CITT Centrum Für Informations-Technologie Transfer GmbH

1. CITT Centrum Für Informations-Technologie Transfer GmbH ED-BPM in the Retail Domain - Taking the Example of Fraud Management

2. AGENDA • Definition of shrinkage • Figures on global shrinkage • Methods employed against shrinkage • Challenges and potential for loss prevention • Typical IT-landscape • ED-BPM reference model

3. ED-BPM in the Retail DomainDefining the Term ‘Shrinkage’ 'Shrinkage' can be defined as loss of stock caused by one or a combination of • crime • administrative error, and • wastage

4. ED-BPM in the Retail DomainFigures on Global Shrinkage • The Global Retail Theft Barometer 2008: • Total global shrinkage: >100 billion $ • About 1.34% oftheretailsales • Only ~ 50% of stock lossisconsideredtobe „known“ • Spendings for loss prevention: >1 billion $ • Sectors differ greatly, loss calculation differs greatly • Source: http://www.retailresearch.org/theft_barometer/index.php

5. ED-BPM in the Retail DomainMethodsEmployedAgainstShrinkage PROCEDURES AND ROUTINES Annual stock loss awareness campaign Company-wide stock loss refresher training Customer returns & refund controls (operator and customer database) Damaged goods resale controls Employees exit searches Hot product identification Hot product management Hot products routine counting Security newsletter Internal key control Patrol routes for employees (red routes) Point of sale information or data checks Random till cash checks Rigorous delivery checking procedures Shelf replenishment techniques Induction training for new employees Unique till operator PIN numbers ‘Watertight’ product monitoring procedures PEOPLE AND PROCESSES Anonymous phone line Civil recovery Covert surveillance of customers or employees Employee awareness and training Employee stock loss training and education Employee incentives—discount purchase schemes Employee incentives—stock loss bonus schemes Employee integrity checks External compliance monitoring External security/loss prevention function External stock audit function Internal compliance monitoring Internal security/loss prevention function Internal stock audit function Random checks on distribution centre picking accuracy Store detectives Test purchasing (mystery shopper) Uniformed security guards EQUIPMENT AND TECHNOLOGY Automated ordering processes Cash protection tactics and equipment (both cash offices and tills) Company-wide stock loss awareness posters Dummy display cards in place of high-risk products E.A.S. hard tagging (recycled) E.A.S. soft tagging (disposable) E.A.S. source tagging (either disposable or recycled) Employee purchasing arrangements Employee panic alarms Employee uniforms without pockets Intruder alarm systems Non-active CCTV Point-of-sale camera monitoring Protector display cases applied by retail outlets R.F.I.D. intelligent tags on pallets, cases or items (radio frequency) Replenishment equipment to support techniques Secure lockers for employees Security-sealed containers/shippers Shoplifting and theft policy posters for customers and staff Specialist anti-theft display equipment DESIGN AND LAYOUT Appropriate product location strategies Designing-out blind spots Designing-out crime programme Distribution centre secure storage Employees entry/exit access control External security—fences, anti-ram raid, roll shutters Risk-based design and layouts Robust anti-theft packaging Single direction product flow Supply chain and logistics network design

6. ED-BPM in the Retail DomainChallenges and Potentials for Loss Prevention • Loss occurs on thewholesupplychain • Common datastandards do not exist • Rare cooperationbetweenretailersandsuppliers • Rare useof electronic transactiondata

7. ED-BPM in the Retail DomainTechnological Foundation - Known Signaling Standards Semantics • ARTS NEAR (Notification Event Architecturefor Retail) • ARTS Video Analytics • ARTS POSlog(formerlyIXRetail) • ARTS SOA Blueprintfor Retail • ... Infrastructure • IBM Store Integration Framework • Microsoft Smarter RetailingArchitecture • Wincor Nixdorf Store Communication Framework • WS-Eventing • ...

8. ED-BPM in the Retail DomainTypical IT Landscape in the Retail Domain Heterogeneous system landscape • Hard and software from different vendors • Independent IT-Systems • No common data standards between components and between enterprises

9. ED-BPM in the Retail DomainTypical IT Landscape in the Retail Domain High amountofprocessed Data • Sales-Data: • x sales per hour • y items per sale • Customer-Data: • Customer Counter • Credit / Debit Cards • Security-Data: • Electronic Article Surveillance data • RFID-tracking • Customer position tracking • Video surveillance data • …...

10. ED-BPM in the Retail DomainTypical IT Landscape in the Retail Domain • A variety of data pools • Rare linking of the data with regard to fraud detection • Post processing of particular data sources • Video recordings • Stock audit • Till cash check De-central data pools Customer Counter RFID tracking POS Data Video Storage Customer Data ERP Data

11. ED-BPM in the Retail Domain Conclusion: • A typical retail enterprise has: • a big problem with shrinkage • autonomous loss prevention systems • a variety of different systems • a huge amount of business data • Perfect basement for ED-BPM

12. ED-BPM in the Retail Domain The Vision The Challenge and the Principle of ED-BPM – Reference Model

13. ED-BPM in the Retail Domain The Vision • Next stepsfortheworkpackage: • Defininguse-casesforfrauddetection • Identifyingbusinessprocessesforlosspreventionwhichcanbemanagedby ED-BPM • Implementing a proof-of-concept

14. ED-BPM in the Retail DomainTaking the Example of Fraud Management Questions / Answers?