Warehouse Theft: What It Is, How to Stop It

A warehouse is a tempting target. It’s big, sparsely populated, dimly lit, and full from floor to ceiling with inventory, raw materials, and other valuable items. Warehouses are a necessity for many businesses and industries, but they may as well sport a bullseye. Thieves from both without and within your company may not be able to resist the temptation. If your business has a warehouse, there’s a good chance you’ll contend with warehouse theft at some point.

But who is most likely to experience inventory theft? And can you prevent it?

Warehouse Theft Data

It’s hard to pinpoint how expensive or prevalent the problem is. Cargo theft—stealing from a warehouse or transport truck—is not officially tracked by the government. The statistics that do exist are from private companies like Sensitech or CargoNet and represent only those thefts reported to them directly. It’s not comprehensive, but assuming they surveyed a representative sample, this information gives a glimpse into the world of warehouse theft.

According to CargoNet, there were:

• 1,181 cases of reported theft in 2018
• 1,106 cases in 2019
• 1,502 cases in 2020

The company recently released data for 2022. In the new report, the number of cases jumped to 1,778 instances with an estimated loss of just over $223 million.

In fact, the average value from a single cargo theft event was $214,104. That could be a debilitating loss for small and mid-sized businesses. Just a few days prior to the time of writing, police in Mississauga, Canada, seized over $350,000 in appliances stolen from three local warehouses.

Parking lots were the second most targeted location. And number one? Warehouses and distribution centers.

And while cargo and warehouse theft is present virtually everywhere, it is most common in the following states:

1. California
2. Texas
3. Florida
4. Illinois
5. Georgia

Of course, that’s based on the number of reported cases and not on a per capita basis. Big states with big cities and lots of warehouses see lots of warehouse theft.

Warehouse Theft: Types and Targets

Everything is a potential target for thieves. That said, some items are more appealing than others for a variety of reasons.

Electronics held the top spot—for their ease of reselling and high street value—until 2010, when they slipped to the #2 position. Perhaps surprisingly, food and beverage took the top spot in 2018. And household goods, including appliances and furniture, “won” in 2022.

Security experts categorize cargo theft into one of two main types: straight cargo theft (breaking into a truck or warehouse) or strategic cargo theft (picking up shipments from warehouses using fraudulent credentials). CargoNet saw a 600% increase in strategic thefts from 2021 to 2022, although it still accounts for just a small segment of overall cases.

If you have or manage a warehouse, inventory theft prevention should be a high priority.

Inventory Theft Prevention Tips

First of all, you need to recognize that theft is widespread and common. It’s going to happen. The best you can do is take proactive steps to mitigate the risk.

Conduct Background Checks

Unfortunately, thieves are not always going to be external threats. Employee theft is a huge issue regardless of industry. According to the Statistic Brain Research Institute, 57% of fraud cases are employee-related.

When hiring new staff—or when reviewing existing members—due diligence includes a comprehensive background check. Third-party companies like Sterling Check, GoodHire, and Checkr make this fast, easy, and affordable. In addition to finding any criminal convictions, they can also verify past employment, educational credentials, and driving records.

Be 100% certain your employees are who they say they are. Trustworthy employees are the foundation of a strong business.

Conduct a Security Audit

Make a quarterly or semi-annual security audit part of your standard operating procedures. You can hire an outside consultant, or conduct one yourself with any of a number of checklists available online.

Be sure to include:

• Security devices and systems. Are they present? Are they in good working order? How is the footage from your warehouse security cameras stored and reviewed? How frequently is that done?
• Risk assessment. Identify and manage any risks that currently exist.
• Access control. Is access to the warehouse restricted? Who has access? How do they get in and out? How are visitors monitored and controlled?
• Policies. Is there a documented security policy in place? What about a workplace theft policy? Has everyone read them? Do they need to be updated?

You can’t fix a problem if you don’t know it exists. Regular security audits make sure nothing falls between the cracks.

Zero Tolerance for Theft

This shouldn’t need to be said, but make it explicit to your staff that theft will result in immediate termination and prosecution to the full extent of the law. There is no wiggle room. That way, employees can’t claim that they “didn’t know.”

Avoid Predictability

If something is predictable, it can be taken advantage of and abused.

