3 Ways to Reduce Inventory Shrinkage

Before you can reduce inventory shrinkage, you need a way to measure it. The best way to do so is by investing in a business intelligence solution that can show the patterns and trends of inventory shrinkage in your storage facilities. Without measuring, it’s extremely difficult to tell if you're making headway on reducing shrinkage.

Once you have a way to measure shrinkage and know when your reduction efforts are making an impact, you can try some of the following measures, all of which should help you combat inventory losses and improve the state of your company’s bottom line.

If your company follows the practice of performing physical inventory counts once or twice a year, try switching to cycle counting. Cycle counting involves counting a few groups of inventory SKUs every day or every week, with the emphasis on product lines that move quickly through your supply chain or that your business intelligence software identifies as particularly prone to shrinkage. By counting these SKUs on a frequent basis, you can quickly get on top of discrepancies and look for the root causes.

Sadly, employee theft and fraud are two of the most common causes of inventory shrinkage. Employers erroneously focus too much on preventing external theft while the real problem most often comes from within, as employees have more opportunities to steal than any external parties.

By improving your company’s security and surveillance capabilities, you should start to see your shrinkage numbers heading in the right direction, as opportunists become aware that their activities are monitored and recorded by surveillance cameras.

Aside from theft, other causes of inventory shrinkage include loss and damage. With a business dashboard application, you can easily keep track of the losses and damages attributable to each employee. With this information, you can manage performance by setting targets for damage reduction and holding each employee responsible for meeting them.

Gaining access to intelligence is the first and most important step in reducing shrinkage. A business management platform such as Sage 100 can provide all the inventory visibility you need, presenting usable data via easy-to-interpret business dashboards.

Southeast Computer Solutions can help you find and implement the best business intelligence software for you. To learn more about how we can help your business reduce inventory shrinkage with business intelligence, contact us today.

Southeast Computer Solutions is based in Miami, Florida, and has additional operations in Mexico. For over 30 years, we have positively impacted the success of small and mid-sized businesses with effective business management implementations that improve our clients’ operations. We listen, we are accessible, and we care. Learn more by visiting our website or calling 305-556-4697.

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