Getting To The Meat Of The Problem

Some years ago I worked as a bookkeeper and accountant in a supermarket. We had the usual amount of “shrinkage” of our inventory, occasionally catching someone in the act but otherwise accepting the 1-2% loss.

In January 2005, we upgraded our inventory system, adding in self-checkout lanes. Things went along without a hitch for the first few months but then our shrinkage rate jumped. In terms of a gross percentage it was still low, but we operated on such a small margin that it pushed us closer to the red than we’d like. My boss asked me to figure it out.

Because of the new system, I could do data pulls any way I wanted. It took me a day to find that the principal loss came from the butcher shop. Prime cuts of meat were entered into the system with UPC barcodes on them but never showed up as being purchased or discarded. These were $20 to $40 (or more) items mysteriously vanishing.

At first, management suspected the butcher staff, but increased security and stern warnings did not slow the pilferage and it was clear that they were not the problem. We upgraded security near the checkouts, but no one was walking out with meat under their shirts.

Although it wasn’t my job, I put some time in on the problem. When I did more comparisons of inventory in and out I discovered that dried pinto beans were selling at a rate greater than we bought them. I thought about it and realized the problem was likely the self-checkout. I went to my boss and we added security camera and real-time monitoring of the system.

It turned out to be a family that ran a small BBQ place in town. Their trick was to use the pay station furthest from the observing cashier and cover the barcode, entering the item as weighed produce using the code for beans. They’d bag the meat and a few other small items and walk out with a valid receipt paid in cash.

We confronted them and ended up with a settlement to avoid court. Now that they had to buy their product at normal wholesale prices, they couldn’t make a go of it and went out of business a few months later. And I got a nice bonus.