The previous three chapters highlight protection equipment and services pro- vided by outside sources or vendors. This chapter discusses the process retailers use to secure the best quality service or hardware at the best possible price. Retail and security executives are not required to know all the technical intricasies of specific systems, but appropriate purchasing is vital to a successful loss control operation. The systems or services purchased should not only perform to the standard set, but should provide retailers with a return on their investment in the projected length of time.
The process of purchasing security countermeasures basically consists of four equally important elements—specifications, bids, testing, and negotiat- ing the contract.
SPECIFICATIONS
The first step in the purchasing process is to detail what is needed in terms of performance on the part of the service or equipment. There are some very important performance questions that need to be answered when putting together the specifications for security countermeasures.
• What type of target is the system supposed to detect or deter (see Figure 14-1)?
• What kind of environment and conditions will the system work in?
• Who will install and maintain the system?
• How many personnel are required to support the system?
• Is the system expandable as the size requirements grow or new technology comes along?
• What is covered under the warranty or guarantee?
• Can this system be installed in increments, instead of one installation?
137
Store -M
AREAS:
RISKS Shoplifting Employee Theft Vendor or Deliveryman Theft Collaboration:
Customer/Employee Delivery/Employee Supervisor/Employee Break-In
Break-Out Hold-Up Records/Cash Manipulation Unauthorized Access to Keys and Combinations
Self- Service
Employee
Lockers Rest
Rooms
Direct
Delivery Source Reps
& Reorders
Service Work
(Maint./Clean) Employee Purchases
Control (Jewelry)
Mark the appropriate control/action number or add any comments to appropriate risk box/area 1. Authenticated Sales Documents
2. Approved Shipping Document 3. Surveillance
4. Security Device
5. Associate Training/Awareness 6.
7.
8.
9.
10.
Receiving Register Truck Seals
Lock/Combination Changes and Controls Unobstructed Arrangements
Inspection
11.
12.
13.
14.
15.
Posted Rules Checklists Location
Sensitive Item Control Audit
16 17 18
Unannounced Cash Audits Shopper Services Undercover Operator
FIGURE 14-1 Accountability control
138 Designing and implementing Prevention Programs
Selecting Protection Equipment and Services 139
• Should a reliable consultant or engineer be secured to draw up the specifications of all or part of the system?
• How much is the system likely to cost?
• Are there any hidden costs?
• Is the budget capable of supporting this purchase?
BIDS
The next step in the purchasing process is to secure bids from competing ven- dors. In some instances, the only source for a particular product may be single distributors. It is recommended that the retailer accept bids or pro- posals from three to five companies, at a minimum. The old saying "Buyer Beware," should guide the actions of the retailer studying the qualifications and abilities of various vendors.
During the review process, consider both the technical capabilities of the vendor's product and its support ability.
The retailer's specifications should indicate the level of protection the security hardware or service must provide and the conditions of ven- dor/client relationship regarding delivery time frames, training, maintenance support. All of these elements are critical. A selection should not be based purely on initial purchase price.
Look into the vendor's background and reputation. What has been the track record ofthat company's product? Reliability, effectiveness, and access to key people in the security product company are all indicators of a company with which the retailer will want to do business. Ask for and check references from the vendor.
Many retail firms find bidder's conferences a very effective purchasing technique. This technique is used when collecting bids for a large project, such as EAS or access control systems, and involves calling all competing companies together for a single, well-organized, meeting. During the con- ference, the retailer gives the bidders either a personally guided tour or a slide/video show of the facility and holds an informal question-and-answer session. A short, private tour for each vendor is recommended to ensure receiving the best possible proposal.
The financial status of the vendor is important to the potential buyer since good, long-term support and future technological upgrades are depen- dent on a financially secure company.
When evaluating the various bids and proposals, it is very helpful to make up and use a simple matrix (see Figure 14-2). This matrix is used to simplify the key data being considered during the bid evaluation phase. All vendors are judged on an even, consistent basis.
