Key Techniques to Prevent Inventory Loss and Shrinkage: Part 1

Retail shrinkage can occur at any time following the delivery of goods and prior to those goods being sold. Some of the most common causes of loss include shoplifting, employee theft, and fraud by employees, suppliers, and credit card thieves.

Whether you own a small shop, a warehouse that holds stock for clients, or a business supplying retailers with products, preventing this criminal loss and shrinkage needs to be a major part of your operational plans.

Below are 7 ways that you can help protect your assets and your business.

1. Minimize Errors Through Training

Not all inventory shrinkage occurs as a result of theft, fraud, or other criminal activity. Simple errors within the stock management process can lead to major problems. For example, if 100 items are processed as 1000 items, it means that you instantly have a paper deficit of 900 products. Even though you haven’t actually lost this stock, your books will show that the items are missing.

If you use data entry clerks or even data entry companies, check their results. If you have your own employees to manage stock and inventory management, ensure that they have the appropriate training. If you do the work yourself, implement double checks and verification systems that help you to eliminate the possibility of making errors yourself. While some of these errors may not lead to an actual loss, it is conceivable that the error works the other way, and you ship 1000 items instead of 100. This means that you are 900 products down, without receiving payment for them.

2. Implement Policies to Tackle Fraud

Fraud is rife. Many people consider it to be an easy crime, while some people commit fraud without really knowing that’s what they are doing. Credit card fraud requires the use of appropriate and secure ordering and payment systems, as well as diligent checks from frontline staff. Returns fraud is another potential problem area—you could lose a number of items every day to returns fraud.

Implement a returns policy, ensure that it is displayed for everybody to see, and train your employees in how to deal with potential returns. Make sure that they ask to see proof of purchase, which may include receipts but can also include proof of transaction. It is primarily down to your employees to help prevent returns fraud, however, so ensure that they are diligent and reliable.

3. Train Staff to Identify and Prevent Shoplifting

Shoplifting can be a major problem in some stores, especially those that sell small items with a large ticket price. Even newsagents and corner shops can suffer at the hands of experienced shoplifters though so no matter what type of business you run, you need to identify possible ways to prevent shoplifting.

Ensure the shop is tidy and well laid out; this provides would-be thieves with fewer opportunities to steal products without being seen. Greet people when they walk in the shop. Not only does this open a line of communication but it will deter some shoplifters from stealing. There are tell-tale signs of shoplifting, and signs that you and your employees can look out for. Train staff to identify those that act suspiciously, dress suspiciously, or repeatedly enter and exit the shop without making purchases.

In the next article, we will look at additional ways in which you can help protect your inventory and ensure that your business doesn’t lose out to physical forms of theft.

Author: Security Shutter Doors manufactures, installs, and maintains security shutters, doors, grilles, and other products designed to increase the security level in your bricks-and-mortar store.