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ARTICLE:
Profit Protection Sums It Up
By John Woolf MREC of SSR Personnel
 
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The security industry has a mixed public profile - in some quarters the disinterested individual at the store entrance is one perception, but fortunately in the boardroom a few retailers have security professionals who deliver consistent measurable benefits - yesterday, today and tomorrow.

In sectors such as retail, utilities, technical services and the Internet, consumers ensure we have to deliver evolving requirements, but in each remains the consistent risk from theft and fraud.

Until a few years ago, the retail sector was guilty of applying resources at a problem that was unidentified and mostly anecdotal.

In 1999 £2.3 billion was lost by retailers, the BRC identified that £500 million was due to staff theft. It is estimated that approximately £12 billion of total losses are the result of incorrect store procedures, manufacturer's cabbage disposal and contract collusion. That leaves approximately £600 million per annum due to customer theft. It is further estimated that those drug takers funding a habit will need to steal £25,000 per annum in order to maintain a basic level of dependency which will cost £11,000 at today's street prices.

Lack of awareness
The answer to shoplifting by many retailers is to spend approximately £500 million per annum in security resources, directed at a £600 million problem. As a finance director you might be considered to be keeping a status quo, but specialists in loss prevention contend that shoplifters are limited in the number of people who undertake it, quite easy to deter with good customer service and all you have to do is look a harder target than the store next door. Colour, texture and ambience all have an affect on the professional and opportunist. Is it easier to shoplift in the Manchester United Megastore in which 20,000 people can visit in less than 2 hours or on a cold wet Monday morning in your local high street store?
Establishing the bigger picture
The audit of process (to re-engineering accepted practice) is a primary business tool for those who wish to protect profits. There is still only a limited number of worldwide data mining software applications and because of differing practice, every user has their own style of presentations for results.

A DIY company may focus on bogus health and safety claims, costing perhaps £5 million a year to the industry. Another retailer will concentrate on supply chain losses, perhaps as much as 50% of losses they have incurred and another will undertake a stock take once a year. The latter company will in times of retreating margins be one of the next retail casualties.

Making it work
The security auditor will have a background in either security or accountancy and the merging of the discipline occurs only in this application. Primary questions to answer for the security auditor.

Where has it come from?
What is it doing here?
Where is it going?


Have validity in every profit protection plan. Large or small companies can recover 25% to 50% of current losses with a basic security plan. The economics of scale will work for the larger users' benefit, but even for the most local independent they would recover the costs of implementing their plan by a factor of 3:1.
How do I implement regular Security Audits?
The recruitment, training and retention of security auditors may not be financially expedient for all retailers - so this function can be hired in through specialist consultancies.
Commitment should be from both parties. The client, by setting minimum levels of use - the contractor pre-setting security levels, guaranteed training competencies and response times. The hiring party should also enquire, can both parties share the service risk? Can the hired put at risk part of their service charge against performance? How will capital costs be funded?


If your preferred route is to employ your security auditors, personnel departments may start recruitment campaigns or perhaps instruct their usual agency to find someone. But the nature of those who are undertaking security auditing is that they will not necessarily be noticeable. What will be a benchmark of salary? A source of reference is www.jobsinaudit.com for those constructing job descriptions, with live vacancies from which salary benchmarking can be compiled.

One or two recruitment consultancies claim to specialise in providing security personnel, but you should enquire as to their range of experiences. If your group trades internationally you may wish to build a team with language capabilities. Even the sourcing of capable people could be international. Hungary and Poland joining the EU will enable UK companies to employ excellent English speaking, job experienced graduates at less than the salaries of UK first job graduates. One of the EU thrusts for suggesting an immigration policy for 75 million people over the next 10 years, is to reduce wage inflation.

If your security audit structure is championed by the operational layers in the business, it enables investment in the business, growth of SAYE, increased shareholder value and the buy in from our staff who witness unnecessary waste or employee theft and feel they can say nothing in an environment which does not address the basics of profit protection.
 


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John Woolf MREC is a Team Leader with SSR Personnel, the largest specialist recruitment consultancy in Europe for retail and audit positions, and has worked for the company since 1996. With a background in retail management he has a unique perception on service delivery and the culture of those who can deliver it. John Woolf can be contacted at:
jwoolf@ssr-personnel.com.

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