140 Designing and implementing Prevention Programs
Vendor Performance
Criteria #1 #2 #3 #4 #5 Comment
Security Need Spec'd On-time Bid Delivery Proposal
A. Technical B. Costs
Propsal Meets Needs Contract Satisfactory References Checked Acceptable Installation
Time Frame
FIGURE 14-2 Vendor bid analysis matrix.
TESTING
Before making a large purchase of equipment or a commitment to a service organization, it is recommended that a controlled test be conducted to deter- mine if desired results and support are obtained. Any test conducted should be consistently applied to ensure that all vendors compete under similar con- ditions. It is important to allow the test to last a sufficient length of time. By testing the product or service over a period of weeks or months, the probabil- ity of discovering problems or ineffectiveness greatly increases before a major capital investment is made.
NEGOTIATING THE CONTRACT
After all proposals are weighed and ranked, services or products have been tested, and a vendor with the best record and ability to meet specifications is selected, the contract must be negotiated. The retailer, not the vendor, should literally write the contract, specifying when the product is to be deliv- ered, support activities, maintenance responsibilities, and payment sched- ules. The retailer's corporate counsel should be involved in the wording of the contract and/or its review before the documents are signed. The cost of
Selecting Protection Equipment and Services 141 a good lawyer's services will pay for itself over the long-term by avoiding con- flicts over liability for nonperformance, maintenance, etc.
If vendors insist on using their contracts, be aware that their standard, or boiler-plate contract, is designed to place the vendor in the best possible position. The boiler-plate contract is the starting point for negotiation, not the final point. Vendors anticipate that most retailers will insist on modifications to the original contract, but also realize there are a few who may sign the first draft. Any contract should be specific and closely reflect the performance standards that have been established. The following points should be consid- ered when negotiating a contract:
During Negotiation System expandability System adaptability
Precise threats to be detected Environmental conditions Operating personnel required
Service and maintenance Spare parts or back-up personnel availability Warranty and down-time acceptability
Distance of vendor operations from retailer Access to key vendor personnel
Include in Written Contract Legal technicalities
Performance descriptions Equipment or personnel descriptions
Product or service delivery schedule
Security of equipment during installation
Implementation and installation details (i.e., who, what when, where, how)
System testing plan Payment/lease plan Maintenance agreement Warranties
Mutual indemnification clause Document the delivery and installation schedule. Any acceptable intalla- tion plan should be realistic and take into account other activities and projects on the part of both the vendor and the retailer.
Working with the purchasing department, devise a procurement pay- ment schedule with "out" clauses included, if possible, to avoid payment for faulty equipment or in case of adverse financial conditions.
Establish a credit line, if possible, to make final payments only upon com- plete implementation/installation and good system operation.
During negotiations, obtain purchase discounts, if possible, to cut unit costs and increase return on investment.
Devise a preferred payment method to pay x amount or percent upon awarding the contract, x percent upon installation, and x percent for total payment after a period of satisfactory operation.
It is recommended that at least 10-30 percent be withheld until the prod- uct has been judged satisfactory. It normally takes from 72 hours to 2
142 Designing and Implementing Prevention Programs
months before a system can be judged satisfactory. Small or local vendors may not be able to afford a large percentage being withheld.
Installation and Follow-up
The time frame required to implement a service or install equipment should be detailed in the contract and the vendor should be held to those terms. The retailer should maintain contact with the vendor at regular intervals to make sure all is proceeding according to plan. The vendor's efforts should be super- vised periodically to evaluate progress and assist where needed.
The contract should specify a system-check procedure itinerary, such as quarterly or annually, after final acceptance. This plan should be monitored to ensure detection and resolution of problems with performance or effec- tiveness. In addition to vendor checks, retailers should conduct their own ob- jective surveys of all loss control countermeasures.
To ensure that any implemented program, service, or system achieves the intended results, it must be supported by thorough and ongoing training and reinforcement. In-house and contract personnel must understand the intent and procedures behind specific countermeasures and be motivated to use them properly if lowered losses are to result. In any case, the retailers and all vendors must operate as a team. There must be continuous open com- munication to gain desired results. Most vendors put their customers first to protect their reputation. Retailers should keep this in mind if problems arise.