Controlling workplace security

WORKING as an investigator in a food warehouse for six months will teach security experts more than they would ever learn in four years of college or in any continuing education seminar that they could possibly attend later in life. Many warehouse workers have little if any formal education, but hold advanced degrees in street smarts, says Barry Brandman, president of Danbee Investigations.

The heads of major food distributing companies may have Ivy League educations, but the people who work in the warehouse understand the systems just as well. For every process put in place to control workplace security, the workers have five ways to beat them. “One of my first cases as an investigator was with a company that was losing more than $30,000 month, an amount that nearly put it into bankruptcy,” he said. “That was 30 years ago, and still today we learn new tricks all the time from the people we're trying to catch.”

In today's environment, any discussion of food warehouse security takes on more importance than simple theft. For the past two years any security discussion now must include product tampering and sabotage as topics, Brandman says. Counterintuitive as it may seem with the national focus on security, theft from food distributors is increasing, he says. Damage from theft rises as the value of commodities increases. With more emphasis on convenience foods and all sorts of fresh products, food distributors are handling higher priced merchandise than ever before, Brandman says.

Low risk, high reward

While the value of merchandise is rising, most companies do a poor job of protecting assets against theft. This simply compounds the problem. The rewards of theft from food distributors are high compared to the risks of getting caught, because most security programs simply do not work, Brandman says. The risk is low even for those who get caught, because the criminal justice system is inadequate in dealing with this sort of crime. The criminal who steals a whole trailer load of food, worth possibly $1 million, probably will spend three to six months in jail. In contrast, the felon who gets caught importing $1 million worth of cocaine is sentenced to 10 to 20 years in a federal institution. This difference in sentencing provides no disincentive for food theft, because, by the time the case is finished, the thief probably will be let go for time served during the trial, he says.

Dishonest workers have always been a threat to the food industry. However, most of those were amateurs who committed crimes of opportunity. Today, the rewards of food theft are so great that organized crime rings are getting into the business, Brandman says. Many of these organizations have switched to stealing from food distributors, because it is too risky for them to continue importing drugs. Since homeland security efforts have put more emphasis on securing the borders, the success of drug interdiction has increased. The alternative is to steal inside the country, still make huge profits, and not have to worry about border security, he says.

These organizations work in several ways. They still use the old-fashioned method of stealing trucks off the street, but, more and more, they plant their members inside food distribution companies as employees, Brandman says. Once these people are inside the company, they can study the security methods at leisure and develop ways to exploit them.

Electronic flea markets

The Internet has made food theft less risky. Before widespread use of the Internet, stolen product could almost always be found within 25 to 50 miles of the crime, Brandman says. Now thieves are using the Internet as a high technology flea market, selling to buyers all the way across the country. A lot of stolen product is transported unknowingly by small parcel carriers. The farther away from the scene of the crime loot is sold, the lower the chances of being caught become. Once thieves find an easy way to convert stolen merchandise into cash, the buyers will motivate the sellers to steal more and more, he says.

Law enforcement is not going to chase food thieves from state to state, Brandman says. In the first place, they run out of jurisdiction as soon as the product crosses a state line. “Second, federal law enforcement is not much interested in food inventory theft,” he says. “Calling the FBI about inventory theft probably won't even result in a return phone call. Food theft just is not a high priority for them.”

However, more federal legislation to protect the food chain is in the works, because groups that are committed to harming the US are looking for ways to penetrate the food supply chain, Brandman says. New laws will be designed to protect the integrity of product brought into the country.

Food warehouses are easy to target, because food distributors place too much trust in the effectiveness of camera systems, guards, and alarms, Brandman says. These systems have their place in the overall scheme of security, but they will not protect against internal theft. For instance, alarm systems are turned off when the building is in operation, but that's when most theft takes place, he says.

Ineffective guards

“Most guards couldn't find a thief in prison,” Brandman says. “The companies that depend on guards to protect against internal theft are in deep trouble.”

Camera systems don't work all that well either, because most food distributors do not assign anyone to spend several hours a week doing nothing but watching video monitors, Brandman says. To make matters worse, if the theft looks like standard operating procedure, which most theft does, chances are that it can happen right in front of a camera and no one will ever notice.

Distribution companies hire their own problems, because most background screening programs are inadequate, Brandman says. “Human resources may have a name and address, but they really don't know who they are hiring,” he says. “In a tight job market, distributors hire workers out of desperation, and that desperation hiring comes back to haunt them.”

To make matters worse, a wholesale warehouse is the perfect environment for large-scale theft. Retail stores simply do not offer the same opportunity to be rewarded for stealing that the average wholesale warehouse offers, Brandman says. In a wholesale environment, all a thief has to do is take the time to get a job. Then he is surrounded by thousands of cases of high value product. The rapid pace of warehouse activity makes it easy to steal without attracting any attention, because most of the time theft looks exactly like normal procedure with products moving in and out of the building constantly. The truth is that most security systems are cosmetic rather than meaningful, he says.

