Pedro Ramos and Evolution of Loss Prevention
I thought I’d share with you all a conversation I recently had with Pedro Ramos, director of retail solutions at Agilence. Pedro emigrated from Portugal at the age of 11 with his parents to seek economic opportunities in the U.S. and went on to form over two decades of experience in retail after college. Pedro previously served as the assistant vice president for loss prevention at Pathmark Stores Inc. (since acquired by A&P) and today manages Agilence’s retail solutions focused on reducing profit margin loss for America’s retailers—that is, when he’s not busy running his son and daughters’ soccer leagues and coaching their games.
I spoke with Pedro recently to learn more about his background and the lessons he has brought to Agilence. We touch upon several topics that are also covered in our recent white paper on hidden operational shrink.
DR: So Pedro, I know that you have a long history in retail. Tell us then, what was the grocery industry like in the dark ages?
PR: (laughs) Well, if you consider the early 90’s the dark ages—and in some ways I suppose it was—I’d have to say that the loss prevention industry was nothing like it is today. This is mainly because the technology at that time was in its nascent stages. Grocers were still focused on detection and apprehension of criminal activity. There were few if any financial audit programs and people were still relying on paper and checklists.
DR: How did loss prevention function at that time?
PR: There were disparate systems; video systems reported only video and separately, we had predetermined exception-based reporting. The job of the regional loss prevention manager was to take reports and investigate the reasons behind them. It was very people focused, not process or product focused, and still very focused on fraud. They were forced to researched sales logs, e-journals, people’s schedules, average transaction value, traffic in the business at that time a particular person works, and then interview the associate or further investigate by looking through hours and hours of video. It was tedious and time consuming.
Additionally, analysis was either localized by store or regionalized by mangers, which caused ad-hoc compliance because at every store and region had a different level of skill sets and priorities.
DR: So what changed?
PR: As technology developed, I began to realize that by tightly integrating data and video together, we could unlock a lot of value in both. With the emergence of more powerful processors, lower storage cost, and digitization of video, we could put both POS data and video together with an enterprise software application and dramatically increase our effectiveness.
I also assembled a centralized analyst team to further streamline the process. By using an enterprise-class software overlay, we could take the best performers from all over the company, promote them, and let them focus on LP full time.
DR: Can you talk about some of the results that came from this?
PR: We identified considerably more activity and found a wealth of hidden operational shrink in the data—sometimes by accident. Often, while in the process of looking for suspect activity, we noticed other patterns. For instance, we realized that a lot of what initially looked like suspect activity was really cashiers compensating for issues within the supply chain. Sometimes a product was priced wrong or the advertisement or labeling was wrong and cashiers often took it upon themselves to make adjustments to the products in an effort to minimize confrontation and expedite the checkout process. This is especially true in cases where cashiers received poor or ambiguous training on these issues.
DR: And what did you do with this newfound information?
PR: We created additional KPI’s that focused on transactional adjustments at the product level or those that were related to process. Our team began to focus on all of these things and create different types of reporting mechanisms internally. Fraud issues went to loss prevention for investigation and closure, operational and training issues went to operations and HR for either restructuring or retraining, product related and supply chain issues went to the buying divisions, and promotional issues went to our marketing organization. In this way, we found synergies within a highly-specialized team and the team gained value as a whole.
DR: And at Agilence?
PR: Well as you know, this is the basis of what we do at Agilence today. When A&P bought Pathmark, I took time to think about my next steps and realized that the future was in software and the convergence of video and data into a single system, along with the quality provided by a centralized auditing team. You see, even great products sometimes never reach their full potential when the support infrastructure is not there. Great solutions implemented without proper resources means a disservice to the company, as well as to the solution. By providing services, we can ensure that our solution is implemented with the highest degree of skill and efficiency and shorten the ROI cycle for the customer.
Interested in learning more? Download the new white paper, “Addressing the Hidden Operational Losses at the POS”
And don’t forget to join us at the NRF Loss Prevention Conference (Jun 13-15, 2011) in Dallas! We are in Booth 1601.