Jul 26, 2023

Product shrinkage tends to account for about 1.4% to 2% of missed sales for most retailers, a small number that translates into thousands of dollars lost annually. Studies show that retailers and warehouses alike are devoting ample funds and efforts to curb shrinkage, leveraging future-forward systems such as tamper-proof tags and RFID-enabled verification stations. However, recent findings highlight a different breeding ground for shirking: your transportation route.

An estimated $223 million worth of cargo was stolen in the U.S. alone last year. Data shows a 20% increase in theft, with Florida, Texas, and California leading the change in the category of most targeted states. Theft during shipping and transportation is prevalent due to:

• Increasing value of ground-transported products – Many items in supply chains, such as electronics, pharmaceuticals, and luxury goods are at an all-time high due to increasing demand and low availability. For example, egg prices remain 4% higher than a year ago, making it one of the many targeted products for cargo thieves.
• Supply chain complexity – There are often multiple handoffs between different parties, such as manufacturers, distributors, and retailers. This can create opportunities for theft to occur, as it can be difficult to keep track of who has access to the goods at any given time.

About three-fourths of product theft happens outside of the distribution center. Targeted inventory type also varies greatly, ranging from food and beverage items to construction materials, electronics, and even the fuel itself. The past few years have also recorded an uptick in cargo theft due to persistent inflation, foreign tensions, and left-over ripple effects of the 2020 pandemic.

As manufacturers and distributors get ready to welcome another peak season, dedicated attention must be given to transportation blind spots to prevent high shrinkage rates.

What do Experts Recommend?

While many measures are available to lower shrinkage rates, there is no foolproof way to prevent cargo theft entirely. However, by taking proactive steps to mitigate the risk, businesses can minimize the likelihood of incidents occurring and reduce their impact if they do. As a result, IT teams are often included in designing automated systems to pinpoint visibility gaps and notify administrators of suspicious behavior and unreasonable inventory decline.

When establishing reliable verification within shipping routes, researchers and solution developers recommend the following seven tactics:

1. Monitor truck routing via a wireless or push-to-talk system – Clear communication channels between drivers and administrators can highlight where trucks have stalled, unreported interactions, and frequent fuel stops.
2. Label inventory with RFID tags to prevent counterfeiting – Since  RFID tags can carry multiple tags within one label, companies have added extra identifiers to ensure assets were in fact produced by the noted manufacturer. This is one of the many reasons currently fueling widespread RFID adoption by big retailers like Walmart.
3. Deploy tamper-evident seals – Customizable adhesives and label surfaces can be tailored to record tampering at a glance.
4. Implement two-factor or multi-factor authentication (MFA) systems – Newer Android devices can leverage MFA within handhelds to verify the user is safe and clear to access routing data. Individual security keys may also be used by the receiver to access products.
5. Establish virtual checkpoints with mobile teams – Lack of communication between distributors and transportation teams can result in a myriad of problems such as shipment delays and worker frustration, but it also serves as a blind spot in inventory tracking.
6. Leverage machine learning and actionable insights – Automation’s powerful data collection tools empower teams with visibility into driving patterns and stock counts. Gathered insights may highlight vulnerability gaps over time.
7. Segment sensitive data – Protect sensitive identifying data such as inventory type, payment information, and truck routes with tiered access systems. Segmenting data access not only safeguards transportation but has also been shown to lower the effects of harmful data breaches.

Of the many tactics proposed by leading specialists, automated visibility and data reporting remains at the forefront of most solutions since it secures dependable accuracy without burdening teams.

How is Automation Protecting U.S. Cargo?

In efforts to accelerate delivery within a volatile supply chain, transportation and logistics companies have already been counting on automation to enhance operations. Besides speeding up order fulfillment, automated systems also:

• Track delivery routes in real-time – While visibility systems like RFID and barcoding can help track delivered products, they also provide customer-facing status reports to help customers know when to expect their order. Furthermore, T&L teams are also leveraging real-time visibility to chart efficient delivery routes. As more customers expect same-day shipping and fuel costs continue to increase, optimizing delivery routes based on truckloads can help lower shipping costs for both a business and its customers, setting you ahead of competitors.
• Notify teams of inventory alerts and tampering – Customizable label surfaces and adhesives can be modified to include tamper-proof sealing. Moreover, electronic and temperature-sensitive sensors have assisted cold chain teams in monitoring storage parameters, reducing risks of spoilage and eventual recalls.
• Verify user access through passcode scanning – Data access is crucial for seamless order fulfillment. However, workers may not need complete visibility into every aspect of the WMS to correctly assemble orders. As a result, personnel identifiers and two-factor authentication have become popular solutions for protecting data access in daily operation without overwhelming teams. Moreover, when data is digitally stored, businesses may have better ease in segmenting sensitive information such as payment methods, product composition, and delivery addresses from falling into the wrong hands.
• Connect teams and security personnel – In place of manual badge scanning and verification processes, automated RFID sensors and tunnels can capture passing tags, verifying personnel without pausing efficiency. This is because RFID does not require a line of sight to successfully complete a scan, which makes it ideal for in-motion tracking.

Product shrinkage has been an ongoing issue affecting virtually every step of the supply chain. Therefore, any effort to minimize its effects can greatly benefit businesses and customers alike. As distribution centers welcome more dynamic fulfillment methods, amplified visibility and communication will be crucial to prevent shrinkage. Meet with our automation team to learn how you can start protecting inventory from the production line and beyond.