Inventory theft is sadly unavoidable for most businesses. Whether it’s theft by internal employees or retail customers, businesses should account for some loss in the form of theft. While some level of theft is unavoidable, business owners should take measures to make theft or loss as minimal as possible. Here’s what you should know about effective ways to prevent inventory theft.
Why inventory theft is a problem
Inventory theft is a problem for many reasons. Theft has impacts from a loss of revenue to a decrease in inventory levels. If you don’t take measures to reduce theft, you could experience greater losses, which could have greater impacts, such as the inability to fulfill customer orders. The main reason inventory theft is a problem is that it impacts the bottom line. Additionally, with inventory being an asset, it reduces the assets of a company. It can also make inventory levels appear to be wrong as you will have less inventory than what you may have accounted for
Most Effective Ways To Prevent Inventory Theft
Conduct background checks on all employees who have access to inventory:
Unfortunately, internal theft is a big problem. With access to inventory and an understanding of how operations work, employees can steal inventory. Whether it be harmless, or completely intentional, you will want to do your best to reduce internal theft. One way to do so is to conduct background checks on all employees, especially those who have access to inventory. While some employees may not have been caught or reported, a background check can help you flag some potential hires who may have a history of stealing or unethical behavior.
Install surveillance cameras at strategic locations throughout your warehouse or storage facility:
Surveillance cameras are powerful and you may not even need to monitor them 24/7 to make them effective. Just the threat of recorded footage can deter employees from stealing. If employees want to steal, though, they may find ways around the cameras. You may want some cameras hidden so that employees are not entirely aware of their placement. Footage from security cameras should be kept private so that employees are not aware of exactly what the camera covers. You also don’t want employees to be able to delete footage.
Use an electronic security system that requires authorized personnel to enter sensitive areas:
Tracking who comes and goes from sensitive areas is another way to prevent theft. It holds employees accountable. When employees are held to certain standards, they are less likely to steal as the fear of getting caught is greater.
Use barcodes or RFID tags to track all inventory items:
Inventory tracking systems can help reduce theft. They can also help you identify theft faster. While inventory tracking systems can be expensive, they are well worth the investment.
Conduct regular inventory audits to ensure that your records are accurate:
When a theft occurs, inventory levels will reflect loss. Auditing inventory levels regularly can help you catch theft faster as well as determine how much loss you should be accounting for.
Train your employees on proper inventory procedures and how to spot suspicious activity:
Inventory counts should be taken regularly. This practice alone can deter individuals from stealing. If employees think you are not paying attention, they may sense an opportunity. Additionally, training employees on how to spot suspicious activity and encouraging them to come forward can help you identify theft sooner rather than later.
Restrict employee access to sensitive areas based on job responsibilities:
Employees can have access to certain areas or inventory based on their job requirements or clearances. For security footage areas, high-dollar inventory areas, areas with cash, and so forth, you can restrict and or log who comes in and out.
Encourage employees to report any suspicious activity immediately:
Employees need to feel safe and protected to report suspicious activity. Encouraging them is one thing, but reassuring them that the information will not be leaked is another. Employees are often scared to come forward for fear that retaliation will occur. Put a process in place for employees to anonymously or privately report incidents. They should not have to ask around to determine how to report theft.
Have a zero-tolerance policy for inventory theft:
A zero-tolerance policy sets the precedent for employees that theft is not tolerated. Employees who value their jobs will likely be deterred from stealing if they see a coworker get terminated over stealing.
Work with law enforcement to investigate and prosecute inventory theft cases:
As we mentioned earlier, theft is sometimes harmless and unintentional. Nevertheless, theft is theft. If you catch someone stealing, you should take action to report the incident. It’s likely that if someone steals once, they will steal again. Law enforcement can help you take action to reduce the potential risk of an individual stealing again while determining punishment for their wrongdoing to you.
Closing thoughts
Inventory is the lifeblood of businesses. It is purchased and sold to turn a profit, and when theft occurs, the business suffers a loss. If you purchased inventory with inventory financing, you would have to cover additional loss. Maintaining accurate and adequate inventory levels is critical, as is maintaining healthy cash flows.
How Kickfurther can help
Kickfurther can fund up to 100% of inventory, with flexible repayment periods. Without giving up equity in your business, you can secure the funds you need for inventory at up to 30% cheaper than other options. Kickfurther can help businesses purchase inventory while fostering growth and freeing up cash flow. Our funding model is unique and truly designed with the best interest of the future of every business in mind. Working with our community of backers, you can share your passion and successes to gain their buy-in. Before obtaining any inventory funding, you should have accurate financials documented. This includes how much loss you incur regularly. After obtaining inventory funding you will want to continue to monitor theft, as a general healthy exercise for the business.
