Inventory Shrinkage

Major retailers blame lower margins on theft, but process and control failures still account for 26% of inventory shrinkage.

According to a recent article from USA Today, companies like Target, Walmart, Dollar General, and Home Depot have been sounding the alarm on retail theft. But theft is only one contributor to the broader issue of missing inventory, also called inventory shrinkage.

Another source of inventory shrinkage is process and control failures, which accounts for 26% of shrinkage according to last year’s NRF survey. What are these failures? Well, some are tied to human error, especially at receiving docks.

Often, shipping manifests are sent to a retailer who assumes that everything on the manifest is in the shipping container which is not always true.

Obviously the comic is a dramatic scenario, but it points to the reality that inventory gets lost when moving from one logistics hop to the next. This is fine, mistakes happen. But it’s important to know during which hop inventory went missing. This way, you know which warehouse or logistics provider to go to with questions.

Moving away from blind faith and toward digitized item scanning at receiving docks — whether through scanning tech on conveyor belts or in warehouse workers’ hands — can cut down on shrinkage related to process and control and free up resources to handle the larger issue of theft.

How do you handle inventory receiving processes to reduce and detect shrinkage?