Inventory Shrinkage: Causes and Possible Solutions

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From Thrive & ADP

Inventory shrink is a loss of goods either due to theft, damages/spoilage or administrative errors on items moving from a manufacturing site to an end customer. The shrinkage can be referred to as a hit to the margin or loss in profit.

Inventory shrinkage, or the loss of stock, can directly impact your small business's bottom line. According to 2015 data from the National Retail Federation (NRF), U.S. retailers experienced $44 billion in losses due to inventory shrinkage in the year prior. Organized retail crime and shoplifting accounted for 38 percent of those losses, while internal theft and assorted administrative errors accounted for 35 percent and 17 percent, respectively.

It's clear that getting a better handle on shrinkage involves a careful process. As shrinkage can be a costly headache for your small business, getting this problem under control may be one of the best investments you can make. By following the suggestions by THRIVE, you'll be better equipped to protect your bottom line.

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