Security Issues with Vendors, Employees, and Customers

1. Security Issues with Vendors,Employees, and Customers Chapter 10

2. Objectives • Describe the different forms of supplier error and dishonesty • Illustrate the different forms of employee dishonesty • Identify security problems in purchasing, receiving, storing, and issuing

3. Objectives (cont’d.) • Explain behaviors that could indicate employee dishonesty • List methods for protecting your customers from being harmed by other guests

4. Supplier Error and Dishonesty • Vendor error • Unwittingly sending products or invoices that have problems • Vendor dishonesty • Purposely misleading the buyer by delivering inferior products, shorting deliveries, or billing for undelivered products

5. Sales Scams • Sales representatives will contact people outside the buyer’s office • Attempt to sell knock-offs or poor quality, high priced items • Backdoor selling • Bypassing the buyer to go directly to an individual who will use the product

6. Product Substitutions and Shortages • Mistakes can be made at the warehouse when loading trucks for delivery • No intent of deception • Seller could knowingly substitute items of lower quality or short deliveries • To make an unearned profit

7. Inventory Theft by Delivery Personnel • Inventory shrinkage • Can occur from internal or external staff • Can occur with sales or delivery staff stealing from their customers • Items can be removed from the delivery after it has been inspected • Clean linen can be removed along with the soiled linen and resold to other customers

8. Employee Error and Dishonesty • Handling food and alcohol requires a high standard of ethics • Dishonest employees have more opportunities than suppliers to abuse an employer’s trust • Because they have more access to the product

9. Security Problems in Purchasing • Methods to protect from purchasing fraud • Separate the functions of buyer and bookkeeper, and buyer and receiving clerk • All emergency purchases must be approved by owner or chef • Require receipts and document all cash paid out

10. Security Problems in Purchasing (cont’d.) • Methods to protect from purchasing fraud (cont’d.) • Invoices must be marked “paid” • Owner should periodically verify existence of all companies who receive payments • No payments to P.O. boxes • Employ an accounting firm to audit books

11. Security Problems in Purchasing (cont’d.) • Methods to protect from purchasing fraud (cont’d.) • Use locks and security cameras • Give receiving clerk time and authority to do their job • Employee parking distanced from entrance • Manager should be present when trash is removed from the building

12. Security Problems in Purchasing (cont’d.) • Types of fraudulent invoices • Padding invoices with charges for products that were never shipped • Conspiracy with bookkeeper to pay fraudulent invoices and split the payments • Paying invoices from fictitious companies • Reciprocity agreements can be difficult to manage

13. Security Problems in Receiving • Receiving clerks must perform duties faithfully, even with trusted purveyors • Inventory substitutions • Seller may bribe receiving clerk to accept lower quality items than were ordered • Kickbacks • Seller offers payments in some form to influence purchasing decisions

14. Security Problems in Storing • Access to inventory must be limited • Proper locking system on access doors • Items that are formally counted and methodically recorded tend to be measured more accurately • Stock may be stolen by employees • Best deterrent: vigilant management

15. Security Problems in Storing (cont’d.) • Other deterrents to employee theft • Conduct unannounced inventories • Inform employees during training that procedures are in place to detect theft • Use electronic locking systems and security cameras

16. Security Problems in Storing (cont’d.) • Inventory value padding • Overstating value of items held in inventory • May be done to “earn” a bonus or to keep a job • Another method is to substitute lower priced products and remove the higher priced products and sell for a profit

17. Security Problems in Issuing • Chef might order supplies using normal requisitioning system only to have some expensive items diverted by issuing clerk • Station-chefs should check-in their received storeroom supplies, comparing their requests with deliveries

18. Preventing Tampering • Tampering or altering a product to make it dangerous for consumption is a potential threat to the industry • Accidental food contamination (E. coli) • Methods to maintain safe food supply • Know suppliers and make sure employees purchase only from approved suppliers

19. Preventing Tampering (cont’d.) • Methods to maintain safe food supply (cont’d.) • Inspect cases for signs of tampering • Control access to kitchen and food storage areas • Keep exterior of building and storerooms well-lit • Clean and check the ventilation system

20. Preventing Tampering (cont’d.) • Methods to maintain safe food supply (cont’d.) • Keep fresh foods covered • Keep chemicals in their own locked storage areas • Monitor any self-serve areas; remove and dispose of any suspect items

21. Summary • There are many ways a company can lose money through mistakes and outright dishonest y • Dishonest sellers • Dishonest employees • Backdoor selling involves going around the buyer

22. Summary (cont’d.) • Theft can occur in purchasing, receiving, storage, or issuing • There are many methods to deter theft • Tampering with food is an industry threat • Many practices should be followed to prevent tampering