Controlling Inventory Shrinkage

According to BusinessDictionary.com the term inventory shrinkage refers to “materials or goods lost through deterioration, obsolescence, pilferage, theft and/ or waste.” In layman’s terms it is the loss of any product, for any reason, between the time it leaves the manufacturer and the time it is purchased by a customer. According to the National Retail Security Survey, inventory shrinkage costs U.S. retailers over $31 billion a year. Here are a few proven methods to help you control the potential loss in your organization.

Let’s start at the top with supply chain management. You need to keep a sharp eye on your invoices and perform frequent audits to ensure that the products your supplier claims they shipped is actually what you received at your location. Once you’ve determined that the merchandise you paid for has actually made it to you it’s time for shrink management. Last year 43% of all inventory shrinkage was attributed to employee theft, 35% to shoplifting, 14.5% to administrative errors, and 4% to vendor fraud. Now is the time for due diligence. Determine where the loss in your company is coming from and allocate the appropriate resources to combat it.

Implement an effective security program with a policy of prosecuting all employees caught stealing. Take a proactive approach to identifying and preventing retail theft. Electronic alarm systems, CCTV systems and loss prevention professionals are all a good way to do this. Use of an integrated point of sale system can also help eliminate a number of clerical errors which have been known to lead to losses. Remember, controlling inventory shrinkage is vital to your company’s bottom line, and after all isn’t that what business is all about?

For more information contact us: inventory shrinkage or call 1.866.914.2567

Posted October 8th, 2010 by Staff Writer and filed in prevent theft

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