6 ways to prevent inventory shrinkage with inventory management system. Inventory shrinkage refers to the difference between the physical count of your stock and the amount your records say you should have. Inventory shrinkage is any loss of inventory that isn’t due to stock being sold. Some of the biggest culprits of inventory shrinkage are theft, damage to stock, and mismanagement of inventory.
Inventory shrinkage can create major problems for businesses because it can result in a loss of sales and profits.
Heres some of the simple process to greatly reduced inventory shrinkage
- Implement a double check system
- To prevent a loss in your inventory you need to implement a double check system, you should have more than one person to important inventory management stages, such as signing invoices, recording stock, and accepting stock where mistakes are occurring.
- Give product a unique identities
- Proper products SKUs are crucial in ensuring your recorded stock levels are correct and to reduce inventory shrinkage.Proper product SKU or barcode are crucial in ensuring your recorded stock levels are correct. Make sure your products code are unique and clear as possible.
- Automate Inventory Management
- Inventory system help you to reduce manual handling and processing of stock, and cut down on inventory shrinkage due to administrative mistakes.
- Vet potential employees thoroughly
- Before you hire an employee you should vet potential employees and do a background check to weed out those with a history of stealing inventory. Hired employees should also undergo rigorous training on how to handle inventory appropriately and carry out stock taking.
- Track inventory loss
- You need to track the inventory loss percentage over time whether there is an increase or decrease . Your inventory count should be compared to the previous inventory counts.
- If the inventory percentage decrease it shows that your techniques have reduce stock loss. However, If the percentage of inventory shrinkage increases, it’s time to examine why this might be happening and circle back to the techniques above to ensure you have proper monitors and controls in place.
- Plan for busy periods
- 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.
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