Inventory shrinkage due to theft, damage, or administrative errors can significantly eat into a business’s bottom line. Inventory shrink averaged 1.6% of total retail sales in 2022. Implementing loss prevention strategies to minimize inventory shrinkage is crucial for maintaining profitability.
Conduct Regular Stocktakes
The cornerstone of any inventory loss prevention program is conducting regular stocktakes to identify missing items. While full inventory counts may only happen once or twice a year, cycle counts of high-shrink areas should be done more frequently. Pay attention to patterns – if the same items go missing from the same areas, it could indicate theft or flaws in storage and handling procedures.
Technology like barcodes, RFID tags, and inventory management software allows for more efficient and accurate tracking than manual methods. Automated reordering and stock monitoring can also help spot unusual depletion trends. This is something you’ll cover while studying for a BS in loss prevention management.
Secure High-Risk Areas
Areas more vulnerable to theft like storerooms, loading docks, and self-checkout stations should be secured. Restrict access to authorized personnel only. Surveillance cameras, electronic article surveillance tags, security guards, and anti-theft devices help deter potential thieves. Lock display cases and use cables to secure expensive or portable items.
Integrate anti-theft technology with inventory systems to identify unusual transactions in real-time, like a high number of refunds and voids at a register. Also, ensure store opening and closing procedures are strictly followed.
Improve Storage and Handling
Poor storage and handling practices can lead to damaged, spoiled, or expired items. Provide ongoing training to employees on proper stocking and storage methods. Use first in, first out (FIFO) inventory rotation and check for expired or short-dated products.
Protect inventory from damage due to inadequate climate controls or pest infestations. Eliminate overcrowding by using adequate shelving and avoiding stacking boxes too high. Also, address hazards like leaky roofs, broken pallets, and malfunctioning equipment like leaky coolers.
Optimize Processes
Administrative errors like incorrect pricing or inadvertent markdowns can negatively impact inventory accuracy. Review processes to identify potential failure points. Ensure pricing is accurately marked on shelves and updated in systems. Improve purchase order and receiving procedures to prevent over-ordering.
Leverage technology like barcode scanners and auto-replenishment tools to reduce human error. Standardize procedures for taking inventory counts. Provide adequate training and supervision of staff to ensure compliance.
Deter Shoplifting
Though not technically inventory shrinkage, shoplifting also contributes to retail losses. Deter shoplifters through visible security measures and staff who greet and engage customers. Keep high-value items near registers and use locked merchandising displays when feasible. Implement policies like checking customer receipts and bag checks at exits.
Prosecute offenders to send a message, but avoid making false accusations. It’s also important to balance loss prevention without negatively impacting customer experience.
Monitor Trends and Set Goals
Track inventory shrinkage metrics over time and identify problem departments and products. Look for unusual patterns that could signal theft. Setting shrinkage reduction goals focused on high-risk areas can help drive improvement.
Preventing inventory loss requires diligence, investment, and constant reevaluation. But the savings gained from reducing shrinkage far outweigh the effort. Paying attention to details like security, processes, staff training, and technology enhances inventory accuracy and profitability.
Read more on KulFiy