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Route to Market & Supply Chain Blog

FMCG's Working With 3PLP’s - Shrinking the "shrinkage" problem.

Posted by Dave Jordan on Wed, Apr 22, 2015

People over a certain age talk about times when they could leave their front doors open or when you found money on the pavement and took it to a police station. Long-gone days, sadly. Nowadays, if you leave your front door open all you belongings will be stolen plus your dog and the actual door itself. Once that loss has taken place it is nigh near impossible to recover the same.

Similarly, stock loss will be happening in your FMCG warehouse. Repeat; stock loses will be happening in your warehouse.......unless you are being proactively vigilant.

You are never going to stop packets of instant soup walking out of the gate in trouser pockets or drinks in lunchboxes or even the legendary string of frozen sausages hidden under a dapper French beret. Yes, 3PLP's need to be vigilant and carry out random checks on personnel (and their vehicles) as the bottom line is this is theft and it is costing you money and customers. However, your biggest losses may be leaving your 3PLP by the pallet not the pocket load.

The troika of Dispatcher, Truck Driver and Security Guard can cost your company huge sums of money.

Ok, so the loading document states 20 FMCG pallets, the driver signed for 20 pallets and the security man "counted" and signed the paper work for 22 pallets so what's the problem? The problem is the warehouse employee loaded 26 pallets, the driver rubs his hands and the security man looks forward to a brown envelope of notes at a later date.

Ensure your 3PLP hires a seasoned and professional security company to look after what could be several million Euros of stock. In-house security operations do not work as this makes the troika formation even easier. Even then the security personnel must be randomly rotated to avoid development of cosy cliques and familiarity. Be suspicious of security people who MUST work the night shift!

You would be amazed at how many major companies still allow high value stock to be shipped around without a robust truck seal protocol. Without a seal the truck becomes an immediate mobile supermarket for the driver.  Sometimes this will be opportunistic but on a majority of occasions theft is made to order and prearranged meetings take place for removal of your stock. If you do not believe me and you have stock losses then follow a few trucks and see where they go!

The 3PLP must apply a numbered seal to each and every truck and this must be done by a suitably senior and trusted security employee. If that seal is intact when the truck arrives at the destination then there is a fair chance the goods are there. However, beware of the delicately cut and carefully reconnected seal that is whipped off in a second at the delivery point.

FMCG Shrinkage 3PLP IKA Stock resized 600If you can persuade your customers to witness the seal breakage then you might stop endless the arguments about refunds and credit notes with your Key Accounts. Now, wouldn't that be nice I hear FMCG producers say!

You should not think the risk is all over when the goods are on the customer unloading dock. I have witnessed an instance when a full pallet of FMCG was relocated to an electrical room while the driver waited out of the way for paperwork processing.

Avoid the shock of huge claims for shortage, inevitable write off and tetchy IKA negotiations by treating your stock like cash because that is exactly what it is!


Image courtesy of jesadaphorn at freedigitalphotos.netfreedigitalphotos.net

Tags: FMCG, Logistics Service Provider, Dave Jordan, Supply Chain, Inventory Management & Stock Control

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