Warehouse Security Tips an e Book from RSI Insurance Brokers to Help Prevent Cargo Loss www.rsiinsurancebrokers.com/warehousesecurity Toll Free (800) 828 5273 Email: info@rsi ins.com
TABLE OF CONTENTS: Chapter 1 Inventory Protection Measures Chapter 2 Warehouse Layout For Better Security Chapter 3 Security Tips for Docks Chapter 4 Responsibilities of Management & Drivers Chapter 5 - Available Technology
CHAPTER 1: Inventory Protection Measures VISUAL HERE Cargo theft is an ever increasing problem in the transportation industry. It's estimated that cargo theft costs shippers and trucking companies up to $30 billion a year and it's only getting worse. A recent study showed the frequency of cargo theft claims is increasing 13% percent per year. Sentry Insurance Page 3
Inventory Protection Measures With people in, out and around your inventory, it's difficult to protect it from pilferage...but there are ways. Retailers have long understood that they have more to fear from dishonest employees than they do shoplifters. In 2002, retailers lost over $15 billion to employee theft and fraud. For your warehouse, the losses are almost entirely internal; there are no customers to shoplift, and external thieves often work with an employee to gain access or information. The threat to your inventory and profitability is significant. It costs you in lost inventory, higher insurance premiums, and personnel turnover. A recent study at the University of Florida reveals that security managers attribute more than 48 percent of theft to employees. Hire the Right People It starts with hiring the right people which is easier said than done. You can reduce your risks with personnel steps like checking references and backgrounds of your applicants. Look for felony records, especially for those you re going to trust with access to areas with highly desirable inventory. Even mundane inventory will be pilfered at surprisingly high rates if you have the wrong people in place. Utilize Warehouse Equipment that Secures Areas Equipment solutions are possible, as well. You can look at such items as security mirrors that give you visibility into closed areas, around corners, and into hallways. Wire Partitions and Security Cages will tightly control access. You can also limit access to an area with Folding Security Gates, if you need flexibility and door coverage. Lockable wire cabinets and lockers can provide pilferage deterrence and protection in the right situation. There are other products that can lock a pallet rack bay or a shelving unit down, allowing you to combine security and storage into the same process. Security focused storage equipment is not the sole answer, of course, but its role is often understated. Page 4
Monitor and Check Frequently Look toward your inventory monitoring processes to also provide some relief. If you know what inventory you have and what you re supposed to have at any given point, identifying a source of theft is much easier. If it goes on for weeks or months before you know about it, the damage has already been done and you probably won t recoup the losses. It s best to check early and often. For extreme cases, there are companies that specialize in undercover operations and surveillance. You can find many of them by searching Google or Yahoo under the term warehouse security system. Often, they will discover problems that undermine productivity as well as pilferage. For instance, Florida based Internal Intelligence International discovered a significant illegal drug selling operation in the plant of one of its clients. This is an extreme measure, but if you need it, you need it. Focus Security Systems and Processes Internally as well as Externally Sufficient monitoring systems should be considered for high risk areas, too. Camera and surveillance systems are good, but something as simple and inexpensive as unscheduled walk throughs are very effective theft deterrents. Unpredictability is the key. Your information should be timely, but your walk throughs in the warehouse should be something that you do frequently and without a fixed schedule. Watch your loading docks and platforms they re very easy places for a thief to remove stolen property, often in partnership with an outsider. Your security system is typically designed to protect your facility from outside thieves. How much emphasis does it put on employee theft? Read and Update your Knowledge The U.S. Customs department has published warehouse security information for companies dealing with Customs issues on its website. Many of its recommendations are common sense, and apply to general warehousing as well as customs specific operations. Page 5
One common sense recommendation is that you separate shipping docks from employee parking lots, making it much more difficult to remove items from the warehouse. No single thing will reduce theft, but a combination of processes, hiring standards, security systems, and equipment can combine to help you improve your operation and eliminate losses associated with internal inventory pilferage. For more information to help you prevent cargo theft in your operation, please contact a Safety Consultant at RSI Insurance Brokers. We also encourage you to visit www.rsiinsurancebrokers.com Page 6
