Manufacturing companies incur significant financial losses when there is disappearance of raw materials and/or finished goods. Whatever the cause of the internal loss, the security department which is equipped with security system knowledge has the full mandate and responsibility to ensure that this situation is averted using various suitable mechanisms. The main aim of this research paper is to investigate the possible causes of the losses and then provide a plan on how the shrinkage problem can be resolved.
The internal loss in our international computer manufacturing company is as a result of stealing from the company by the employees.
Causes of Losses
Theft is one of the major causes of losses. It is also caused by motivation, availability of an opportunity and rationalization (Cressey1953, pp. 173, 175). Employee model for theft was represented as shown below by Cressey:
Motivation + Opportunity + Rationalization = Theft
The criminals may also Sabotage computer systems, for instance, by interfering with computer systems that provide security against theft such as Closed Circuit Television (CCTV) which uses alarm assessment. The company lacks an internal control and separation of functions that means that an integration of computerised accounting has not been introduced and this has made it difficult to detect theft easily (Hertig 1998, pp. 326). In addition, it has been discovered that waste containers may be used be the employees or outsiders to carry some items out of the company premises. Also, protection officers who waste time, provide an enabling environment for stealing by employees (Bottom 1998, pp. 149) and also inappropriate waste management whereby useable materials are discarded.
There is a need to implement internal discipline and ensure that clear policies are developed and disseminated to ensure effectiveness in all the cases where employees may be involved in theft or dissemination of information. Again, criminals should be prosecuted if the loss incurred is above a certain set amount. Investigations making use of co-worker tip-offs, security audits, shopping service and electronic surveillance should be conducted to detect dishonest employees (Fishman 2000, pp. 326). There should also be a thorough auditing of the physical security of the company, for instance CCTV as well as locking procedures.
The security officers have a role to protect the company from incurring losses by having adequate knowledge of what entails the security practices of the company. The role influences labour relations such as strikes, employee discipline, misconduct and dishonesty and hence should be aware of a strike plan, access control and escorts(DeLong 1998, pp. 140). The officers should also understand the scope of substance abuse problem that may undermine security and safety for this would be the effort of the company to ensure the security and hence prevent any possible losses (Elliott 1998, pp. 163).
Internal loss in the manufacturing company is mainly contributed by the dishonest conduct of the employees. However, this is triggered by lack of proper internal control system which can not only monitor movement of raw materials and finished products but also provide security through surveillance, auditing and also improve waste management.