Close

Tracking, Control Are Keys to Merchandise Control (Part 1 of 2)

“Our facility’s linen and uniform losses are becoming a real issue, and I need to develop a strategy to improve security. Where do you suggest I begin? Item tracking, surveillance, keep it all under lock and key? How far should I go?”Commercial Laundering: Richard Warren, Linen King of Central Arkansas, Conway, Ark.
I always wonder what process is used to determine the extent of the loss. Usually, it’s just a feeling.
“The shelves were always full, but now they’re empty.”
“I know we sent more to the laundry than that.”
“Replacement cost is too high.”
An environmental services manager once told me that he was always over budget on replacement linen. Then, later in the meeting, he said his linen replacement budget had been the same for eight years. We all know unit costs have gone up considerably during that period of time, so his “loss” may have been the same as always, and he was over budget because of the higher prices per unit. In this case, none of the measures suggested above will help the situation.
Surveillance will help if your goods are being carelessly tossed in a dumpster, or stolen outright. If you have the ability to track items, you can certainly tell where they were last used or seen, and that would be good information. RFID (radio-frequency identification) works very well in many applications. It would be advisable to keep your goods locked up whether you have losses or not.
No one likes to hear the word “inventory,” but if you don’t know what you have, how can you possibly tell how much you’re missing? How can you accurately know how much to order? If you don’t purchase enough, the problem is still there. Too much, and it’s a waste. Most of us don’t manage our bank accounts that way. Why would we put hundreds of thousands of dollars worth of merchandise in play and hope everything works out OK?
All of this comes with a price, in documentation, employee hours or hardware. Whatever method is preferred, there must be monitoring and interpretation of the information, or all efforts will be wasted. Some operators absorb the “shrinkage” as a cost of business.
There are those who don’t care for this idea, but here it is anyway: I would prefer to make all employees aware of the cost of the goods and what has been spent in the last quarter, year, or whatever measure of time you wish. Also, make them aware of the ongoing cost of processing or renting those items. Then, try to employ those who make an effort to watch over the well being of the company.
This sounds altruistic, but if we surround ourselves with conscientious employees, many of our troubles will just go away. Everyone paying attention is far better than one cranky manager trying to outsmart disgruntled employees. If there is something improper going on, rest assured, one of your employees knows about it. They would be able to give you your best plan of action.Textile/Uniform Rental: Steve Kallenbach, American Dawn, Los Angeles, Calif.
Merchandise control is both a plant- and customer-based issue, a necessary element to creating a profitable and lasting business. While the process requires constant supervision to maintain, it’s certainly achievable and done well in many operations. If you’re paying the average industry price for your products, and still spending more than the average percentages on any item, look to the following areas as a possible start, remembering that they are clearly two separate areas of concern.PLANT MERCHANDISE CONTROL
While you can take steps to prevent the internal theft of merchandise, it’s difficult to completely control and still maintain a positive work environment (protecting the innocent).
An all-encompassing merchandise control system typically includes a “crib” area for finished flat goods and garment stockroom, as well as a paperwork procedure that controls the flow of merchandise. This process would allow only authorized personnel into those areas and only authorized, documented transactions to occur (shipping via load sheets, receiving from plant, add wearers, shortage orders, sample orders, new accounts, etc.).
Many operations also have some sort of surveillance equipment at the exits and even on their crib and loading docks. However, the reality is that unless you’re willing to monitor those cameras and record all activities, verify each and every document, do a search-and-seek mission on all vehicles leaving your premises, and, finally, have a team of investigators follow your folks around, chances are you’ll never “catch” all of the company property flowing out.
At the plant level, provide an orientation document that states your policy on personal use of company merchandise, including removing it from the premises without written management approval in the form of an invoice (no charge or otherwise). Your document should state clearly that merchandise being removed from the premises will be considered theft and result in immediate, on-the-spot termination. No exceptions, no forgiveness, period. You can kindly remind your team about this policy at safety meetings or other occasional business settings. And this means everyone — from the top down.
On the positive side, you can offer company merchandise for sale to employees at cost, and even allow them to have an assigned amount of goods for use at no charge. In doing this, you start to feed a culture of honesty among your employees — rather than just the fear of getting caught. Of course, this sort of benefit program requires a flow process to ensure loss prevention.CUSTOMER MERCHANDISE CONTROL
It’s my industry experience (30 years now!) that most merchandise is either lost at the customer level (poor control by the route- or plant-counting process), or by theft/sale from the truck. Route sales and service drivers have opportunities all day long, with customers and non-customers, to sell your merchandise for cash.
You have to control this at the operational level, by reconciling what’s coming back with what goes out the same day, against the invoices for that day. This check-and-balance system should involve your administrative area as third-party validation.
And you have to make sure that your entire service team understands the ramifications of getting caught with a hand in the cookie jar. If you catch someone in the unfortunate act of stealing from you, fire him or her and make an example of it in your next meeting.
Mats, towels and linen are among the hardest to control (they’re delivered in bulk), yet typically have the least amount of operational controls in place at most plants. For instance, do you reconcile your clean-mat load sheet for a given day against a soil count of the same day’s mats that are being brought back? Just one mat could cost you $25-$100, and most plants don’t reconcile clean against dirty.
If your towels and/or linen are delivered on a par basis or guaranteed inventory amount, do you reconcile the soiled merchandise to make sure it’s not disappearing at the customer level? If not, literally thousands of items can be thrown away, stolen or misplaced there, and you’ll never know.
Your route runners and route managers should all be trained, coached and measured on merchandise return. If a route driver is off for the day, the substitute should be there to not only service your clients, but to retrieve your extra merchandise.
In addition, some companies have a full-time route auditor who works directly for the general manager or senior manager (and specifically not for service or production). The amount of goods that this person can get back or get on the invoice will usually pay for the salary/incentive program, and helps to keep everyone honest.
Remember that the best scenario isn’t necessarily bringing the merchandise back, but rather getting the customer to rent the entire amount they’re using! Along this line of thought, experience has shown that a short, 4-6 week growth initiative will work wonders.
During this time, routes are given full sales commissions to fix/increase inventories to match the invoice with the amount of goods at the customer site. For instance, if the customer is paying for 100 towels, but has 200 in use, and the route professional increases the inventory to match usage, he would get sales commission on the difference.
The garment area can be another operational black hole, especially for those companies that engage in garment maintenance programs that override loss charges when a user quits. Quit-user goods should be reconciled against the invoice as part of your check-in process. Replacement garment orders should be reconciled by counting in the old merchandise before processing the new order. Shortage garment orders should be verified and approved at your top plant/service management levels so they’re not abused.
Item tracking with RFID (radio-frequency identification) chips, bar codes, electronic route accounting, etc., are all important opportunities to help you control your merchandise. However, if you don’t have good reconciliation processes, any of these systems will only allow you to know what’s missing!
 

Advertisement

Digital Edition

Latest Classifieds

Industry Chatter