Opinion: Don’t Neglect Warehouse Security

B>By Mark Swenson

I>Executive Vice President

riStarr Management Services Inc.

A product being transported to a warehouse facility via some mode of inbound transportation receives a critical security check during the receiving process at the destination distribution center.

It is important that the warehouse puts all products through a rigorous receiving process, especially high-value or sensitive commodities such as electronics, computers, consumer goods with high street value, pharmaceuticals and Department of Defense or other government-procured items.

An effective warehouse receiving process helps verify product accuracy by reconciling the type and amount of product being received against purchase order information. The warehouse receiving process also ensures that product has not been damaged or tampered with during the inbound transportation process.

Once a warehouse receives product into inventory, without any exceptions noted, the distribution center now becomes 100% responsible for ensuring the safekeeping of that product.

There are many ways to safeguard inventory against loss while stored in a warehouse. First, it is important to mention that there are numerous ways for on-hand inventory to be lost or damaged in a distribution facility. For example, inventory losses may occur due to theft.

In such cases, employee background checks, product security cages, employee badges, integrity tests and heightened facility security measures are only a few ways to combat pilferage.

Other inventory losses occur due to sub-par order picking accuracy, loading dock mistakes, poor inventory management or lack of employee accountability. A robust warehouse management system is a powerful way to prevent such inventory losses. An effective warehouse management system protects the security of the product by tracking its flow through the warehouse and the activities of each warehouse associate.

The warehouse management system also protects the security of sensitive product and customer information that often has to be exchanged with external parties. For example, sophisticated warehouse management systems have multiple security levels designed to limit employee access to sensitive information or screens in the system.

Simply stated, you wouldn’t want your entire warehouse crew to have access to the “Inventory Adjustments” module within your warehouse management system.

It is also important to mention that information security must be maintained by reliable firewalls. An effective firewall monitors all traffic and blocks unwanted infiltrators such as hackers from gaining access to sensitive information residing in the warehouse management system. External Web access — inventory inquiries and visibility for customers are examples — needs to be secured using an encrypted SSL (secure sockets layer) Web connection.

Many warehouses have product belonging to multiple customers. A warehouse management system operating in this type of facility should not allow customers access to proprietary information belonging to other customers in the system.

As orders are being fulfilled, staged and loaded on vehicles, the warehouse shipping process serves as a final quality/security check before the critical handoff to transportation. Multiple orders and/or SKUs are often loaded on individual pallets that are in turn shrink-wrapped. As a result, the transportation provider frequently has very limited means of validating order accuracy and product integrity.

In addition, warehouse operations often set up “shipper load and count” relationships with numbers of transportation providers. In such cases, the distribution center is responsible for all product counts and vehicle loading (in most cases this involves staged trailers or rail cars).

In such cases, the warehouse has a direct impact on transportation security because it is responsible for properly balancing loads, ensuring that maximum weight restrictions are honored, guaranteeing compliance with hazardous materials regulations and seeing that unwanted access to loaded trailers is denied.

Clearly, when assessing your organization’s transportation security, it is important to consider the effect other segments of the supply chain have on that security.

TMSi is a third-party logistics provider that specializes in contract warehousing, warehousing technology and dedicated contract carriage. The author works out of the company’s Portsmouth, N.H., office.

This story appeared in the Oct. 27 edition of Transport Topics. Subscribe today.