Deep Thoughts on Supply Chain

Retail Supply Chain Errors and Fraud Cost Your Family Over $70/Year

Tuesday, November 17, 2009 by Chris Goldsmith

When you hear a news story about a supply chain issue at your favorite retailer, you might think that it is not your problem, but you might want to reconsider. According to the recent 2009 Global Retail Theft Barometer Report from the Center for Retail Research, United States retailers lost an astounding $42.2 billion last year due to retail crimes such as shoplifting, employee theft and supply chain fraud/errors. The $42.2 billion breaks out into the following main categories:

$18.7 billion for employee theft
$15 billion for shoplifting
$6.8 billion for supply chain errors or fraud

That $6.8 billion a year translates to over $70/year of additional cost the average family pays because your retailers do not have the appropriate technologies and processes to reduce these errors and catch instances of fraud. All of the costs above translate into higher prices for consumers since the retailer needs to cover the costs to stay in business. The report estimated that the cost of store crimes to consumers is over $435 for the past year. These are meaningful amounts for most families and might warrant the question: what are you (retailer) doing to make your supply chain more secure from source to consumption at the retail shelf?

While I am sure many retailers are painfully aware of the statistics, these numbers should be a wake-up call for many retailers about the need for additional investment in track and trace technologies and supply chain logistics software. An important fact this study highlights is that not only is shoplifting a major issue but having your own employees steal from the company is a problem that needs a better solution than many retailers have today. With improved supply chain visibility and a movement toward real-time inventory availability on the store shelves, retailers will have better information to start uncovering areas that merit additional investigation. At these levels of loss many companies will have a compelling ROI case.

Next time you speak to a friend who works at one of your favorite retailers, you might want to ask if they are investing enough in supply chain technology and visibility from store shelf to purchase. It could end-up saving you some money.