2013 DNC Food & Beverage 2013 DNC Food & Beverage SummitSummit

Corporate Loss Prevention Program“ A Culture of Integrity”

To establish a strategic loss prevention program leveraging multiple internal partnerships (Internal Audit, Treasury, IT and Risk Management. Collaborated with various business partners.

To provide clarity regarding shrink and loss rates by unit (SSUS,THS,P&R,G&E, BOS, P&S,UK,AUS) with DNC LP Visibility. Scalable phased in program.

Limit Exposures to DNC by Internal Occupational Fraud Schemes & External Loss Sources primarily through increased

education.

Decrease Controllable Losses and Negligence through a comprehensive Associate Awareness Campaign.

Leverage Technology, Training and LP Best Practices

Based on 100% global base :

10% of all people will never become dishonest even when given the opportunity to be dishonest without detection.

80% of all people will engage in dishonesty if they believe the dishonesty will not be detected. Each person has a level of dishonesty based upon their own moral code. (This is whom we want to effect).

10% of people’s sole reason for joining the organization is to steal, misappropriate and engage in dishonesty from the onset of employment.

Not all losses are a result of theft. The challenge at DNC is measuring loss. This

include reduced profits through wastage, spoilage and damages.

Failing to control or quantify loss leads to increased COGS and lost profitability.

Inventory levels become affected when these key items are not being measured correctly.

This can add several percentage points to the COGS and impact the business significantly.

CORPORATE VISIBILITY

As of 6/25/13, DNC operates 123 locations globally, approximately 20% are SKPI eligible

13% out of the 20% SKPI eligible units have not reported inventory variance for this year

DNC Corporate currently has visibility of 6.5% of unit inventory results globally

No centralized inventory monitoring system in place . Masterfiles do not exist

Reporting ability for 80% of DNC units is not visible to LP

SHRINK RATESSHRINK RATES DNC SHRINK RATE %DNC SHRINK RATE % US average retail shrink rate

in 2011 is 1.58%1.58% of sales

EU average retail shrink rate in 2011 is 1.39%1.39% of sales

US average F&B shrink rate in 2011 is 1.63% 1.63% of sales, liquor 2.95% of sales

EU average F&B shrink rate in 2011 is 1.57% of sales, liquor 2.25% of sales

Source: 2011 Global Retail Theft Barometer

Unknown Shrink Rates in 2013 due to:

Variance reports not being sent back to DNC Global HQ

Inventories not being completed properly

Poor Pre-Inventory preparation

Ability to educate the 50,000+ employees quarterly with LP/CS related topics

Each quarter LP/CS will concentrate on a particular cover theme

Advertise employee dishonesty apprehensions in a “Gotcha” section quarterly

Can be distributed in both virtual and paper copies to reduce printing costs

GOTCHA’S 

 

Winter 2013 Newsletter

This poster is designed to complete awareness at several levels:

Provide an avenue to confidentially report concerns or observations without the fear of reprisal or non-action

Increased environmental awareness. Helps establish ownership in the business operation by all stakeholders

Encompasses messaging to engage in active observations of both internal and external

Deterrence for internal theft and visiting vendor dishonesty

Advertises the Associate Hotline number for other employee related concerns

FRAUD TRIANGLEDETECTION OF INTERNAL THEFT

43.3% Employee tips 14.6% Management review 14.4% Internal Audit Detection 7.0% Accidental Discovery 4.8% Account Reconciliations 4.1% Document

Examinations 3.3% External Audit 3.0% Notified by Police 1.9% Surveillance/Monitoring 1.5% Confession 1.1% IT Controls 1.1% Other Source: ACFE 2012 Report to the Nations

Physical Security is not a deterrent to theft & dishonesty

Most internal thefts occur for 18 months before detected

Peers in most cases have strong suspicions regarding theft and/or fraud but do not report to a supervisor

87.6% of all reported corporate thefts were asset misappropriation cases

87.3% of dishonest employees were never charged or convicted of a crime previously

Source: ACFE 2012 Report to the Nations

A multi-disciplinary approach to deter criminal behavior through environmental design.

Theory developed in the 1960’s in the Chicago Housing Authority to address security concerns.

Criminologist C. Ray Jeffrey highlights the theory in a 1971 book called “Defensible Space”.

Largely developed through the “Broken Windows” theory. (Abandoned houses, lead to broken windows, which lead to decreased housing values). This same theory can be applied to businesses.

Controllable thefts and criminal conduct will increase in units not properly maintained, have poor housekeeping and are lacking strong internal controls.

Natural Surveillance: increases the threat of apprehension by taking steps to increase the perception that people can be seen (placing more expensive merchandise closer to the register).

Natural Access Control: limits the opportunity for crime by taking steps to clearly differentiate between public space and private space (Proper lighting, designated points of entry/exit).

Natural Territorial Reinforcement: promotes social control through increased definition of space and improved proprietary concern (Motion Detectors, Alarms, Integrated Camera Systems).

Maintenance: is an expression of ownership of property. Deterioration indicates less control by the intended users of a site and indicate a greater tolerance of disorder (Broken Windows Theory).

Activity Support: increases the use of a built environment for safe activities with the intent of increasing the risk of detection of criminal and undesirable activities (understanding normal course of business, so outliers can be more readily identified).

Affordable alternative to deter theft of lesser priced merchandise

High Impact Immediate visual

deterrent Customizable Text Decreases thefts of

opportunity No need for deactivation

by Sales Associates Less customer service

issues vs. conventional RFID systems

Reduce inventory labor costs

Real-time perpetual inventory results

Measure product life Forecast Optimization Inventory Profitability Integrated technology

identifies and reduces internal thefts.

Radio-frequency identification (RFID) is the wireless non-contact use of radio-frequency electromagnetic fields to transfer data, for the purposes of automatically identifying and tracking tags attached to objects.

Tags may either be read-only, having a factory-assigned serial number that is used as a key into a database, or may be read/write, where object-specific data can be written into the tag by the system user. Field programmable tags may be write-once, read-multiple; "blank" tags may be written with an electronic product code by the user.

Completion of SAFE Assessments at Units to increase controls of the Cash Rooms and General Offices

Case Management System for follow-up of Associate Hotline calls

Integration of CCTV, Card Access and Intrusion Systems

Workplace Violence Program

Alcohol Compliance Program in Sportservice

DNC Corporate Crisis Plan

CCRP Reporting Guidelines

When Do I make a call to the Associate Hotline?

What happens once I make the call to report an incident?

Dennis Thomas Corporate Security

Loss Prevention Operations Manager (716) 858-5678 dthomas@dncinc.com

Richard Santucci Corporate Security Manager

(716) 858-5321 rsantucc@dncinc.com