Can Inventory Theft Be Prevented?
Workers at a Texas Caterpillar plant were recently accused of stealing some $160,000 worth of parts. Nine people are believed to be involved in the thefts, which have been taking place since July.
Situations like the one faced by Caterpillar show how quickly theft problems can get out of control if they aren’t addressed quickly. Thanks in part to the fact that Caterpillar is known to have systems in place to monitor their processes, the perpetrators were caught and will now likely face prosecution.
But what can other companies do to protect themselves from theft? These crimes can’t always be prevented, but is there a way to limit the degree of their impact?
While it is hard to say what could have prevented this specific situation in Texas without knowing more facts, one thing is for certain: companies that employ barcoding-enabled organizational/accountability tools like CMMS stand the best chance of catching these problems early and limiting their impact.
+ Real time visibility into operations
It practically goes without saying that if a company maintains inventory of any kind, that inventory is recorded as an expense in an accounting system of some kind. Companies may differ in terms of the types of systems they use, but ultimately, they must track how much they’re spending on inventory.
But this can be a problem. Because inventory is being tracked somewhere, the way it’s being tracked is often left unexamined. This is exactly the kind of false sense of security that leaves companies vulnerable to the kind of theft that took place in Texas.
This is because accounting software is good at tracking raw data on expenditures, but does not always provide insight into the day-to-day movement of parts on and off site. To get this data, companies need to implement a more robust inventory system, preferably with barcoding functionality.
By associating parts with barcodes, and requiring employees to scan them as they leave shelves and part rooms, managers can get a much better handle on the daily flow of their inventory. If owners and managers are only looking at accounting data, it may be harder, if not impossible, to discover discrepancies associated with theft and other losses.
Through a combination of regular cycle counts and close inventory tracking (including assignment to work orders), managers can keep a close eye on the movement of their inventory and spot problems early.
+ Building a culture of accountability
Keeping close watch over inventory with barcoding-enabled inventory tracking solutions is helpful for owners and managers because it gives them accurate insight into daily operations, but what about the employees themselves?
Just by investing in these powerful tracking tools, owners and managers signal to their employees that they are serious about accountability. Research shows that more crimes are committed in areas where law enforcement is apparently lax, a concept often referred to as the “broken windows theory.”
For this reason, it is important to create additional layers of accountability at the operational level. If employees are required to account for their work in a robust software system, it stands to reason that they will be less likely to attempt theft because they see fewer administrative loopholes to exploit.
And by assessing employees’ proper use of the system, managers have more data to identify potential problem employees. If an employee refuses to utilize the system properly, it can be a sign that they are cutting other corners as well.
If a problem does arise—such as an act of theft—software solutions like CMMS provide solid data that can be used to target the source of the problem. Managers can check to see who was handling inventory and when.
Theft can be a frustrating problem, but owners and managers do themselves no favors by assuming that nothing can be done–or assuming that tracking inventory as an expense in their accounting software is sufficient to prevent problems. With the right organizational tools, such as CMMS, many problems can be prevented, and the impact of those that do arise can be mitigated quickly.