CHAPTER 2: Warehouse Layout For Better Security Lay out your warehouse for security: how your warehouse layout can deter inventory theft, pilferage, and shrinkage. 1: Trash Dumpsters and other Containers It's a poor idea to place a dumpster or other bins, large containers, scrap vessels, or cans near an accessible door. They can become ideal places for thieves to stow stolen inventory for later pickup and removal to cars. If you cannot position your dumpster in a way that discourages thievery, consider making it lockable so that access is difficult to unauthorized personnel, searching it frequently, and letting people know it is monitored. 2: Total number of Doors This warehouse has far too many doors. There should only be one that is open, and there should be a guard or other employee in charge of watching this door. If fire regulations require more than one door, use bars that set off an alarm if the doors are opened. You can secure these doors with equipment such as folding security gates or man trap cages if they are already in your facility (but be certain to follow all local fire codes). 3: Staging Area This staging area may be too close to the loading docks. If no one is around to keep an eye out, it would be easy to take something and put it in a truck. Page 7
4: Shipping and Receiving Doors The receiving dock and the shipping dock are too close together, and there is no barrier between them. It would be easy to take things from one truck and put them into another. Erect a barrier between the doors if they are in place already with easy crossaccess between them. 5: Employee Parking Lot This parking area is too accessible to an employees who might steal inventory. The door is very close to the parking lot, making it easy to take things from the warehouse out to cars. It's best to have parking separated by a comfortable distance from the warehouse doors, making it more difficult to transport pilfered items. Best case scenario is to have a fence separating the warehouse from the parking lot, as well. 6: Trucker's Lounge, Break Room, etc. To get to this lounge area, the truckers have to walk all through the warehouse. Look at the tracks (light blue arrows) to see where they might walk. Everything along these routes is at risk. It is important to restrict movement in your warehouse. Don't let people just go wherever they want. If possible, lay out your warehouse to move visitors or guests to a lounge area without any access to inventory. If not, strictly instruct them on where they are expected to walk through your facility (and make sure they stick to it). Consider "man trap" dock area cages that let you admit truckers and other visitors at your convenience, within your restrictions. 7: Restroom Location This is a bad spot for the restroom. To reach it, the truckers have to walk through the warehouse. This puts your goods at risk of being stolen. Just because people are dropping off or picking up shipments doesn't mean they are free to wander around. It's best to keep unauthorized people out of the warehouse, or within a strictly limited path if they must be inside. There is usually no reason for someone other than your employees to be in your shelving or storage racks with access to stored items. Page 8
8: Bushes and Foliage Bushes, shrubbery, and foliage are a good hiding spot for things stolen out of the warehouse, especially when they are near a door. Remove the bushes or lock the doors to curtail this avenue for thieves. For more information to help you prevent cargo theft in your operation, please contact a Safety Consultant at RSI Insurance Brokers. We also encourage you to visit: www.rsiinsurancebrokers.com Page 9
CHAPTER 3: Security Tips for Docks Avoiding Cargo Theft at the Point of Loading & Unloading $10 billion a year is stolen at shipping & receiving docks in the U.S. How can you protect your operations? Page10
Cargo theft occurs in freight forwarding yards, warehouses and during transportation in trucks, airfreight, and ships. Worldwide, the direct cost of cargo theft exceeds $30 billion annually and $10 billion in the United States alone, with indirect costs many times higher. On top of the cargo costs, losses are amplified by double or more due to investigative and insurance costs. For a business operating on a just in time basis, freight loss can be an extreme problem that threatens profitability and viability. According to a study done by the Australian Institute of Criminology, 87 percent of these losses are inflicted at the road transport level, where warehousers, shippers, and receivers of goods are most at risk. Almost any warehouse has something people want, although items such as electronics, footwear, clothing, prescription drugs, computers, jewelry, tobacco, and media such as DVD discs are especially coveted. But nearly anything can be at risk. The most common method employed to steal cargo involves a truck driver working with a warehouse employee. Working together, these parties can easily break a chain of awareness that shippers and receivers put into place and obscure exactly when the theft may have occurred. Cargo is at its greatest risk when it s being loaded and unloaded. It can be carted off while a driver s attention is diverted. Short orders can be loaded, or loose cargo can be concealed for later removal, according to the AIC report. This timeframe is particularly chaotic, involving people who are mostly concerned with getting the truck unloaded and away from the dock, not with security at any conscious level. Especially since the 2004 Hours of Service working rules change, warehouses and distribution centers are more concerned than ever with the speed at which they load or unload a truck. Unfortunately, this focus on loading speed also makes trucks and warehouses more vulnerable to theft and pilferage. Page11
