Archive for Aprile 2021

There are literally tens of billions of dollars to be recouped. They don’t often know their shrinkage numbers—which is something wholesale inventory management software and inventory forecasting helps with—but they know they’re losing product. It doesn’t take much shrinkage to make a noticeable impact on your business. An average shrink rate of 1.62% translates to $61.7 billion in losses across the industry.

Bring a supervisor in consistent intervals to conduct inventory audits. This will ensure in-depth bookkeeping of the inventory, resulting in tight security and a decrease in employee theft. Security checks should be a non-negotiable concept when it comes to inventory. The warehouse or the retail outlet should be covered with a web of CCTV cameras.

What Is Shrinkage in Inventory?

This is why it is important for businesses to track their shrinkage rates over time, to determine what is typical. It’s also important to factor for shrinkage when deciding how much inventory to order. In businesses with complex supply chains, the inventory may at one point be handled by third parties who are not part of the company. The theft may occur during transit from the supplier’s warehouse to the business premises or when loading and unloading the products. Deliveries should be counted every time they enter or leave the business premises and recorded appropriately. Although employees should be at the forefront of preventing adp totalsource softwareage, some dishonest employees may steal from their employers.

Inventory may be managed by third party businesses who are not affiliated with the company in the supply chain of the businesses with complex supply networks. Therefore, they can also be referred to as warehouse maintenance in simpler words. You can start estimating your cost of goods sold once you have all of the aforementioned information. COGS can be calculated weekly, monthly, quarterly, or annually, depending on your business and goals. As mentioned earlier, theft can affect your bottom line drastically; with more than 400 million incidents of shoplifting per year, it’s a serious issue that you need to arm your business against.

While barcodes and QR codes are all you need to track inventory quickly, RFID technology can help reduce the risk of shoplifting. That’s because RFID tags allow businesses to keep an eye on inventory as it moves around the store—and can even trigger an alarm when exiting the premises. According to your inventory records, you have 75 sets of racks on hand.

What happens if inventory shrinkage goes unnoticed?

However, the scope of reducing the temperament of carelessness can turn the wheel around to reduce Inventory shrinkage. There are a lot of ways in which a business can save the cost of inventory shrinkage. Simply curate the right tricks and rules and implement some in the business. For example, if a retailer accepts $1 million of product, then the inventory account increases by $1 million. Every time an item is sold, the inventory account is reduced by the cost of the product, and revenue is recorded for the amount of the sale.

Although most businesses have moved from paperwork to digital methods of record-keeping, administrative and paperwork errors are still among the leading causes of shrinkage. Administrative errors may include pricing mistakes, accidental reorders, missing or additional zeros, or left-out decimal points. To reduce such errors, inventory should be physically counted and re-counted even when the business relies on automated systems. If you have errors in your inventory counts when manually taking inventory, that screws up your shrinkage rate.

How to prevent inventory shrinkage

The important word here is “ongoing” because any effective shrinkage training should be an ongoing discussion with employees. These new forms of inventory shrinkage require new tools and strategies. Solink provides the tools you need to reduce shrinkage today. By connecting the data from your video surveillance system, POS, and more, Solink shows you how you can reduce shrinkage on a single dashboard. Third-party logistics or 3PL providers are professional fulfillment companies that help ecommerce businesses store inventory in the 3PL’s fulfillment center to pack and ship orders. They take precautions to keep your inventory safe and secure while allowing merchants to outsource fulfillment, which is often costly and unproductive to manage in-house.

• Shrinkage occurs across all industries and at every point in the value chain.
• Managing inventory shrinkage is important to reduce inventory costs and improve margins.
• We talked to everyone we know that runs a business and is concerned with how to stop shrinkage.
• Solink’s video surveillance software connects your security camera footage with your POS data and creates a dashboard of analytics and searchable moments.
• Because POS systems are so integrated into the sales of a bar or restaurant, employees have the ability to use them subtly and to their own benefit.

Flowspace partners with ecommerce brands to optimize logistics, including ordering, processing, picking, packing, loading, shipping, and more. Flowspace’s OmniFlow Visibility Suite gives brands real-time visibility and the ability to track inventory management KPIs like inventory shrinkage. But Flowspace’s platform goes beyond just tracking supply chain KPIs; Flowspace’s platform gives retailers actionable insights in order to improve and optimize their inventory KPIs. With these two values in hand, you’re ready to calculate your inventory shrinkage, which is your recorded inventory minus your actual inventory. So what can eCommerce business owners do to prevent shrinkage?

