LPC aswaaq 2012-13
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The document discusses strategies for reducing shrinkage and increasing profitability through effective loss prevention programs. It notes that shrinkage significantly impacts retailers' bottom lines. Studies show best-in-class retailers realize shrink recovery can be a top profit source, and loss prevention programs can reduce shrinkage by 20-40%. The document advocates moving from traditional reactive approaches to more innovative predictive analytics utilizing comprehensive data to identify drivers of loss, monitor trends, profile high-risk stores, and target solutions. An analytical approach and roadmap are presented for building baseline models, validating accuracy, enhancing operations, measuring results, and addressing out-of-tolerance indicators to efficiently allocate resources and minimize losses over time.
LPC aswaaq 2012-13
- 1. Loss Prevention Control Reduce Shrink & Increase Profitability Sep, 2012 Jun, 2013 Dec, 2013
- 2. What studies show Deloitte Consulting: Shrink is a big problem for retailers. In fact, for a typical supermarket or discount store, the impact of shrink is felt everywhere – within individual departments, across functions, and throughout the supply chain. This coverage makes managing shrink difficult, but not impossible. The right kind of program can reduce shrink by 20-40 %. A reduction of this magnitude puts real money back into the business. Larry Miller, Director in the National Supermarket Research Group, US, points out, “Best-in-class supermarket operators have realized that shrink recovery can be their top profit source.” Pricewaterhouse Coopers: The retail and consumer industry is one of the sectors hardest hit by economic crime, In the retail sector, companies face a two-fold threat, from ‘shrinkage’ – theft of goods by both customers and employees – on the one side, to the broader spectrum of economic crimes such as accounting fraud, corruption and bribery, and intellectual property (IP) infringement on the other.
- 3. Innovative Loss Prevention • From Traditional to Futuristic- a path forward • Current environment Initiative Common Challenges • From traditional to future • A path forward What Works
- 4. Loss Prevention – common challenges Traditional environment Information poor data; Continued reduction of resources; Reactive to failures; Post-incident reporting; Duplication of efforts for compliance; Absence of historical data analysis and trending; Minimal or no efforts on root cause analysis Emerging vision Information rich data; Improved efficiency in resources; Rapid detection of trends and patterns; Risk identification – loss forecasting to help prevent; Frequent audits based on real time data; Collaborative efforts with other compliance teams;
- 5. Overall assurance Today Multiple points of view related to operations Risks Differing perspectives on risk Potential for duplication and gaps in coverage Reduced visibility in the linkage between sources of assurance Tomorrow Collaboration across departments Develop a common view of risk Internal Controls Store Operations related to the stores/locations Presents a clear path to how key Risks Compliance risks are being covered Loss Prevention Health & Safety This is more than developing improvements in risk-based Others internal auditing
- 6. Comprehensive & analytical approach Understanding critical processes and existing sources of loss; Root Cause Analysis Isolating and quantifying key drivers of loss; Coordinating across functional areas to develop a common view of risk; Address key drivers and Identify Shrink Analytical Drivers & Forecasting monitor effectively and Trends Engine efficiently Implementing a targeted solution to rapidly detect early warning signs and address out of tolerance Store situations; Profiling & Better allocating resources to Clustering high risk stores and operational areas
- 7. Benefits of analytical approach Reduce loss across historically poor 1 Benefits performing stores and products; 2 Targeted opportunities directed at addressing factors highly correlated 5 and believed to be causing loss; 4 3 Shrinking the interval from detecting to resolving at stores that 3 have yet to disclose continued poor performance; 2 4 More efficiently allocating out loss prevention resources; 1 Streamlining reporting systems and 5 Controls Loss
- 8. Roadmap to Loss Prevention & Control • Sep, 2012 Sep, 2012 Dec, 2012 Jun, 2013 Build baseline Rebuild baseline models Operations models Finance Validate Enhance Finance Merchandize Accuracy & Operations Merchandize Management Value Activities Management Measure Results Refine Dashboard Capabilities Finance Finance Merchandize Merchandize Operations Monitor Leading indicators & Trends Management Management Address Out of Tolerance indicators