1. 1 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf CITT C ENTRUM F ÜR I NFORMATIONS -T ECHNOLOGIE T RANSFER G MB H ED-BPM in the Retail Domain - Taking the Example of Fraud Management

2. 2 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf 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. 3 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN D EFINING THE T ERM ‘S HRINKAGE ’ 'Shrinkage' can be defined as loss of stock caused by one or a combination of crime administrative error, and wastage

4. 4 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN F IGURES ON G LOBAL S HRINKAGE The Global Retail Theft Barometer 2008:  Total global shrinkage: >100 billion $  About 1.34% of the retail sales  Only ~ 50% of stock loss is considered to be „known“  Spendings for loss prevention: >1 billion $  Sectors differ greatly, loss calculation differs greatly Source: http://www.retailresearch.org/theft_barometer/index.php

5. 5 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN M ETHODS E MPLOYED A GAINST S HRINKAGE 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. 6 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN C HALLENGES AND P OTENTIALS FOR L OSS P REVENTION Loss occurs on the whole supply chain Common data standards do not exist Rare cooperation between retailers and suppliers Rare use of electronic transaction data

7. 7 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN T ECHNOLOGICAL F OUNDATION - K NOWN S IGNALING S TANDARDS Semantics ARTS NEAR (Notification Event Architecture for Retail) ARTS Video Analytics ARTS POSlog (formerly IXRetail) ARTS SOA Blueprint for Retail... Infrastructure IBM Store Integration Framework Microsoft Smarter Retailing Architecture Wincor Nixdorf Store Communication Framework WS-Eventing...

8. 8 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN T YPICAL IT L ANDSCAPE IN THE R ETAIL D OMAIN Hard and software from different vendors Independent IT- Systems No common data standards between components and between enterprises Heterogeneous system landscape

9. 9 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN T YPICAL IT L ANDSCAPE IN THE R ETAIL D OMAIN 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 …... High amount of processed Data

10. 10 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN T YPICAL IT L ANDSCAPE IN THE R ETAIL D OMAIN 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 ERP Data Customer Data Video StoragePOS Data Customer CounterRFID tracking De-central data pools

11. 11 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN 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. 12 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN T HE V ISION The Challenge and the Principle of ED-BPM – Reference Model

13. 13 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN T HE V ISION Next steps for the workpackage:  Defining use-cases for fraud detection  Identifying business processes for loss prevention which can be managed by ED-BPM  Implementing a proof-of-concept

14. 14 Thomas Paulus, CITT & Hendrik Scheider, Wincor Nixdorf ED-BPM IN THE R ETAIL D OMAIN T AKING THE E XAMPLE OF F RAUD M ANAGEMENT Questions / Answers?