Inventory control is a critical component of any retail business affecting operations and the bottom line. And if you’re experiencing shrinkage not related to sales, it means you are losing your inventory.
A new infographic from Se-Kure Controls titled, “Common and Costly Inventory Mistakes to Avoid” looks at 10 of the most common mistakes retailers make regarding their inventory. These mistakes and others are responsible for losses which totaled $48.9 billion according to the 2017 National Retail Security Survey from the National Retail Federation.
For small retailers or small business owners, the loses are more impactful. The NRF survey said on average inventory shrinkage costs retailers about 1.44% of sales. And whether it is happening because of criminals or dishonest employees, it is money you can’t recover.
The challenges retailers face was pointed out by NRF Vice President of Loss Prevention, Bob Moraca. In the press release for the report, Moraca said, “Retailers are making progress in combating criminal activity, but there are still many challenges. Whether the threat is coming from cybersecurity, organized retail crime or employee theft, the job for retail security teams continues to become more difficult every day, especially when resources and staff are limited.”
Mistakes that Contribute to Inventory Shrinkage
Inventory control is the term which covers the management of your company’s inventory. And this includes everything from the purchase of the inventory to the time you receive it, ship it, store it, and warehouse it along with turnover and the next reorder.
As Se-Kure Control states in the infographic, inventory shrinkage can take place for many different reasons. Having too much inventory in itself can be responsible if the product is not moving.
The depreciation of your inventory is shrinkage, which also extends to the added cost of storing the merchandise. So make sure you are on top of what is selling to avoid inventory glut.
Another mistake is not using automated inventory management software. For small retailers taking an inventory manually is a time-intensive process.
This can easily be fixed with barcode-based systems. And the technology is so prevalent, smartphones can be used as scanning devices with apps which create bar-codes and keep track of your inventory.
Although business owners would like to trust the employees, trusting them too much can be a problem. The NRF study said retailers attributed 30% of their inventory shrinkage to inside jobs. The survey found dishonest employees account for an average of $1,922.80 per act, a big loss no matter how big your company is.
Se-Kure Controls recommends businesses to implement policies for checking bags at the end of shifts and/or storing employee belongings in a designated location.
Some of the other practices retailers should avoid include putting too much faith in third-party services, ignoring the threat of shoplifting, not checking inventory often enough, and not provide adequate training.
You can look at the infographic below for more details.
Image: Se-Kure Controls