Protecting the corporate name or brand is a business strategy that dwarfs most other threats to profits and asset vulnerabilities. Theft, fraud, product tampering, counterfeiting and diversion can quickly erode consumer confidence, destroy profitability and markets faster than any other form of business loss.
Most of us think of theft in terms of single events, when in reality, the problem is far more dynamic. The cumulative effect of these seemingly innocuous losses can be in the millions of dollars. To the manufacturer or retailer, industrial pilferage curtails the ability to create wealth. It reduces markets and destroys marketing efforts, because without products to sell, clients will shop elsewhere.
Domestic and international supply chains are the breeding grounds for in-transit loss. The cost of theft of in-transit goods is estimated at easily more than $15 billion domestically and growing.
Understanding the Problem
To deal with the conditions of loss and their ramifications at the retail and consumer levels, you must understand both the vulnerabilities of unattended cargo and what actions can be taken to limit this vulnerability.
There are numerous best practices shippers can employ for the containment, security and control of unattended cargo, many of which are merely procedural and have no real cost. To stop theft, companies must seek solutions that harden targets, deter thieves and secure their unique supply chain against known threats. In order to be most effective, each security element must be planned with the entire supply chain in mind, including the integration of carriers and recipients into the chosen methodology.
Negative Impact of Theft
Although theft losses fall well behind damage in overall dollars, theft losses have a vastly greater negative impact on retailers and manufacturers. For drugs or food out of the care and control of the owner, for example, must be destroyed by law, even after recovery. For an electronic products manufacturer, a theft could mean the business, brand and product are competing with itself — against authentic stolen versions of its own brand in the same markets. When theft becomes a part of product distribution, brand owners lose their ability to determine markets and price points, because unauthorized resellers are marketing like goods. Further, businesses that deal in ancillary sales such as warranty protection, service contracts and peripheral devices lose their ability to attract these dollars for their resellers — instead they wind up servicing stolen goods.
When manufacturers lose control of which distribution channels its good are coming from, the result is a cheapening of the brand in the eyes of the consumer and an instant loss of market for authorized resellers. Only .5 percent of containers arriving at U.S. ports are currently opened for inspection; however, none of the inspectors are looking for stolen, counterfeit or diverted products. Because there is no possible way to identify the counterfeit or diverted goods, nor is Customs empowered to do these searches or identify such goods, the illicit products move freely in what can be termed an underground supply chain. At this point in time, the focus of government security at the port of entry level, is the interdiction of weapons people and illegal drugs coming in by truck, air, rail or container from points outside our borders. Federal mandates have moved every counter-theft task force to counter terrorism missions.
Economic Terrorism: A New Vulnerability
Another vulnerability that brand owners and retailers face is economic terrorism — using containerized freight to deliver a weapon seamlessly to their door. This can be a terrifying thought, as a weapon disguised as cargo can pass onto the dock of any store, warehouse or manufacturing plant with little effort. Trucks possibly filled with explosives are typically allowed to move through yards even if guards are present, so long as the paperwork and vendor documents are in order. Rarely do guards check trailer or container contents prior to allowing cargo to enter facilities. This is especially true in normal truck deliveries to retail stores, where no gates, guards or process controls are in effect.