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Supply Chain News: Amazon Tries New Tactic beyond Searches and Metal Detectors to Deter Fulfillment Center Theft - Tough Video Messaging

 

Does It Go to Far? Some Say Yes, but DC Theft is Big Dollar Issue

March 15, 2016
SCDigest Editorial Staff

Theft by employees - sometimes euphemistically called "shrinkage" - is a big deal for companies operating warehouse and distribution centers.

Supply Chain Digest Says...

Many media outlets have taken the Bloomberg report and criticized Amazon over the approach.

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It is difficult to estimate just how big the problem is, since unlike cargo thefts, which generally involve a relatively few high dollar value incidents that are comparatively easy to track, distribution center theft involves thousands of small value crimes that would only show up as part of inventory discrepancies identified later in a cycle count or physical inventory process.

Nevertheless, some experts say the value at a given facility per year can easily add up to tens of thousands of dollars or even more in some cases.

Companies take a number of measures to address these risks. Those include locking up certain high value items in caged areas with very limited employee access, unformed guards, increasingly surveillance video, and often posters in lunch rooms or other areas warning employees of the potential ramifications for someone caught stealing.

Now Amazon.com has taken that last general approach to a new level. Bloomberg recently reported that Amazon has put up flat screen TVs at strategic points in many of its fulfillment centers that convey video news about the company or warehouse incentive programs, but it's the anti-theft videos that have caused something of a stir.

The videos contain short stories of Amazon workers caught stealing, Amazon employees interviewed by Bloomberg said.

"The alleged offenders aren't identified by name. Each is represented by a black silhouette stamped with the word "terminated" and accompanied by details such as when they stole, what they stole, how much it was worth, and how they got caught - changing an outbound package's address, for example, or stuffing merchandise in their socks. Some of the silhouettes are marked ‘arrested,'" Bloomberg reports.

Amazon has not commented on the Bloomberg piece after being contacted by a variety of media sources.

"It's just letting people know that you're being watched," one former Amazon worker said.

It's not that Amazon hasn't been rigorous about preventing theft already. It is known for searching employees on the way out the door and making them pass through metal detectors.

(Article Coninues Below)

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In fact, a group employees of a private security firm used by Amazon (Integrated Security Systems) filed a lawsuit against the on-line giant, saying the security workers were "required to wait at least 10 to 15 minutes each day, and often more than a half hour, at the beginning and end of each shift without compensation whatsoever in order to undergo a search for contraband and/or pilferage of inventory."

The employees wanted to be compensated for the loss of their personnel time. The case made it all the way to the Supreme Court, which ruled in favor of Amazon.

Many media outlets have taken the Bloomberg report and criticized Amazon over the approach.

The tech web site Gizmodo, for example, ran its piece under the headline "New Horror Story Proves Working for Amazon Is More Soul-Crushing Than We Thought." The investment web site Bidnessetc.com's headline was "Amazon Goes Orwellian in a Bid to Prevent Warehouse Theft."

The BBC in the UK quoted Matthew Gwyther, editor of Management Today magazine, as saying "What sort of an organization has got to the point that it thinks this is a satisfactory or commendable way to be behaving?"

Our take: Although employee theft in distribution is a big issue, this approach seems to go beyond a reasonable level of employee communication. When the robots finally take over Amazon DCs, the problem will take care of itself.

What do you think of Amazon's video approach to discouraging DC theft? How big a problem is theft in warehouses? Let us know your thoughts at the Feedback section below.

 

Your Comments/Feedback

John

Supply Manager, Biotech
Posted on: Mar, 22 2016
When I worked for a retailer at my first job out of high school, the store manager brought me to his office. He had a shoplifter there and had called the police.  This was his way of showing what would happen if someone was caught stealing. I think Amazon has a right to communicate exactly what will happen if someone is caught stealing. The "good" employees will be offended by suggesting they are thinking about stealing from Amazon.  
 

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