Third-party logistics (3PL) supply chain providers have a significant impact on their customers’ profits, the prices of goods and services, and the overall well-being of the economy. Ensuring their customers’ goods are delivered on time and intact is important, so mitigating risks is essential for timely production and delivery.
The greatest risks to 3PLs are inventory shrinkage and safety. From missing key deadlines to hurting a customer’s bottom line and reputation, inventory loss can have lasting damage, while workplace injuries can be dangerous and costly. Investing in loss prevention and safety strategies will pay dividends on the long-term viability and strategic goals of your company.
What are the Main Causes Behind Inventory Shrinkage?
Retailers lose an average of 1.33% percent of their sales due to inventory shrinkage each year, which equates to about $46.8 billion annually. The costs of inventory shrinkage ultimately fall on the end retailer or the customer, so it’s important to understand the crux of the issue. There’s a multitude of ways supply chain providers experience inventory shrinkage. However, you can categorize most of these scenarios into three main categories. These include:
- Employee Theft
- Product Damage
- Lost or Late Shipments
Lost and late shipments generally fall outside of the control of the immediate supply chain provider. There could be a product shortage, a delivery driver was in an accident, there was a natural disaster, etc. For the sake of this article, we will focus on employee theft and product damage, which is something supply chain leaders can have control over in-house. Here’s 5 ways 3PL providers can mitigate risk, inventory loss and injury in their supply chain network.
1. Implement Access Control Checkpoints
Depending on the size and scope of your business, you probably have a lot of foot traffic throughout your distribution centers on a day-to-day basis. Access control allows you to keep better tabs on your employees throughout the workday.
With access control reporting, you can see when employees enter certain areas of your facility. You can also limit access to restricted areas in your warehouse to a pre-select amount of individuals. If an incident occurs within your warehouse, you will know exactly who was in that area when the incident occurred, which can help pinpoint the specific cause and who was involved in the incident.
2. Install a Video Surveillance System
Having a bird’s eye view throughout your facilities is an undeniable benefit. A strong security surveillance presence deters theft both internally from your employees and externally from thieves and criminals. Surveillance cameras can also improve the safety of skeleton crews or lone workers so you can spot dangerous situations and implement training or corrective actions to mitigate injuries.
If you own or operate multiple distribution centers, you can access surveillance cameras at all of your sites through a unified alarm management platform. From there, you can pinpoint when an incident occurred at any one of your facilities. A unified monitoring platform gives you the flexibility and control you need to monitor an entire supply chain network, as well as one facility or warehouse.
3. Invest in People Screening Technology
Did you know there’s a new way to quickly and effectively scan for hidden objects without sacrificing the privacy of your employees? People screening technology utilizes thermal imaging to detect metallic and non-metallic objects hidden beneath clothing. It is a completely safe solution that does not reveal any anatomical detail of the person.
A people screening solution not only shortens screening times and mitigates the threat of internal theft, but also gives you a long-term return on investment. Here’s how: with people screening, you reduce the need for on-site security personnel and wanding. These cost-cutting moves give you a larger ROI each year. People screening not only reduces product theft but is also a solid long-term investment solution.
4. Utilize Advanced Environmental Monitoring Solutions
Some of the most vital products in the supply chain ecosystem require strict temperature monitoring. These include foods, pharmaceuticals, chemicals, medical devices, and more. Spoilage can cost suppliers thousands of dollars and may even prevent individuals from receiving life-saving prescriptions or medical treatments.
Accuracy here is paramount. Just a degree or two off the required temperature can have devastating consequences. Utilizing advanced environmental monitoring solutions can mitigate the chance of spoilage and ensure your products stay within the optimal temperature range during storage and transportation.
5. Partner with a Trusted Security Integrator
Security is an integral part of any business, which is why you should partner with the experts at Vector Security Networks. We have over 40 years of experience working with supply chain business leaders building customized security solutions that keep their products, employees, and business safe.
Our team is here to help build solutions that work for your unique set of needs and future goals. As your business grows and evolves, so can we. Learn more about how Vector Security Networks can help mitigate inventory loss for your supply chain business by contacting us today.
