Three of the major contributing factors to retail loss are internal and external theft, and paperwork errors. Paperwork errors are frequently the easiest to control and just require some thought and care to prevent. Although this type of shrink would seem to be harmless – since the merchandise is not stolen – it is still a serious problem and a drain on profits.
One of the major contributors to the large overall problem of inventory shortage – retail shrinkage – is carelessness and a lack of control over paperwork.
What causes paper shrink and how can you help to control it?
- Receiving. The receiving paperwork says you should receive 30 items, which you sign for, and you only receive 28. Detailed receiving counts will avoid the loss of 2 items.
- Breakage, spoilage, items for company use, and other inventory adjustments. Sometimes, physical items are removed from stock for legitimate purposes, only some of which are named here, with the intention of completing the adjusting paperwork later. If we forget, the result is inventory shortage. Complete the paperwork and process it immediately to prevent unnecessary retail loss.
- Mispriced merchandise. An item is carried in inventory at $10.00 and priced at $9.00. Every time a sale is made, $1.00 is lost to shrink. Any mistake when marking, changing, or recording prices can mean increased shortage, which means less profit.
- Inaccurate counts. At inventory time, when making price changes, or when transferring merchandise, incorrect counts mean unbalanced inventories, which contribute to shrink, which result in unexpected losses to the company.
These are a few of the ways inaccurate, incomplete, or an absence of supporting paperwork can affect inventory. There are many other ways, and you can probably think of more of them yourself.
The way to solid inventory control is to assign jobs correctly; take time to avoid errors; and accurately complete the paperwork in order to complete the job.
Retail loss caused by paperwork errors is preventable.
For ideas on implementing an effective loss prevention program, go to retail loss