Beverage Thieves

If you have dishonest people working in your company, losses can add up quickly. You have to work harder just to stay in the same place.

Here how the beverage thieves operate

• Delivery drivers who sneak extra cases on their truck when no one is looking and then sell it to one of their "regular" customers at a "bargain price.
• Delivery drivers who start with the right amount of product on their truck. They short a customers    lax on checking in the order. Sometimes the driver will short the customer when he comes into the store and tell the customer he left it on the truck and will bring it in before he leaves. The customer  proceeds to check the order in,  sign the bill or pay the driver for the full amount and the driver never brings the missing case in and the customer forgets. The driver then has an extra case to sell another customer. If the customer is a cash customer, he marks the customer's copy of the bill with the correct amount reflecting the total with the extra case. He pockets the extra money and turns in the lower amount to the office at settlement. His inventory and cash checks out. Only the customer who paid for the correct amount of product, but got shorted is screwed.
• The driver calls in and says the customer doesn't have money to pay for the order. The driver is given authorization to allow the customer to sign for the order (charge), however, the customer pays for the driver for the merchandise. The driver marks the customer's copy of the bill "paid" and makes the customer or receiving clerk sign the other copies of the bill not knowing he's now charging the order. The driver keeps the money and the invoice is handled as a charge during settlement and the customer is shown as owing the bill. When the bills goes unpaid and a collection call is made, the customers tells the accounts receivable person that the driver was paid at the time of delivery and can produce a receipt.
• The driver is in collusion with someone in the warehouse who loads extra product on the truck knowing that the truck will not be checked against the load sheet before the driver leaves the warehouse.
• Driver sell product to customer pocketing cash and reports case was broken. Nobody bothers to check in undelivered or broken cases when the truck returns to the warehouse.
• Customer returns a case of product to driver. Driver gives customer credit for the case. The driver sells the case to someone else for cash. Turns in paperwork to office. Customer gets credit. Company is short one case of product.




I guess they didn't hear the story of Honest Abe
If a driver can figure out how to make an extra $20 a day and not get caught because the company has no controls, checks or audit trails he get to make $200 a month..

You must have a system in place to control:

• inventory
• cash
• sales invoices for charge sales
• bounced checks given to salespeople or driver to collect
• returns
• unsold/undelivered product
• breakage

Avoid having drivers pick orders and load trucks without having a trustworthy person overseeing the operation and checking every case against an order or shipping document.

Do not hire brothers or cousins with one working in the warehouse and one working on the street. Avoid nepotism or you will find they are working their own business and not yours.

Know who you are hiring: Check references and go back 3 jobs. Check MVR. Check criminal record.  Require drug testing.

Implement and Maintain Internal Controls:

The same person who checks in returns (undelivered product & breakage) is not    the same person who settles the driver. The person who counts the money turned in by the driver is not the same person who settles the invoices.

Track breakage by driver every day. Find out who's taking it their aggression out on the product.

Have the driver write the time he was at the account and the reason when the order or part of the order was not delivered.

Have someone call the customers immediately the next morning if the driver brings the order back and confirm what the driver reported.

Be suspicious of people "recommended" by someone already working for your company,, if they worked together at another company.

People with drug problems or extra girl friends need more money than they can earn working for you. They will look for every opportunity to steal.

If they think no one can figure out their system because of stupidity, lack of interest, strict departmental barriers or lines of authority, they will execute their plan.

Have a trusted friend or family member supervise the night shift if you can not avoid having one.

Manage by walking around. Talk to every employee.

Have supervisors call customers and chat about personnel and service.

Question sudden termination of employment by supervisors.

Question sudden promotions and bonus to employees by supervisors.

It is easier to have a kid prosecuted for shop lifting than to have employees prosecuted for theft or embezzlement. District Attorneys see these cases as difficult to prosecute and offers no points for their political aspirations.

July 1992

Jim Waldron consulting with Ron Bates to figure out the best place to put the extra pallets of Elliott's apple juice and Stewart's Root Beer.  That's me standing there thinking they had a plan to build the business...Yes they did. their own.

Now here's a twist!

Your sales manager who has your trust, authority, keys and access to the entire operation (except order entry and cash management) comes into the warehouse between 8PM and 2AM at night when the trucks are being loaded. He tell the night manager supervising the loading that he has another order which is to be put on one of the trucks. Because the order entry system consolidates all the orders to be delivered on each truck and no one is in the office at this time to generate a new pick ticket and load sheet, the manager verbally tells the crew loading the truck to put the product on the truck. The "trusted" sales manager prepares a hand written invoice for the extra product. At 6AM, the sales manager is right there helping to "check" the trucks against the load sheet. The load sheet does not show the extra product that was put on the truck the night before. The day warehouse manager, the office staff or any other driver is unaware of the transaction. The truck is checked and sent on it's way. The extra product is "sold" for cash as a "special price" to a "select number of bulk wholesalers" by the driver who brings the cash back to the sales manager who splits the money with the driver. When all the trucks have left, a physical inventory is performed by the warehouse manager who can not figure out why the inventory is short a pallet of this or a pallet of that. The sales manager berates everyone, takes charge and recounts the inventory "finding the missing cases". The inventory variance is reported to the computer person who "adjusts" the inventory to reflect the physical inventory. The accounting system reflects "inventory shortage" which eventually increases the cost of goods sold and decreases the gross profit margin.

How about this one: Both of them come to the warehouse on Saturday. Load up one of the trucks and drive around from wholesaler to wholesaler peddling merchandise off the truck.

How about this one: The sales manager sets  up his in-laws as distributors who come to the warehouse at night to pick up product. They get bonus product loaded on their truck and because they're so nice and no one else is at the warehouse at that time to see what's going on or what's happening, , they get two or three $800 coolers loaded on their truck too.

Good idea is to have everyone bonded, but make sure your limits are high enough for the people in your company who handle big bucks. In this case, the insurance company paid off the full limit we had- $15K not $150K

You have to have people who can put 2+2 together. You have to have people who question everything including "authority". You have to have people who "smell rotten fish". You have to have people with a spine to come forward when things don't add up.

Fire people in positions of authority who repeatedly tell subordinates or peers not to "bother" top management.

The water is thick with predators. Get your Slime-o-meter tuned up and working.