How To Reduce Inventory Shrinkage

A loss of inventory is referred to as inventory shrinkage.Shrinkage can be caused by theft, damage, or errors.Proper monitors and controls can greatly reduce inventory shrinkage for businesses that carry goods.

Step 1: Train and educate employees.

Training and loss-prevention programs should clearly discuss the implications of theft with employees, such as limited pay increases, fewer opportunities for promotion, and layoffs due to the company’s financial instability.Loss-prevention programs show employees that the company takes the issue of theft very seriously.Employees can learn how to spot theft from these programs.

Step 2: Your storeroom needs to be secured.

To reduce the risk of employee theft, restrict access to your inventory.Employees who handle inventory should have access to the areas.If you have some goods that are worth a lot, you might want to restrict access to the areas where they are kept.

Step 3: You should tighten your receiving practices.

A large amount of inventory theft takes place in the receiving area of a warehouse.Employees might claim the good for themselves if they mark shipments as short or spoiled.It is possible to prevent this by requiring an inspection of the goods before they are thrown out.A recount of the items received should be done by an employee that works outside of receiving.

Step 4: You should install cameras.

A deterrent to crime is the installation of visible security cameras.Let your employees know that the security cameras are checked frequently.Every night, review the security cameras to make sure they are not being used for theft.Even if there are no signs of shrinkage, the cameras should be reviewed at least weekly.While training employees, you can show them where all the cameras are, show the live recordings, and emphasize that the tapes are checked daily.You can post warnings against theft in the store and workroom.

Step 5: Keep an eye on valuables.

Store higher value items in locations that require higher levels of authorization or access to reduce the urge to steal.Store high priced items under lock and key, and only give keys to trusted managers.

Step 6: There are separate duties for more than one employee.

The same person should not be handling inventory management, processing of receipts, and recording of Receipts.It is easier for theft to go undetected if there is one person in charge of income and inventory.The checks and balances system will deter theft if the duties are spread among multiple people.

Step 7: The point-of-sale system should be used efficiently.

Require each employee to sign into the POS terminal with a unique password and usernames and review their transactions daily for suspicious behavior.You can find questionable losses by studying your daily profit margins report.It is possible to investigate a department for employee theft if there is a lot of losses there.Unnecessary and excessive access to the cash drawer, recorded refunds in small amounts, and product returns not matching the product are examples of suspicious behavior.There are fake sales where an employee enters in a discount in order to pocket the money paid by the customer at full price.If the discount appears too drastic, transactions will not go through.When signed in to the terminal, limit what each employee can do.You could require employees to call a manager to perform voids or product returns.Civil penalties and class action law suits can result from the failure to match posted prices with cashier prices.

Step 8: It’s a good idea to locate cashiers to prevent theft.

There are cash registers near the store entrance.As customers come through the doors, make your cashiers welcome them.The cashier’s sight lines should be open to the rest of the store.Pick out your most valuable items close to the cashier.If they are being watched closely, shoplifters are less likely to commit the crime.

Step 9: Security cameras and mirrors can be used.

A shopper is less likely to shoplift if they know they are being watched.To let shoppers know that the store takes theft seriously, install cameras, mirrors, and warning signs.There are more likely to be hiding spots for theft if you place mirrors in corners or obscure areas.

Step 10: Employee awareness and visibility needs to be raised.

Employees should be trained to recognize theft and put their skills to use daily.Professional shoplifters said that employee visibility was the top deterrent to theft.Ensure that employees walk the floor, assist customers, and watch the dressing room.Shoppers who avoid eye contact, appear nervous, wander aimlessly, leave and return to the store frequently, and linger in obscure areas should be looked for by employees.Make sure employees greet all customers and ask if they need help.Due to possible lawsuits and complaints, set up a policy that forbids physical contact with shoplifters.It is against the law to profile customers based on race, gender, ethnicity, age, or disability.

Step 11: Store policies can cut down on theft.

Some policies will make it hard for thieves to steal.If you have a retail store that sells clothing or shoes, you should have policies regarding shopping bags and dressing rooms.The policy should deal with shopping bags brought in by customers.Give them a number that will allow them to retrieve their items when they leave the store.A dressing room attendant that monitors the number of garments taken into the fitting room by each shopper is a must.Emergency exits should be locked or alarmed, but remain in compliance with fire code.

Step 12: Employees should be aware of scam.

Store policies regarding discounts, returns, and coupons should be up to date for employees.In order to be aware of current coupon scam and bad promotion codes, cashiers should be familiar with item prices.If a coupon or code is deemed invalid by the manufacturer, the store may not be reimbursed.Employees should be aware of a large amount of coupons being redeemed.Always have an original receipt for returned goods.If customers don’t have a receipt, you can charge a 20% restocking fee.

Step 13: Your store should be well-organized.

If something is missing or out of place, it is easier to notice.Pull all products to the edge of the shelf to form a wall of merchandise.

Step 14: There are many types of administrative errors.

Administrative errors that lead to inventory shrinkage include Universal Product Code (UPC) ticketing errors, point of sale ringing errors and inadequately trained staff.Being aware of common errors can help you avoid them in the future.Ensure that items have the correct barcode and that they are being scanned and recorded correctly.Creating clear labels for items, bins, and shelves will cut down on human scanning errors.

Step 15: Audits must be conducted consistently.

Auditors want to know where every piece of inventory is located.cycle counting is the most efficient way to audit inventory because you only have to count a small amount of inventory each day.You should conduct at least two complete audits per location.barcode scanning or mobile devices can be used to track inventory from the dock to the register, but thieves can find a way around this.Each piece of inventory can be counted by hand.You can see how to keep inventory.

Step 16: You can automate your inventory with a software solution.

By using software to track inventory, you can standardize the system and more accurately track information.It makes inventory adjustments easier since it is done outside of the accounting system.A system like Flow Inventory can provide an overview of the entire inventory process, and allow you to create an audit trail of all transactions, even down to separate user accounts.

Step 17: Pay attention to items that are broken or spoiled.

Try to limit the amount of inventory that goes to waste by ordering the proper number of items during purchasing, and ensuring careful handling of the items in the stock room.You will occasionally get spoiled or broken items from the warehouse.To avoid scam, be sure to inspect items that are said to be damaged or spoiled.