We can think of two legitimate reasons for inventory to leave your pallet rack system. The first is the most obvious: the item has sold, or the boxes on the pallet are moving to the carton flow racks. The second legitimate reason is that the pallets are being reorganized in order to make space for different inventory.
What’s not a good reason for items to leave your industrial shelving? Theft. While we wish we didn’t have to write this blog, theft is a big problem in warehouses. After all, warehouses are large areas where people feel that they can get away with anything. Would you really be surprised if some inventory goes missing from the darkest corners of your pallet racks? Probably not.
There are five primary reasons that employees steal from their employer:
- They Are In Financial Trouble – Being in financial trouble can make even the best people do bad things. If an employee is a couple of hundred dollars short on their mortgage this month, they might not see any harm in walking out with a set of headphones, a couple smartphones, or some other electronic device every week.
- They Feel Wronged – If an employee feels that they’ve been wronged in some way, they’re more likely to get back at a company by stealing. Was an employee angered because their vacation time at Christmas wasn’t approved? Were they forced to work over the weekend? Were they passed over for a promotion? All of these situations can lead to employee theft.
- They Feel Undercompensated – If they aren’t getting the financial competition that their peers enjoy — either in the same building or in the industry — they might feel that they’ll get compensated “one way or the other” by stealing. If they feel that they deserve it and that your business owes them, they’re more likely to take matters into their own hands.
- Opportunity – Opportunity can make a thief out of a normally honest person. If expensive inventory is just sitting near the non-alarmed exit, an honest person might not consider taking it the first, second, or tenth time they walk past it. But maybe the idea gets into their head the 11th time they pass the inventory, and by the 100th time they’re thinking “well, it’s still just sitting there, no one is going to miss it.” Out the back door it goes.
- The Chances of Getting Caught Are Low – This is a continuation of the opportunity we mentioned above. If an employee feels that they won’t get caught, or if they believe that they won’t be punished if they do, then they’re more likely to give it a try. This sort of problem can cascade if theft is commonplace in the warehouse; if everyone is stealing, what are the chances that any one person will get caught?
Maybe you trust every single person in your warehouse, and every time you take inventory the numbers all balance. If that’s the case…great! But if anything has gone missing mysteriously, maybe it’s time to consider some of the following.
Talk To Your Employees
One of the best ways to prevent theft in a warehouse costs absolutely nothing: get to know your employees. It’s also one of the most humane and least intrusive. How does this work?
- Employees who feel that the manager of the warehouse cares for them — and by extension, the company cares — are less likely to steal. And if true friendships form, all the better!
- Simply talking to an employee and knowing a little bit about them makes them feel as if they are a part of the team, and stealing from the team means stealing from themselves.
- Employees who are valued are less likely to harbor negative feelings toward the company, which makes them less likely to steal.
- Employees who are noticed, i.e. talked to, are less likely to feel that they are able to slip into the shadows of a warehouse and pop open some boxes. If you greet them by name, it shows that you recognize them. If you see them in the same place 15 minutes later, they know that you’ll recognize them again.
One of the most obvious ways you can prevent theft is with the use of cameras. Cameras that are recording your pallet racks not only catch people in the act of stealing, but act as a deterrent in the first place.
Unfortunately, cameras can get expensive and their coverage area can be limited. With pallet racking systems being so tall, a single camera might only be able to see down a single aisle. The solution could be a mixture of live and fake cameras. If they’re all installed at the same time, costs can be reduced and employees will be none the wiser. Even if it gets out that only some of the cameras are real, employees still won’t be sure which cameras are real and which aren’t. Most will assume that they’re always being recorded.
One last thing. Make sure you have cameras inside and outside your warehouse. If you accuse an employee of stealing because the camera shows them driving a pallet outside, they could claim that they were just moving it as part of their job. But if the outside camera shows it being loaded into their pickup truck, their excuses won’t go nearly as far.
Bonus!: Cameras can prevent a number of other problems as well. If you believe an employee is sneaking a smoke in the farthest corner of the warehouse, cameras can convince them to take it outside. If there’s a place where employees like to take a nap or just hang out on their phone for an hour, cameras can encourage them to get back to work.
