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About the Author

Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.

Logistics News

By Cliff Holste

May 21, 2014

Adopting Product Tracking & Loss Prevention Systems

Monitoring & Securing Product Movement through Advanced Technologies

Holste Says:

In addition to security and deterring theft, product tracking is potentially helpful in limiting liability exposure.
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Previous Columns by Cliff Holste

Sorting It Out: Shippers Looking To Increase System Capacity Are Surprised To Find It May Already Exist!

Sorting It Out: For Shippers - Benefits Of Real-Time Control In The DC Are Huge!

Sorting It Out: Shippers Looking to Improve Operations Choose Customer Centric Approach

Sorting It Out: Productivity is a Crucial Factor in Measuring Production Performance

Sorting It Out: Packaging Construction Impacts on Logistics Operations


Distributors and Retailers alike are highly focused on keeping track of products throughout the supply chain cycle. One reason is a renewed emphasis on controlling “shrinkage” which is defined as any preventable loss caused by deliberate or inadvertent human actions.

Deliberate human actions that cause loss to a business can be theft, fraud, vandalism, waste, abuse, or misconduct. Inadvertent human actions attributable to loss are purely poorly executed business processes, where employees fail to follow existing policies or procedures. Loss prevention is mainly found within the retail sector but also can be found within other business environments.

Since retail loss prevention is geared towards the elimination of preventable loss and the bulk of preventable loss in retail is caused by deliberate human activity, traditional approaches to retail loss prevention have been through visible security measures matched with technology such as Closed Circuit Television (CCTV) and electronic sensor barriers. Most companies take this traditional approach by either having their own in house loss prevention team or they use external security agencies. Charles A. Sennewald and John H. Christman state "Four elements are necessary for a successful loss prevention plan” [1]:

1) Total support from top management,

2) A positive employee attitude,

3) Maximum use of all available resources

4) A system which establishes both responsibility and accountability for loss prevention through evaluations that are consistent and progressive."

[1] (2008). Retail Crime, Security, and Loss Prevention: An Encyclopedic Reference. Butterworth-Heinemann. ISBN978-0-12-370529-7.

The development of electronic article surveillance (a magnetic device attached to the merchandise that would trigger an alarm if removed from the store, also called EAS) led to an increase in arrests; however, many cases have been dismissed due to lack of observation of the crime.

Internal shrink is caused by methods such as staff members stealing products, cashiers not ringing sales through the tills and keeping the payment for themselves, staff selling products to friends and family at discounted prices, sweet hearting where product is given for free to friends and family by staff, colluding with maintenance staff or external contractors to steal product and under ringing merchandise on the tills for friends or family so they end up paying less for the items.

To further combat this retailers are requesting that their suppliers make it increasingly harder for someone to steal product, whether that someone is a customer or an employee. As a result, advanced security and product tracking methods are emerging providing the ability to gather data from all types of electronic sensors and cameras connected to multiple access points to gather information.

In addition to security and deterring theft, product tracking is potentially helpful in limiting liability exposure. Such information gathering is critical for the grocery, pharmaceutical and automotive parts industries. While grocery and pharmaceutical outlets are working to comply with requirements from the FDA, automotive parts retailers need strong information gathering systems to track warranties, log data from the manufacturing process on tires, and track product recalls throughout their life cycle.

There are a myriad of tracking systems. Some are 'lag time' indicators, that is, the data is collected after an item has passed a point, for example, a bar code or choke point or gate. Others are 'real-time' or 'near real-time' like Global Positioning Systems depending on how often the data is refreshed. There are bar-code systems which require a person to scan items (self checkout counter) and automatic identification (RFID auto-id) strategically located at exit points.

For the most part, tracking methods are composed of discrete hardware and software systems for different applications. That is, bar-code systems are separate from Electronic Product Code (EPC) systems, GPS systems are separate from active real time locating systems or RTLS for example, a passive RFID system would be used in a warehouse to scan the boxes as they are loaded on a truck - then the truck itself is tracked on a different system using GPS with its own features and software.

Tracking software systems now include features that help businesses manage that data, turning it into information by using a cooperative tracking capability such as Real-time Locating Systems (RTLS).

RTLS are enabled by Wireless LAN systems or other wireless systems with multilateration. Multilateration is a surveillance navigation technique based on the measurement of the difference in distance to two stations at known locations that broadcast signals at known times. Such equipment is suitable for certain confined areas, such as offices, lunchrooms, as well as restricted and limited access areas. RTLS require system-level deployments and server functions to be effective.

Why would a business need, want, or inquire about an RTLS Solution? Because location tracking is a critical component of enterprise-class WLANs today. Location tracking provides visibility and control of the air space, enabling IT staff to deploy wireless networks that are as efficient, effective, and easy to deploy as traditional wire line networks. In a highly mobile business environment where people and assets are constantly on the move, insight into the exact location of resources and/or personnel are playing an increasing role in streamlining operations, raising customer satisfaction, enforcing security, and even saving lives. There is an urgent need to track Wi-Fi enabled devices and tags in real time, improve asset visibility, and enhance WLAN capacity management all via an existing WLAN. Real Time Location Systems provide smart business applications that take advantage of an already deployed wireless solution.

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Final Thoughts

RTLS may be seen as a threat to privacy when used to determine the location of people. Several prominent labor unions have come out against the use of RTLS systems to track workers calling them "the beginning of Big Brother" and "an invasion of privacy". However, this loss of privacy may be outweighed by other benefits to staff. The growing frequency of incidents where a gunman gains entry into a facility and shots are fired should be sufficient to offset any such privacy concerns.

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