- On March 13, 2016
- document, management, production, recepy, supply chain, supply chain management, warehouse
I’ll reply immediately – it is very easy!
Are you shocked by the answer? Yes? You shouldn’t be. You’d better get acquainted with part of the methods used by the employees-thefts, so that you protect your company. Let’s move straight to the topic. My job is to seek for problems in the companies and to recommend not only how to overcome the issues but also how the company to be protected. If anybody thinks that only finance department may draw off from company’s capital, he is in a deep fallacy. The most appetite place for misusage is the supply chain – deliveries, warehouse and distribution – and the circle is closed. The mass Bulgarian firms have close the circle a priory by giving these three milestones in the hands of one person. Of course this person has been working in the firm since its establishment or from 15-20 years and the owner trusts him unquestioningly. The nightmare for the owner starts here but unfortunately he is not aware of it.
Let’s see the major symptoms which indicate the company is a subject to robbery from inside:
1. Messy warehouse
This is one apparent and easy for recognition symptom. It is very comfortable oasis for misusage by everybody and everyone. Usually such warehouse is accessible and at any time. Inventories are never ok, but you can hear plenty logical and illogical explanations by the personnel. The excuse number one is that the work is too much, people are overloaded and thus they do not have time to arrange the warehouse and keep the order. When someone asks for an explanation from a warehouse worker for whatever problem or asks for cooperation, the answer is usually negative, rude and everybody hides from responsibility. The warehouse workers’ behavior is like in a syndicate – “if you touch our colleague, we all shall leave and you’ll have no workers”. Or there is a threat that someone may provoke a state authority inspection; we all know that employers do not want deliberate inspections. Have you noticed that documents in such warehouses either are missing or are filled in improperly, on purpose? The warehouse job is quite elementary and the steps in any ERP system (or on paper) can be learned in 3 days maximum by a semi-literate person. Then why is the negligence towards documentation tolerated? Because it fits well to the thefts. And the employer is in the position of scapegoat, praying the poniard not to fall on him.
What is missing – ORDER and DISCIPLINE! So once entering a warehouse, just one glance is enough to diagnose whether there is even a small chance for misusage.
2. Lack of segregation of duties
To save some money from labor, usually the Bulgarian owner has only one employee responsible for deliveries and warehouse. This employee alone orders raw materials, writes in and off raw materials in the system, participates in the inventory checks. In such factories there are 100% organized channels for:
- Sales of raw materials to competitors
- Theft of finished goods which are not registered at all
- Theft of finished goods, hidden in the trash or in the technological waste
It is enough the owner just to wake up and be aware that he himself has entered the trap “parsimony is the mother of misery”. The mistake comes from the beginning when the firm was small and only one person (the owner) was needed to run this part of the job. And the owner thinks that an employee would work as the owner does. In principle it is possible but practice shows that this is a golden opportunity to harm the business.
3. Overspend of raw materials
Overspending raw materials is deliberately sinking the company. From one side it blocks the normal working process and increases the waste, from other side it is an easy method to justify the expenses from thefts. Often, ostensibly, to avoid production interruptions, the people involved in the scheme, withdraw raw materials from the warehouse, whenever they want, even without documents. Like that we go back to point 1 above – access to the warehouse.
The solution is very simple:
- Fixing the recipes and technical cards
- Fixing the production program
- Fixing the production line settings
And after that strictly observing who departs from the rules – this is how one link from the organized chain can be caught and the thefts to be stopped. Usually such kinds of thefts are subsequent from incompetent technologist and/or production manager.
4. Poor communication within the managerial staff
Some owners think that the most correct strategy is „divide and rule“. They play the role of a distribution center for emails, tasks, propositions. As a result, there is no connection among the departments and every manager works whenever and whatever he wants. The owner cannot be everywhere and check everything. Besides, he loses energy to run operational tasks, to coordinate and check details and cannot focus on the big picture; he cannot even see that he is robbed. And when control is missing, the managers and employees who have criminal intends can prepare and execute the planned theft without any problem.
5. Over trust
We all have been victims to our over trust on someone. Some of us take their morals, other do not. Because a person is toady and works in your factory for ages, does not necessary mean that he is loyal. May be he has found a shelter where to get salary or built a network for additional income and he now lives quietly till pension. Have you asked yourself why you trust a person but the results in his area are worsening? It is not this crazy where eating pie, but the one who gives it – alas this is very true proverb which is applicable to many company owners.
6. Documentation chaos
The documents are very, very, very important. I’ve seen companies overwhelmed by useless papers. I’ve seen also companies which at the end of the day destroy protocols and invoices. Both extreme actions are dangerous for the company because this means a total chaos. Only few documents and real control are enough and may make miracles. Everything is in the correct doze.
It is not possible to list all symptoms which show that the company is ill. The pointed above are just a small provocation every owner to think over and answer himself honestly whether he has built prerequisites for malicious actions from his employees.
The good news is that there is an exit, even painful sometimes. It requires creating rules, following the rules and applying penalties for violators. All this should be done at once, with a firm hand, without compromises. Otherwise conquer from inside (like cancer conquers the body) is unavoidable. It is a must to have complete cleaning and then a recovery period. If you can do it alone, do it. If you cannot do it alone, then search for competent help on time. And after that, do not lose the order and control in your company.