What can you do? Experts say that besides being thorough in your hiring process certainly something you should do, but something that s not bulletproof there are several common sense steps you can take. Harden the Target Restrict access to your shipping and receiving areas: This is the point of vulnerability, where confusion and opportunity may meet and allow thieves an opportunity. Be sure everyone in the area has proper identification and is supposed to be there. It s all about access: you need to control who has it and who doesn t. If the trucker isn t involved in unloading, don t let him loiter in the area; consider providing a lounge area away from inventory and loading docks if possible. Secure your storage areas Utilize security partitions, cages, secure storage lockers, or mini security cages to lock up things that are particularly desirable to thieves as quickly as possible when they are received. Keep them locked up until you must unlock them before shipping. A number of available accessories can transform standard pallet racking and shelving into secure areas that you can control. Move cargo from receiving into these secure devices as soon as possible. On the shipping side, move it from them into trucks in the same, quick manner. Don't let things sit around the dock doors unattended and unlocked. Make sure all doors and windows have locks. Going further, consider the reason a particular door or window exists at all. When it isn t being used for business reasons or safety reasons, why keep it at all? You should consult safety experts in advance of permanently sealing a door. Get involved with the process * Hang around the docks: Nothing is more effective than being there, watching, and participating. Go to the docks, talk to people, and make sure they know you know who they are and what they re doing. This doesn t have to be an onerous process; a friendly conversation works wonders. Criminals play a percentage game. If the percentages shift, even a little, they may be deterred. This is particularly true in the case of casual thieves who take easy pickings but shun riskier thefts. Make it risky by being around and creating a culture of honesty Page12
among the people at the docks. The presence of a watcher can help to do that and make them wary for days. * Make sure merchandise isn t left unattended for long periods of time. It s folly to allow valuable inventory to stack up, unwatched, in the receiving department. Get it loaded into stock whenever possible. For those periods when you can t load higher risk shipments into normal storage, look to solutions such as portable, lockable security carts that can stow it away safely wherever it sits. This works even in shipping operations, since you can have a trusted employee unlock it when trucks arrive. If it s palletized, shrink wrap it so that getting at it requires more effort and more visibility. * Use seals that are difficult to reseal once they ve been broken: Such tools as self voiding tape and water gum tape make it hard for thieves to hide what they ve done. If they break a carton seal, it s visible. In the case of a trucker working with a warehouse employee, this can be particularly effective. * Consider electronic security systems and surveillance. You can monitor movements in the warehouse using these tools. Your insurance company may provide better rates to you if you have them, and they are great deterrence. Simple tricks such as installing a dome mirror or an opaque camera dome may deter some people. It lets them know that you re paying attention. In the end, nothing is foolproof, but a combination of common sense tactics, equipment, and awareness can significantly cut your chance of losses. Consider the way people steal cars: no thief can be stopped by a car alarm or steering wheel attachment, but they may move on to cars that don t have these devices. Your efforts aren t meant to create a totally secure environment very little can make that happen. Your shipping and receiving area should become a hard target, too risky for thieves to consider. Page13
CHAPTER 4: Responsibilities According to most experts, the vast majority possibly as much as 85% of cargo losses can be attributed to employee theft. Cargo security generally centers on three specific areas: at the terminal, while in transit, and at the destination. Since in transit hijackings account for only a small percentage of cargo crime, clearly the key to reducing cargo losses is to focus on the prevention of theft and pilferage at the terminal, during delivery of the shipment, and while cargo is being unloaded at the destination. This e Book provides practical measures that can be used to improve the security provided to cargo. By establishing an effective security program that provides for the accountability of cargo at all stages of its handling, substantial reductions can be made in cargo crime losses. Information specific to hijacking prevention is not included. Page14
