LP Magazine

MAY-JUN 2018

LP magazine publishes articles for loss prevention, asset protection, and retail professionals covering shrinkage, investigations, shoplifting, internal theft, fraud, technology, best practices, and career development.

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SECURITY AT THE SOURCE 40 MAY–JUNE 2018 | LOSSPREVENTIONMEDIA.COM M anufacturer involvement in designing product protection is decades old, noted University of Florida research scientist Read Hayes, PhD, CPP. He remembers Walt Disney's Buena Vista Pictures as being an early pioneer in coordinating with retailers to prevent theft. Video releases such as Beauty and the Beast were massive hits with kids—but also with shoplifters. "Maybe some executives at Disney saw it differently and thought it's solely up to retailers to protect products, but the consensus for them was to see it as a mutual problem," he recalled. "So we came up with portable fixtures and included some security features and were able to reduce theft by making it harder and less rewarding to steal and increasing the odds of being caught." He remembers, too, working with a lip balm company on display options to increase shoplifters' effort and to prevent the small product from falling into cracks and getting lost—an early industry effort to address "total retail loss." In the industry's most celebrated example involving Gillette, the company mapped its entire process for handling product—from the time it's made all the way through to the shelf—looking for opportunities to improve process and handling to reduce the risk of loss. And, generally speaking, it's not much different today, said Hayes. The roadmap and anti-theft menu is similar now as in these past examples. "Where you put it in the store, what types of display fixtures you use, employee positioning, prodding employees to pay particular attention to very high-loss SKUs, focused protective tech, what do you do, how often you do it—these are all options that are available for each solution." As director of the Loss Prevention Research Council (LPRC), which conducts research into crime and theft prevention technologies for the retail industry and includes manufacturers among its membership, Hayes has a unique seat from which to view the working relationship between retail LP and product manufacturers. He's in the room when the two sides are discussing anti-theft solutions, both separately and when they are brainstorming solutions together. While the issue of theft prevention often divides the two sides, his job is in the middle—helping both. "I'd say the relationship is not necessarily better or worse than in decades past. I think it tends to go up and down," said Hayes. He said he's fortunate to work with manufacturers that want to work with retailers, but he knows that's not universal, that some manufacturers still see retail theft as retail's problem. "They think, 'I'm already making a great product. I'm doing promotion to create demand. I'm shipping the product, so you have it when you want it. And now you want me to do more? You're running the store.'" The Manufacturers' Perspective "One stole is one sold" is still the perspective that some manufacturers cling to according to some loss prevention executives we interviewed. And a willingness to work with retail loss prevention isn't as strong in some sectors of goods as others, they said. Manufacturers in the drug, food, and household goods sectors have tended to be more aggressive in pursuing product protection, according to industry experts. Several LP leaders specifically identified Procter & Gamble (P&G) as a model manufacturer partner, for example. Krista Marantos Monnin is a retail business leader at P&G and oversees the company's on-shelf availability operation. "We see it as a collaborative role with our retailer partners; ultimately, it has to be a retailer solution because everybody addresses shrink differently on the retailer side," she said. Source tagging is certainly a primary part of product protection today, said Monnin, but even within that ubiquitous solution, retailers deviate on what frequency of tags they require. As such, she said manufacturers aren't effectively positioned to forge across-the-board solutions on their own. Plus, even within the same product—Tide, for example— variation in packaging, size, and theft desirability often belies a single product protection strategy. "So if a customer comes to us and reports that it has a problem with Tide, we have to narrow it down to where and which SKUs, and then we can work together to find a solution that is effective, working off of a solutions matrix that we have built based on our experiences." Certain manufacturers operate under heightened requirements for product protection due to consumer health and safety concerns. For these companies, product diversion is more than a nuisance—supply-chain risks are material to the business. One generic drugmaker , for example, wrote in its annual mandatory 10-K filing with the US Securities and Exchange Commission, "Cargo thefts and/or diversions, and economically or maliciously motivated product tampering on store shelves may occur, causing unexpected shortages, which may have a material impact on our operations." Because of the stakes involved, such companies have led the way in product serialization to increase supply-chain visibility. Embedding security features into products as a selling point is also a possible trend as use cases for identification technology seeps into more product category niches. For example, manufacturers build technology by GearSecure, a mash-up of RFID and GPS, into musical instruments, which then allows end-users like touring bands to keep tabs on their gear. Collaboration between wireless companies and makers of cell phones has led to increasing adoption of kill-switch technology. There is an anti-counterfeiting sewing thread. There are apparel makers that mesh Krista Marantos Monnin Read Hayes, PhD, CPP

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