Three security components

Effective security systems all have three components in common, Brandman says. Food distributors are willing to spend money to protect their assets. The problem is that many programs waste money, because it is not spent in the right way, he says.

The first step in building an effective security program is a comprehensive background screening system. Many companies have begun to use screening available from Internet providers for about $14 per applicant. The first thing to know about these online background checks is that a national background search cannot be done, because the information does not exist. “An Internet background search is not a cost-effective way of screening applicants,” he says. “The simple truth is that companies that buy an inexpensive background check are getting what they pay for — almost nothing.”

Many companies want to do good background screening, but they stop short of getting all the information that they need. For instance, many companies never verify an applicant's social security number. Checking a social security number can reveal a number of things. The number may not match the name of the person applying for a job. It may be a completely bogus number — one that the Social Security Administration has never assigned.

Most companies need to expand the scope of their criminal history investigations. In general, criminal history is recorded on a county-by-county basis, Brandman says. Most counties do not exchange criminal conviction information; most states don't exchange criminal histories either.

Fit checks to jobs

Background checks should be designed to fit job requirements. The higher the potential security risk a position holds, the more extensive the background check should be, Brandman says. Checking deeper into an applicant's background costs more, but the expense is worth it to prevent systematic theft. A single background check at initial hiring is not enough. When people are promoted within the company, conduct another background investigation. “The discovery that the background screening process is inadequate should not come after a major loss,” he says.

Conduct periodic reviews of the security program, Brandman says. Take a realistic look at the program and what it is supposed to accomplish. Determine whether or not the program is designed to detect theft or embezzlement. Make sure that the program includes safeguards against product tampering. A realistic analysis will probably show that the program still depends on the same techniques that it started with. In addition, analysis probably will indicate a low level of adherence to the program and will find few checks and balances to ensure that the program is self-correcting.

Once a workable security plan has been designed, make sure it keeps working by running periodic, unannounced audits, Brandman says. Audits are necessary, because most supervisors are not overly concerned about security on a daily basis. Without audits, daily concerns will quickly overwhelm any security program.

Unannounced audits

Audits must be unannounced. If people know an audit is coming, the audit will not find anything out of the ordinary, because the workers will put on a show for the inspectors, Brandman says. An unannounced audit that pulls a truck back to the dock and counts every case on board against the shipping documents will get the undivided attention of everyone on the dock. One good way to make security a higher priority is to tie audit results to annual performance reviews. Putting security awareness into the compensation equation motivates people to do a better job of protecting company assets.

An internal tip line is essential to an effective theft prevention program, Brandman says. Whether it's warehouse theft or a major crime, most of the time, the solution comes from a tip, usually from someone near to the bad guys. If workers have a safe, secure method for providing information, they will provide tips. If not, they will remain silent.

An open door policy is not the same as an anonymous tip line. An open door is fine for worker complaints, but it will not work to generate leads about theft, Brandman says. To be effective, the tip line must not be answered by company personnel. It has to be handled by third party operators. The best part of a tip line is that it helps keep people from taking the chance to steal. If workers know that others can turn them in anonymously, they may not steal. The point of a tip line is not so much to catch thieves; it is to prevent theft in the first place, he says.

Techniques that work

Undercover investigations are widely used in the food industry and are extremely effective at catching thieves, Brandman says. It takes a while, but once an undercover investigator has been in a warehouse for some time, other employees will open up and say or do things to provide information. “We have actually had investigators invited to become a part of theft schemes,” he says.

Several new technologies can be helpful for preventing theft. “Some clients have had trouble with cargo theft right off the dispatch line by drivers pretending to be from an authorized carrier,” Brandman says. “To prevent this, we have required all their contract carriers to take digital photos of their drivers. When a driver is dispatched to pickup a load, the carrier must email a photo of the driver to our client. The driver must match the photo before the load is released.”

One good way to prevent collusion between inbound drivers and receiving personnel is to institute a 10-minute freeze rule on the receiving dock. Once an inbound shipment has been taken off the trailer and placed on the dock, no one is allowed to touch it for 10 minutes, Brandman says. Freezing an inbound shipment on the dock keeps dishonest workers from putting goods into storage before a complete count is done.

Lax security often results from making one or more common mistakes, Brandman says. For instance, a poor security program put in place for cosmetic reasons often leads to a sense of complacency. In turn, complacency communicates itself to potentially dishonest workers who begin to see the company as an easy mark, he says.

Companies need to ensure that they are not hiring experienced troublemakers. The best example of hiring a troublemaker is a worker who takes drugs or sells drugs at work. “We can show a definitive correlation between drug use and crimes in the workplace,” Brandman says. “By the same token, use every means to keep from hiring thieves or people who use a false identity to get a job.”

Take proactive steps to prevent loss. Companies that simply react after a theft are more likely to sustain losses in the future, Brandman says. Setting up a good program for receiving tips and other intelligence is essential for communicating a company's desire to remain secure to the workforce.

Never have a victim mentality, Brandman says. Let everybody in the company know that security is a high priority. Make sure that workers know that the company will fight to protect its assets.