How to Stop Supply Chain Crimes from Hurting Your Business

Posted by Sean Murphy on May 4, 2020

If there's one thing some companies are learning the hard way, it's that it's possible to disrupt the supply chain in an instant. COVID-19 had people racing to stock up on the essentials. Many stores could not keep toilet paper, soap, wipes, and hand sanitizer in stock. Even ecommerce conglomerate Amazon with its seemingly bottomless inventory ran out of all the essentials. And it went on for weeks.

That's because these essentials fall under the just-in-time supply chain. Stores don't stock up on these items. They don't want to fill up valuable shelf space with bulky toilet paper for just-in-case. Responsive just-in-time supply networks deliver what's needed when it's needed.

COVID-19 isn't the only scenario that has affected the supply chain in modern times. The World Trade Center attack on 9/11 led to the U.S. government closing borders and shutting down air traffic. Undoubtedly, it hit the supply chain.

It's bad enough when the supply chain runs into an unexpected bump in the road that throws it out of whack. Add crime to the supply chain and it exacerbates what's already a precarious situation.

The Effects of COVID-19 on Cargo Theft

How does the COVID-19 outbreak affect cargo theft? CargoNet reports that experienced thieves are taking advantage of the pandemic. Why would the pandemic present an opportunity? An information-sharing system founded by the ISO and the National Insurance Crime Bureau (NICB) speculates that thieves believe COVID-19 has driven law enforcement to change their priorities or operating practices.

The following thefts occurred after the outbreak arrived the U.S.

  • Truckload with 18,000 lbs. of toilet paper stolen in Whitsett, N.C. on March 19, 2020.
  • Seven truckloads of copper scrap stolen on March 23 and March 24, 2020.
  • Truckload of nitrile gloves stolen in Charleston, S.C. on March 24, 2020.
  • Truckload of whiskey stolen in Atlanta on March 31, 2020.
  • Truckload of groceries stolen in Perris, Calif. March 27 - 29, 2020.
  • Salvation Army trailer with supplies to feed hundreds was stolen in Houston on March 29, 2020.

Those trucks filled with toilet paper and nitrile gloves will lead to a larger backlog of supplies. Medical staff won't have the needed gloves to protect their patients and themselves.

CargoNet predicts an increase in cargo theft in the upcoming weeks as shelter-in-place continues. It's important to secure the supply chain and take extra steps to secure household essentials, food and beverage, and medical supplies.

Cargo Theft Is Growing

Cargo theft has been rising since before the pandemic. It's an international problem that affects the U.S. and Canada. Thieves like tractor-trailers because they know they can drive away with the huge cargo and resell them. CargoNet presents an analysis of cargo theft. It finds that the average value of a single cargo theft exceeded $150,000 in 2019.

In the second quarter of 2019, more than 300 recorded supply chain risk events occurred in the U.S. and Canada. Half were thefts or a chain-of-custody problem with the shipment. The other half involved a theft of one or more vehicles. Stolen cargo in the U.S. and Canada from the second quarter of 2019 alone cost almost $23 million.

The three most common cargo theft tactics are slash and grab, theft from vehicle, and hijackings. Not far behind is theft from a facility. Securing the supply chain requires more than just protecting trucks on the move. It also demands securing the facility.

Recall that CargoNet says professional thieves view the pandemic as an opportunity. The second most common type of cargo theft is fictitious pick-up. This is where criminals dupe people with a fake ID or creating a bogus business to redirect and pilfer cargo. These sophisticated crime rings have the tools to pull it off.

How to Prevent Cargo Theft

Any company that experiences cargo theft may want to contact CargoNet. They're providing free cargo theft response services. After a theft, call law enforcement first. Then, contact CargoNet at 1-888-595-CNET (2648). This will allow you to access CargoNet's 24/7/365 command center. They'll also connect you with subject matter experts in the cargo recovery network and their investigators.

Create and implement processes for verifying identities and company information. You can validate the information with Federal Motor Carrier Safety Administration (FMSCA) and the Internet. A better approach is to contact your partners, vendors, and customers.

One thing to include in the process is to require trucking companies to provide specific information before pick-up. This includes the driver's and carrier's names, truck numbers, and insurance information. Any truck arriving in fewer than 24 hours or without notice will not receive the shipment.

When the truck arrives, take pictures of the truck and bill of lading. Capture the driver's fingerprints. If the driver is reluctant, explain that this is your standard process. No exceptions.

This entire process of check-in and verification can be automated with a gate and access control system. The video surveillance system can track the truck from entry to exit.

Here are a couple of resources worth checking out. Share the Top 20 Driver Security Tactics. Review CargoNet's tips and best practices on supply chain fraud, in-transit cargo, and warehouse security.

The Effects of Theft on the Supply Chain

Shrink has cost the U.S. retail industry more than $50 billion in 2019 according to the NRF's 2019 National Retail Security Survey. The main sources of shrinkage are employee theft, administrative error, shoplifting, and vendor fraud.

