3 Ways To Reduce Inventory Shrinkage 2

Understanding Inventory Shrinkage: Causes, Impacts, and Prevention Strategies

Tracking key performance indicators (KPIs) for inventory control is essential for identifying inefficiencies, reducing losses, and optimizing warehouse operations. Without clear metrics, businesses often struggle with stock inaccuracies, slow order fulfillment, and unexpected inventory shortages. By focusing on the right inventory management KPIs, you can make data-driven decisions that enhance efficiency and profitability. By using real-time tracking tools, such as Warehouse 15, businesses can monitor incoming shipments, check stock levels, and anticipate delays before they cause disruptions. Automated alerts for low inventory levels, late deliveries, or demand spikes allow managers to react quickly and make data-driven purchasing decisions. When shrinkage in warehouse settings goes unaddressed, it can create an undercurrent of inefficiency.

Streamline your inventory management process further by assigning each product a unique identifier, such as SKUs, barcodes, serial numbers, or GTINs. Ensure everyone understands and follows your inventory procedures to minimize errors and shrinkage. For instance, we can create a hybrid security solution combining video surveillance and on-site security through dedicated security guards and mobile patrols. Depending on your needs and budget, you might opt for custom security solutions and work with a professional security company like Scout Security. Tailoring your security setup to address specific vulnerabilities in your warehouse or store can be more effective than generic solutions. Wastage refers to inventory shrinkage due to goods, particularly perishable ones, spoiling before you can sell them.

Leveraging Technology for Shrinkage Reduction

When stock levels drop unexpectedly, it leaves you with less product to sell. If you’re unaware of this, it can impact your inventory management systems. You need an accurate picture of what’s coming in and going out to correctly manage your brand. Sortly can help you get organized and keep an eye on your inventory each and every day.

#1. External Theft

We have a built-in barcoding system to help reduce human errors and speed up your workflow, a robust reporting feature, and stock-level alerts. We even allow you to restrict user access, which will help reduce theft. It’s one of the common reasons some customers have started using our inventory management software, inFlow. Once you have your KPIs in place, regularly analyzing and acting on the data is crucial.

• Smartsheet’s inventory stock control template lets you track product names, SKUs, quantities on hand, reorder points, preferred suppliers, and unit costs all in one view.
• That’s a lot, considering small businesses usually have small margins.
• Inventory Shrinkage – It is the difference between the cost price of inventory available and of inventory bought.
• They will also conduct regular audits of your inventory levels and stockroom procedures.
• Despite best efforts, factors such as human error, theft, damage, and spoilage are realities of managing large inventories.

It’s one reason (of many) that you should carefully examine a vendor before using their system. Of course, customers aren’t the only ones who could steal from you. This issue is most frequent when the person in question is unhappy in their job or feels underpaid. You may want to consider hiring a security consultant to determine how to protect expensive inventory without sacrificing productivity or access at your place of business. Inventory management might not be the most exciting part of running a business, but getting it right can mean the difference between struggling to survive and thriving.

If something goes missing, you’ll know exactly when and where it happened. In addition to this, you should also use tools like barcodes, RFID tags, or QR codes. We provide scalable fulfillment for health, wellness, and beauty products to help brands stand out from their competitors. Take our survey to see if we are the right fit for your company. In fiscal year 2020, over 15% of retailers in the United States stated that they experienced an inventory shrink of 3% and higher.

Consistently Audit & Review Inventory Counts

Choosing the right method reduces spoilage, prevents obsolescence, and keeps inventory fresh. With Warehouse 15, workers get real-time updates on order status, minimizing delays and ensuring that the correct items are picked, packed, and shipped every time. ✅ Track expected vs. actual received/picked inventory, ensuring discrepancies are caught and corrected on the 3 Ways To Reduce Inventory Shrinkage spot. One of the biggest time-wasters in a warehouse is poor labeling. Every shelf, bin, and storage area should be clearly marked so that workers can instantly locate inventory without confusion.

Retailers of all types can lose inventory in various ways, impacting their bottom line. Whether you’re concerned about employee theft, shoplifting, or both, adding video surveillance could discourage inventory theft. If your business stocks expensive inventory or assets, you might consider storing them in an area with extra security. Some companies lock high-value items behind closed doors, while others move the highest value items offsite altogether. There are a few things to remember when conducting an inventory audit. You’ll want to ensure your audit is not only confirming the quantity of your inventory but also its condition.

Which Accounts are Affected by Inventory Shrinkage?

Implementing real-time inventory technology can also be helpful to reduce shrinkage issues without causing operational delays or shutdowns. Scheduled and surprise audits are recommended when internal theft is suspected. To stay on top of who has access to inventory at any given time, a business can use a tracking system through its inventory management system.

If certain products are disappearing faster than expected, it may indicate theft, mismanagement, or vendor fraud. By having a real-time view of stock movement, businesses can catch problems before they become major financial losses. Our software gives users real-time inventory tracking with multi-location support.

Ways to Prevent Inventory Shrinkage

These platforms help in sharing insights, immediate alerts, and cross-functional updates on any potential shrinkage issues detected by your data analytics systems. By dissecting each of these factors with precise data analytics, retail pharmacies can pinpoint vulnerabilities in their supply chain and internal processes. Controlling shrinkage is a collective responsibility that involves several roles within an organization. While loss prevention teams or security personnel may lead the efforts, employees at all levels contribute to minimizing shrinkage.

• Here’s a closer look at how to spot and reduce inventory shrinkage.
• This technology can also give you real-time tracking and more precise control over inventory levels.
• Throughout your warehouse, it is imperative that your SKU locations are marked clearly and boldly.
• Inventory shrinkage is the loss of goods between the point of purchase or manufacture from your vendors and the point of sale.
• Sometimes, shrinkage happens because people don’t realize its impact.
• By breaking up inventory checks into smaller, more frequent audits, businesses can maintain more accurate records without disrupting daily operations.

Conclusion: Empowering Your Business with Effective Inventory Management

Ultimately, it takes a concerted effort from everyone in the organization to reduce inventory shrinkage – from top management down. In addition, many software programs can help you to track your inventory levels and manage your employees effectively. Another valuable tool to reduce your company’s shrinkage is to train all current and new employees to prevent customer and employee fraud. By clarifying your policies and procedures, you can help to reduce inventory shrinkage and keep your business running smoothly.