Management Responsibilities Implement a cargo security program that includes written procedures for the proper handling of cargo. Establish guidelines for the screening and selection of employees. Maintain liaison with local, State, and federal law enforcement agencies. Enclose the terminal with a perimeter fence and, where practical, utilize a fence alarm system. Maintain adequate nighttime lighting along the perimeter fencing, around storage structures, and in all yard and parking areas. Install a central station burglar alarm system to protect the facility during the closed period. The system should protect all buildings and high value cargo enclosures, as well as yard storage areas. Equip all perimeter entrances with secure locking devices and establish an effective key control program. Provide parking for employees and visitors outside the terminal enclosure. Require employees and visitors to enter and exit the terminal enclosure through one monitored door or gate. Require that all parcels be declared upon entry to the facility and inspected upon departure. Implement a badge identification system to regulate the movement of employees and visitors, and require employees to display their badges at all times, Station guards at perimeter gates to inspect and manifest all cargo upon arrival at or departure from the facility. Maintain a log of all cargo seals and store un issued seals in a secure place with access limited only to authorized personnel. Store all high value cargo in cargo cages or other secure areas, and assign supervisory responsibility to one person per shift. Page15
Identify high value cargo on bills of lading by code numbers or as general freight to conceal its identity. Restrict access into storage areas only to those employees so authorized. Separate the shipping and receiving areas as much as possible. Supervise the shipping and receiving operations, and utilize closed circuit television surveillance to deter pilferage. Implement a program of frequent, unannounced spot checks, or audits, of shipping and receiving operations. Rotate cargo personnel onto different shifts and locations, as practical, to limit the opportunity for collusion. Supervise trash disposal and salvage activities to prevent valuable items from being concealed in trash containers for later retrieval. Use kingpin locks to secure loaded cargo trailers and maintain arecord of their use. Devise a parking arrangement for loaded trailers to prevent easy, unauthorized hook up. Install truck alarm systems that provide for 90 day maintenance checks and keep a record of all service. Provide high visibility identification for trailers (e.g., paint numbers on top for easy identification from overhead. Provide good locks for securing trailers during multi stop deliveries. Select a reputable company when storing cargo in transit, and determine beforehand that the storage location has adequate security. Driver Responsibilities Inspect the integrity of cargo seals on departure from the terminal. Check operation of truck alarm before departure from the terminal. Do not to discuss the nature of the cargo with anyone. Establish a pre planned route to the destination and deviate as little as possible from the route. Page16
Keep cab doors locked while driving, and do not to pick up hitchhikers. Park the truck in an area where it can be observed during relief or meal stops. Do not park loaded trailers in unlighted or remote areas. Remove keys from the ignition when leaving vehicle, roll up windows, and lock all door and compartments. Log in with the dispatcher immediately upon arrival at a destination. Inspect cargo seals for tampering and compare seal numbers with shipping documents. Oversee the unloading of cargo. Obtain a signed acknowledgement for the receipt of cargo. Page17
CHAPTER 5: Available Technology Cargo theft hurts your bottom line and your reputation with shippers. By developing and implementing strong countermeasures, you can control this growing hazard. For more information to help you prevent cargo theft in your operation, please contact a Safety Consultant at RSI Insurance Brokers. We also encourage you to visit www.rsiinsurancebrokers.com Page18
Take Advantage of Technology When it makes sense, install alarm surveillance systems, and respond to every alert. Ensure the perimeter, entrances, building doors and windows are well lit. Vehicle and cargo tracking, vehicle immobilizers, including anti theft heavy duty locking devices and advanced security seals, are now available at lower costs. No matter what you purchase and install, combine it with a viable escalation and response plan. Global Positioning System tracking is available for power units, trailers and cargo. This technology helps law enforcement locate and recover both equipment and cargo. Radio Frequency Integrated Circuits can be loaded in with the cargo to assist authorities in recovering stolen cargo GeoFencing can be set up to notify dispatch when a unit leaves apreset course Systems are also available that allow dispatch to remotely disable a power unit if a theft occurs Page19
If you re interested in improving your Warehouse Security Processes, request an evaluation from a Safety Consultant at RSI Insurance Brokers. www.rsiinsurancebrokers.com/warehousesecurity Toll-Free (800)828-5273 Email: info@rsi-ins.com Sources: Sentry Insurance, NICB, CargoNet, & Cisco-Eagle