Your inventory management software shows you should have 50 lbs. Of coffee that you purchased for $5,000 left in your inventory. This is based on how much you had at the beginning of the month and how many cups you sold. You’re certain you didn’t sell all of it, but when you check your inventory, it isn’t there. In addition, many software programs can help you to track your inventory levels and manage your employees effectively.

How to control inventory shrinkage

Implementing regular counts of your inventory can help you track down sources of shrinkage. Consider increasing the frequency of your counts, for example from annually to quarterly, to get a better understanding of your inventory shrinkage. While you might not think there is normal retail shrinkage, there definitely is. Just like meat and vegetables, fashion has a “best before date,” and goods that do not sell before styles change require heavy discounts to entice customers.

• You should also regularly implement cycle counting, a smaller-scale inventory audit that happens daily, weekly, or monthly as needed.
• Solink allows you to video audit stores for regulatory and company policy compliance from head office.
• This software can make onboarding and anti-theft training seamless for new and existing employees.

If the shrinkage percentage has decreased over time, it shows that the company’s inventory management techniques have reduced stock shrinkage. However, if the inventory shrinkage percentage increases over time, then the company should review the measures they have implemented to identify and correct any potential problems. Theft, both internal and external to the company, continues to be the driving force behind retail inventory shrinkage, at 78.3% of all shrinkage in 2008.

Implement anti-shoplifting measures

35.8% of inventory shrinkage is due to employee theft, which means it’s critical to properly screen candidates. Depending on your business, you may want to ask for employee references and do a background check before hiring. It’s also important to have training procedures in place, so that staff members know how to handle inventory properly and count stock. To measure the amount of inventory shrinkage, conduct a physical count of the inventory and calculate its cost, and then subtract this cost from the cost listed in the accounting records. Divide the difference by the amount in the accounting records to arrive at the inventory shrinkage percentage. Reducing inventory shrinkage has a direct impact on a brand’s bottom line because fewer products are going missing and can be sold.

Hiring a loss prevention manager can help significantly reduce the amount of inventory shrinkage in your eCommerce business. Whether due to errors in fulfillment or theft, shrinkage can eat into profits and leave businesses struggling to stay afloat. And yet, many eCommerce business owners don’t realize how much inventory shrinkage affects their bottom line. All the items are discarded because of damage, yet there are several items that are perishable. Health care items, food items, dairy, medicines, and a lot of other category goods are perishable items. Once a product is not sold till the date of expiration, it becomes a waste matter.

Most 3PLs provide transparent reporting and technology to help you control stock levels to prevent inventory shrinkage. Your inventory shrinkage rate is 10%, which means you lost 10% of your inventory value to shrinkage. Then, multiply your inventory shrinkage rate by 100 to convert it into a percentage.

Inventory shrinkage costs can be significant and may cost a business thousands of dollars per month or more, depending on how much product the company moves. It can be especially difficult to accurately count and record stock during busy periods when demand is higher, staff are under pressure, and returns and exchanges tend to increase. Making sure you’re adequately prepared for peak sales periods ahead of time means you’ll have the proper systems in place to continue to manage inventory levels efficiently when demand increases. If your inventory reports and sales records don’t match, you will have to spend a significant amount of time reconciling your receipts and accounting records.

They have a contract with a wine wholesaler who buys every case available to distribute to retail wine shops, bars, and restaurants. But the vineyard only has 598 cases of wine to sell to the wholesaler. The process of bottling, labeling, packing, storing, and shipping the wine cause 2 cases—24 bottles—to disappear. The best way to combat shrinkage is to know where yours is coming from.

Management errors such as miscounting, wrong units of measurement used, or any other type of human error that was a mistake can lead to inventory shrinkage. This is even possible when automation is used for inventory management. However, due to shrinkage, your actual inventory value is $63,000. For every piece of inventory that’s unaccounted for, you’re essentially throwing away money or losing product. It can lead to a drop in profits and require you to alter your accounting books, which will cost you even more time and money to fix. Acceptable levels of inventory shrinkage vary by industry and by individual businesses.

When the Widget Fairies carry off your widgets in the middle of the night, that’s called inventory shrinkage, and it can cost your company a lot of money. Remember, inventory shrinkage can be caused by employee training deficits and not just theft. You might not think of your security cameras as an employee training tool, but it has a direct impact on employee training. In fact, Negril considers finding employee training opportunities one of the biggest value adds of Solink’s platform. In fact, the 2020 National Retail Security Survey states that a single dishonest employee costs a company on average over $1,100.