RFID and NFC
As warehouses become more and more automated, radio-frequency identification (RFID) and near-field communication (NFC) are taking over. These are often used to locate and identify inventory in the warehouse, often helping drones and robots hone in on the right pallet.
Why not incorporate what you’re already using as a means of theft prevention by using the RFID or NFD as a type of anti-theft tag? While it might not be able to work on individual items, we bet it can reduce the theft of boxes…or even entire pallets.
If you don’t already do background checks on your employees, it’s probably a good idea to start. It’s not just theft you should worry about, but also anger issues or abuse that could cause everyone in the warehouse problems
Now, we’re not saying that you shouldn’t hire someone who’s spent time in prison. Some charges are more understandable than others, and most people deserve a second chance. But if the reason they were in prison involved multiple thefts, not hiring that person in the first place will probably reduce your inventory loss in the future.
Have Inventory Done Regularly
Let’s say you hire someone new in the warehouse, and the other workers soon tell them that inventory hasn’t been done in years. That new person could get an idea in their head: “If I steal something, for all they know it’s been missing for three years. Other people have been here longer, so there’s a better chance they’ll be blamed.”
Doing regular inventory not only lets the warehouse workers know that missing stuff will be noticed sooner, but it also improves overall customer experience. It’s a winning scenario no matter how you look at it.
Reward Confidential Reporting
An employee needs to know that they can say something if they see something. At the same time, many employees are fearful to report someone for theft because they might fear retribution from the thief.
That’s where confidential reporting comes in. If an employee wants to report theft, they should be able to do so without revealing themselves. You’ll be able to keep a better eye on the accused to see if they are responsible for future losses.
Provide Fewer Exits
In most cases, the number of exits are dictated by the warehouse designer and are usually based on the exits required by OSHA and other codes set by the city or state. To have fewer could cause huge problems during an emergency, and that could be a major safety concern.
What we are suggesting is that you have fewer non-emergency exits. While it might be convenient for employees to have that non-alarmed door at the back of the building so that they can reach the lunch patio, it’s just one more door that allows your inventory to disappear. Stealing is often a crime of opportunity, and simply taking away that opportunity by reducing the number of doors an employee uses can reduce theft.
Employees might complain that you’ve taken away the door with the best area for a smoke break, but telling them that it’s to prevent further theft will keep everyone’s eyes open to others stealing.
One way to prevent employees from stealing is to keep them in cages.
Don’t worry, we’re kidding. We’re not going to suggest keeping your employees locked up, but we will suggest that you keep some items locked up in order to prevent them from being stolen. Wire partitions are an excellent way to put one more barrier between your most expensive inventory and an employee’s car trunk.
Of course, many warehouses have equipment that’s very expensive. Maybe it’s something as simple as a cordless screwdriver, or something smaller and easier to slip into a pocket like a set of (very expensive) milling bits. Such high-value items won’t even be counted as missing during basic inventory, so it’s important to do what you can to keep them in place.
Prevent Instead of Catch
In so many of the scenarios, you’ll notice that the bulk of your employee theft prevention in a warehouse should be about prevention instead of just catching them in the act. For instance, putting out obvious cameras will keep an employee from stealing better than hidden cameras will. Not hiring a known thief in the first place makes much more sense than hiring them and then catching them in the act.
Thanks to movies and television, we get a rush whenever someone is caught on tape and gets their comeuppance. But while it might feel good to catch someone on tape or find them red-handed with the missing inventory, that can create additional problems. The fired employee could sue for wrongful termination, which will cost you legal fees and headaches even if you have them dead-to-rights. An employee caught with company property in their truck could become confrontational and hurt anyone who approaches them. Wouldn’t it just be better to prevent theft in the first place?
Protect Everything On Your Pallet Racks!
We hope that the anti-theft suggestions we’ve made above keep your inventory from being stolen. Employee theft is a huge problem, and you’ll never stop it completely. But it can be mitigated, which is great for your company and can create trust with employees who aren’t stealing.
While we want to protect your inventory from theft, DAK Equipment and Engineering also wants to protect it by providing you with the best pallet rack system to meet your business’ needs. We also carry the pallet racks protection to keep the industrial shelving — and your employees — safe. We look forward to hearing from you!