FINDING PROACTIVE WAYS TO PREVENT VENDOR FRUAD

You know, I’ve talked a LOT about how to prevent employee theft, but one thing I don’t believe I’ve ever talked about is how to stop vendor theft. Depending on your business, you probably have hundreds of different vendors that supply you with inventory. In addition, there’s also a good chance that you have vendor reps in on a weekly basis. While I don’t know your specific set-up, I can give you some examples from my tenure in the LP field on ways that vendors steal from you (whether on purpose, or not) and ways to protect your business.

Verify shipping contents!

If you’re a multi-store location, you may have a centralized warehouse, but if you only have one store, chances are, you’re getting shipments in from a carrier daily. Reputable vendors will never short change you on purpose, but humans are the ones processing every order, so it’s always important to match those manifests up with what you actually received. Any discrepancies should always be reported to the vendor.

I’ve seen once or twice where a small vendor, specializing in maybe a handful of items was purposefully shorting orders. This happened to me a while ago with a line of shirts. Every time we received a shipment, it would be a case short. Eventually we found out they were doing this to every single customer they had in an attempt to raise capital. It backfired and they went bankrupt in the end.

Check the invoice

Did you call a plumber out to fix a leaky toilet? How about the A/C guy to cool things off? Again, 95% of vendors aren’t scamming you on purpose, but billing mistakes do happen. If you’re not vigilant about what you’re signing off on, it could cost you extra money that eats away at your bottom line. Then again, there’s that 5% that may be adding those extra “services” because they know that a check is just blindly written. Always make sure you know exactly what you are paying for!

Vendor Representatives

At least once a week, I have a rep in my stores. Sometimes they come in to merchandise a new fixture, other times, they come to maintain a dedicated area of the store that their product is in, and other times, they come out to do product demos. I had a rep once steal about $1,000 in product from me. She claimed that she needed to remove about several articles of clothing for a vendor “recall”. My manager didn’t think twice about it and she strolled out with a ton of clothes. We discovered a day or two later that she was recently terminated and at the time of the theft, no longer worked for the vendor. Moral of the story, if any of your vendors want to remove product from your store, you should be on the phone with their office to verify.