Another rising problem is organized retail crime (ORC). Of the retailers participating in NRF's study, 97 percent say they've been victims of ORC. Organized retail crime has increased for 68 percent of the retailers.

Between shrinkage and organized retail crime, the situation has grown dire that some companies are raising their prices to pass on the losses to customers. It's also forcing companies to implement multiple measures and better technology to fight crime. For instance, a retailer can remove high-value items from the sales floor. They require customers to grab a ticket and pay for it before they can pick up the expensive item.

The Los Angeles Times reveals that Home Depot plans to add technology that prevents power tools from working until they've been scanned by the point-of-sale system. Home Depot has already added deterrents such as video surveillance and alarmed spider wraps on high-priced items, and it's working.

The company says that anything affecting the bottom line hurts its customers and community. They must raise prices to cover the losses. Besides, crime begets more crime. "Organized retail crime drives other crimes," says Scott Glenn, Home Depot vice president of asset protection. "It drives drugs. It drives guns. It drives human trafficking."

The news doesn't get much better. "Will COVID-19 further accelerate the decriminalization of shoplifting in the U.S.?" references a research paper from the Loss Prevention Research Council (LPRC). The article quotes a national ORC investigations manager who says there's an increase in online fraud and store pickup fraud.

Three factors can drive a suspect to commit crimes during a crisis like COVID-19. They are incentive, rationalization, and opportunity. Many people have lost their jobs. As such, they're facing financial pressure, which incentivizes them to take criminal action. This incentive helps them rationalize committing a crime. The pandemic forces people to stay home. Suspects believe this opportunity increases their chances of getting away with the crime.

The criminal justice system has changed how it does things. Some law enforcement agencies have either cut back or stopped answering calls related to non-violent crimes like theft. To prevent COVID-19 from spreading, jails are releasing prisoners convicted of a non-violent crime. Some courts are either closed or won't hear non-violent crime cases.

The Effects of Supply Chain Crime on Businesses

Any kind of interruption anywhere in the supply chain leads to problems that affect the bottom line and customers. It also impacts your employees because it puts them at risk. They can encounter criminals or the employees themselves commit the crime.

Some members of organized retail crime rings are violent criminals. That's why employers tell their employees not to chase after suspects. ORC recognizes this. They plan their crimes knowing employees won't try to stop them.

Internal theft is a problem. In retail, one-quarter of the respondents say that it is a bigger priority with 35 percent saying it's somewhat more of a priority.

When items get stolen, it can damage the brand's reputation. This can happen in several ways. The company makes news when it's a victim of a crime. Customers may think it's not a safe place or the company doesn't put a high priority on security and safety.

On top of that, criminals resell stolen goods. The stolen items may have been handled improperly, especially food and beverages. A customer who unknowingly buys stolen goods may have a bad experience with the brand. When this happens, the customer may badmouth the brand to friends and family as well as publicly on social media. People trust customers' recommendations.

Fortunately, it is possible to maintain greater control over your supply chain by planning and implementing a multilayered security program. Security technology helps businesses maximize security without increasing staff responsibilities.

How Video Surveillance Helps Secure the Supply Chain

An effective security program with multiple layers would include simple, inexpensive things like lighting to elegant, affordable solutions like video surveillance and access control systems. The good news is that the right video surveillance service can help deliver a fast ROI. You won't have to pass on the cost of the technology to customers.

Video surveillance uses a combination of video analytics and computer intelligence to stop crime before it happens. Video surveillance's artificial intelligence works in conjunction with the trained security operator to spot suspicious activity. The monitor reviews the activity and acts by warning the suspect through an audio speaker. If that doesn't work, the operator contacts the police.

What makes remote video surveillance more effective than security guards and burglar alarms is that it captures all the activity. Sometimes security guards stand there and do nothing. The high-resolution recordings provide the proof you need to identify suspects. When you learn of irregular activity after it happens, a team can search the footage to get the needed evidence to tell the real story.

As a bonus, video surveillance systems can do more than deter crime. For instance, no one saw a company's fleet truck damage a car during the day. However, a video surveillance camera caught it. The security operator could zoom in on the truck to obtain a clear photo of the driver's face, license plate, and fleet number.

You can also use it to identify bottlenecks and weak spots in your processes and procedures. Working with a company like Stealth, you'll maximize your security, get faster police response times, and complete site coverage.

The technology pays for itself quickly because it doesn't require hiring a full-time employee. When you factor in the cost of the hardware and monthly surveillance, it can save up to 60 percent compared to the cost of a full-time security guard.

Don't let the pandemic open the door for thieves to strike your supply chain. Stealth is open and can customize a security program while respecting pandemic guidelines and orders. To learn more about supply chain and logistics security, please contact us.

Posted in: Crime Prevention, Video Security Systems, Security Guards & Savings, Video Monitoring