit the highest recorded sales of the company.  It has been a very satisfying and humbled me in every way that made my skills in retail more masterful by experience