Businesses Find in Tight Economy, Biggest Threat Comes From Within
CHICAGO, Dec. 16 /PRNewswire/ — Employee fraud and lax inventory controls, not decreased sales, could be the biggest threat to businesses in today’s economy. A new survey, by the Institute for Corporate Productivity, of 392 companies of varying size and industries finds that 31 percent of employers state that internal crime, including theft and fraud, has risen as employees are pinched by the recession.
Employers are focused on ways to increase sales in the front of the house, while adding security and inventory audit controls to the back of the house.
“In today’s tough economic climate, more businesses need to look to itemize their assets, increasing the likelihood of detecting inept inventory processes or employee theft,” said Andy Dane, President of Chicago based inventory services firm Allied Inventory.
The cost of ineffective inventory controls and internal fraud can have a significant impact on businesses’ bottom line. U.S. companies lost $2.4 million on average to fraud in 2007, according to PricewaterhouseCoopers’ biannual survey of 5,400 global companies of all sizes.
“Companies are looking to trim costs, but may not realize critical assets are literally walking out the back door or lost in inefficient supply systems,” noted Dane. “Inaccurate inventory and asset controls result in excess inventory, reduced productivity, and reduced profits.”
Controlling inventory can have additional benefits. Companies that manage assets and physical inventories are able to reduce inventory storage costs and better service customers by having the right inventory on hand when orders come in, according to the Council of Supply Chain Management Professionals’ 19th Annual State of Logistics Report.
Steps businesses can take to save money and control inventory
- Implement proper inventory counting procedures. Split responsibilities so different staff is responsible for distribution and receiving, and control access to inventory.
- Monitor all inventory at irregular dates, including slow moving products (these items are more susceptible to theft as it may take time to notice missing items).
- Hire a professional. Increase productivity and detect fraud by outsourcing inventory counting services, particularly for large jobs.
- Install security systems and instill a work environment focused on integrity where employees feel valued.
- Treat physical assets like monetary assets, taking appropriate steps to protect and easily assess them. While computer programs make inventory management easier, they can also be used to hide fraud. Nothing can replace physical inventory counting as an essential process to protect against fraud and loss.