As per the 2015 National retail security survey, retailers lost almost $44 billion of their products due to inventory shrinkage. Inventory shrinkage is something that affects revenue in every business and especially retail. Loss of inventory equals the loss of profit. Therefore, the excellent way to tighten up your bottom line and increase your potential income is to have a sound inventory management system to prevent the shrinkage.
Ways for Effective Inventory Shrinkage Prevention
1. Train your employees
The best way to avoid shrinkage is to train your employees. The majority of losses happen due to employee theft; it comprises almost 43% inventory shrink.
A small number of companies talk about shoplifting prevention or have any guidelines in place to handle shoplifters. An open discussion about shoplifting can update everyone involving your employees. You can conduct a seminar about teaching your employees on how to recognize shoplifting techniques and improve your security
Also, the placement of your products within your stores is essential. Keeping expensive and luxurious items in a locked case in the back of the store prevents anyone from doing a quick grab and run. This is easy and cost-effective to step up your security.
2. Implement a system for double check
It is also possible that inventory management accuracies may come from mistakes made during the receiving process or while using multiple systems to manage your inventory. Therefore using a single automatic system can reduce the errors of transferring data from one system to the next
3. Prevent fake promotion codes
Offering promotions is one of the best ways to increase the sales of a product. However, it is also one of the ways that scammers can take advantage of these promotions. With the increased use of online ordering, many scammers circulate fake discount coupons online from manufacturers. When this happens your business could be forced to take-up loss of those reimbursements which would likely have a devastating effect on your margins
Be sure that your customers and employees are kept up to date with the online promotions that run on your store. you will also need to educate your employees on how to detect anomalies in promotional coupons such unusually have high discounts or higher than average number of coupon redemptions
These are just a few signals pointing towards that’s something dubious happening, and someone might be taking advantage of your company’s promotional activities.
4. Rotate Products
The best way to avoid inventory shrinkage is to know the trending product in the current market. You should know how to locate products that quickly become out of date. Having a robust inventory management software can give you alerts off the shelf life of current products.
Today many software comes embedded with AI and machine learning. These can provide you great insights into which products are selling the best now and those that are not using the data available on the internet. You can then adjust your sales techniques to prevent loss and turn it into ground breaking profit.
5. Stop shipping fraud activities.
If you have a large inventory, then fulfilment can become challenging to detect scams due to the hectic activity of orders being shipped and received. To avoid fraud, you should carefully check your shipping documents, and even the products claimed to be ‘defective.’
For the goods received, ensure that you have an inspection process in place that can verify the quality the products received. Also, it is good to keep a record of these inspection reports so that you can later analyze any strange pattern or trends that are worth investigating further.
6. Improve the inventory stocking processes
It is also essential to prevent damage to new products received through shipping and stock them correctly. Train your employees on how to handle them and store properly into the warehouse or backroom. Place Items accordingly so that they can be easily accessed; for example, figure items should be on the bottom of the shelf so that employees and customers can easily reach the item they are looking for.
If you have a storage facility like a warehouse, make sure that you have scheduled inspections to check out the integrity of the exterior and the roofs. So if needed, repairs can be made in a timely fashion without impacting your store inventory. Fire detection and prevention systems should also be in place appropriately stored so that they can be used during emergencies
7. Invest in a good inventory management software
Using good inventory software is a great way to automate and manage inventory. It can eliminate all the administration errors that result from manual management of inventory. You can have an organized workflow that you can easily monitor and maintain even remotely. By having secure access keys for your employees, you can prevent fraudulent activities and have control over the whole operation.
It is also easy to manage your inventory with the centralized system rather than having multiple spreadsheets that are handled manually from different accounting shipping and quality control departments. Doing so will streamline your process and avoid the chances of any errors dramatically.
Wrapping it up
With all these tools in place, you can create a plan of action to prevent inventory shrinkage. Something did you should take care of is practicing good hiring employees. You can print them on preventing shoplifting on how to handle valuable stocks and how to use your inventory management software properly. Inventory shrinkage cannot be eliminated, but you can surely minimize the effects of proper inventory management practices.
Greg Wilson is a Content Writer working with GoodFirms, a research and review platform for service and software companies. He is passionate about blogging, creative writing, social media, and content marketing. Greg writes blog posts for GoodFirms about eCommerce softwares, Cloud computing, IoT development, and many more such categories.