Inventory Shrinkage…How it Affects the Consumer – Atlanta Georgia

Well you may be thinking your inventory shrinks, as in from a medium to a small. Nope not it exactly…the term inventory shrinkage refers to the loss of products between point of manufacture or purchase from supplier and point of sale.

So what in the world would cause inventory shrinkage you ask?  Want to take a guess what the main cause is, it might surprise you to know that it is attributed to employee theft!  The second largest cause is shoplifting.  According to the National Retail Security Survey, 2009, an estimated 44% of shrinkage in 2008 was due to employee theft, totaling over $15.9 billion. Another 35% was due to shoplifting, totaling over $12.7 billion.

Other causes can be damage of the merchandise in transit, employee errors, such as giving a lower price by mistake to the advantage of the customer, or vendor fraud.

How does inventory shrinkage affect the small business owner? If your shrinkage numbers are large, your profit margin goes down.

How does inventory shrinkage affect the consumer? Well, if your business profits go down, you in turn must raise prices to your customers to still maintain the same level of revenue income you would have experienced before the shrinkage.

The best way to eliminate shrinkage is to identify the cause.  By implementing an inventory management system, you can not only identify where your inventory shrinkage is originating from but you can also establish ways to prevent it.  I’m pretty positive in today’s economy; every dollar small business owners can send to the bottom line is a huge benefit.

For assistance contact us at inventory shrinkage or call 1.866.914.2567 – Atlanta Georgia

Posted October 28th, 2010 by Staff Writer and filed in prevent theft

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