What kind of predictability is too predictable? Security guard rounds at the same time and on the same route, supervisor walk-throughs on a set schedule, employees always working the same shift with the same co-workers… you get the picture.

Keep staff and outsiders guessing. Rotate shifts and assignment areas, perform unannounced walk-throughs and security spot checks, reserve the right to inspect bags leaving the facility, forbid inventory from being stored or set near exits or bathrooms, and create anonymous channels for staff to report suspicious behavior.

Keep an Eye on Everything

Watch everything and everyone. And let them know they’re being watched.

Business security cameras throughout the warehouse floor, office spaces, and other high-risk areas will dramatically reduce the likelihood of theft. Hang signs in monitored areas. Inform your staff. Record 24/7 and keep footage for a minimum of 30 days (while being aware that some industries require even longer). Seriously consider investing in live monitoring.

Cameras may not prevent all theft. But if a brazen thief goes through with a crime, your camera footage will at least provide you, police, insurance officers, and any regulatory agencies with invaluable evidence after the fact.

Access Control

A bank doesn’t allow just anyone to waltz into the vault. Likewise, a warehouse shouldn’t be a zero-restriction location.

In addition to controlling access via keys, pin codes, or swipe cards to the building itself, there should be areas inside that are accessible to only those necessary. Offices and areas with big ticket items or confidential information should be secure zones within secure zones. Employees in Area A don’t need access to Department B, and vice versa. The fewer individuals who have access to an area, the easier it is to identify the culprit when something goes missing.

To go even further, implement an electronic control system that keeps a record of who and when accessed.

Keep Meticulous Records

No one loves taking inventory. It’s time-consuming, tedious, and dull. But it’s also crucial to preventing inventory loss.

Stocktaking is the process of physically checking your inventory count and quality to ensure it matches your records. If you had ten ovens, shipped out or sold three of them, but only have six left in stock, something is up. If you last did a stock take six months ago, you have little idea when it went missing. However, if you conduct one every month, you can narrow it down.

Alternatively, you might consider cycle counting in lieu of or in addition to stocktaking. It’s essentially the same thing, but it’s less disruptive and much more frequent as part of the day-to-day operation. Instead of a complete check of all inventory, cycle counting is a check of smaller subsets of your inventory on multiple schedules—daily, weekly, monthly, or quarterly—so that your entire inventory is cumulatively checked on a regular basis. Check items with the highest value or sales volume more frequently and slower-moving or cheaper items less frequently.

The faster you discover discrepancies, the easier it is to identify how, when, and who may have taken it. Inventory shrinkage isn’t always due to theft, but if you’re not tracking it, you’re not going to control it.

Protect the Outside Perimeter

Warehouses are appealing targets for thieves. In addition to security measures to protect it from staff, you need to defend it from intruders too.

A fence around the outer perimeter—ideally with a perimeter intruder detection system (PIDS) to notify you when someone tries to climb, cut, or pull it down—is a solid foundation. It’s an effective deterrent and solid protection. But don’t stop there.

Always-on or motion-activated floodlights take away the cover of darkness that thieves use to their advantage. Eliminate dark hiding spots.

Strong locks, fortified doors, and secure windows keep outsiders from getting in. And if they do, sensors and motion detectors can alert you to their presence by triggering an alarm. Cameras covering the fence, windows, entry points, and other high-risk areas tie it all together.

In short, you need a robust security setup that includes lights, sirens, sensors, and cameras. That’s a must.

If the budget allows for it, you might consider hiring security guards to patrol the area. It’s a battle-tested tactic, but remember that it is not an infallible solution, and may be cost-prohibitive for some businesses.

Partner with Deep Sentinel

Guards are effective but expensive. Cameras are great but can’t stop a crime if no one is watching the feed. What if you could have the best of both?

Deep Sentinel’s warehouse security solution is the only surveillance system that comes with guards included. Advanced security cameras, artificial intelligence, and live security monitoring combine to provide proactive protection for a fraction of the price of a guard team.

The system’s AI evaluates movement detected by the camera, dismissing non-threats but alerting remote surveillance guards of any suspicious behavior or individuals. The guards can engage via 2-way audio, trigger an alarm, and notify police of a verified crime in progress if necessary with zero false alarms and the fastest response time in the industry. It’s the superior modern security option that prevents crime before it happens.

So how do you prevent warehouse and inventory theft? With Deep Sentinel.