How can you avoid inventory shrinkage?

1 Track and audit your inventory

One of the best ways to avoid inventory shrinkage is to track and audit your inventory regularly. You can use an inventory management system that integrates with your barcode scanners, RFID tags, or other identification methods to monitor the movement and location of your goods. You can also conduct periodic physical counts and compare them with your records to identify any discrepancies and resolve them quickly. By tracking and auditing your inventory, you can reduce the risk of theft, misplacement, or miscounting, and ensure that you have accurate data for your planning and reporting.

2 Train and motivate your staff

Another way to avoid inventory shrinkage is to train and motivate your staff to follow the best practices and procedures for handling and storing your goods. You can provide them with clear guidelines, instructions, and feedback on how to perform their tasks efficiently and safely. You can also reward them for their performance, loyalty, and honesty, and create a culture of accountability and transparency. By training and motivating your staff, you can improve their productivity, morale, and compliance, and reduce the chances of human error, negligence, or fraud.

3 Secure and organize your warehouse

A third way to avoid inventory shrinkage is to secure and organize your warehouse to protect your goods from external and internal threats. You can install security cameras, alarms, locks, and access controls to deter and detect any unauthorized entry or activity. You can also organize your warehouse layout, shelving, and bins to optimize the use of space and facilitate the retrieval and storage of your goods. By securing and organizing your warehouse, you can prevent damage, spoilage, or loss of your goods due to environmental factors, accidents, or theft.

4 Implement quality control and maintenance

A fourth way to avoid inventory shrinkage is to implement quality control and maintenance procedures to ensure that your goods are in good condition and meet the standards and expectations of your customers. You can inspect your goods before, during, and after the receiving, picking, packing, and shipping processes to check for any defects, damages, or errors. You can also maintain your equipment, vehicles, and tools to prevent any breakdowns, malfunctions, or accidents that could affect your inventory. By implementing quality control and maintenance, you can avoid returns, refunds, or claims due to poor quality or service.

5 Analyze and optimize your inventory

A fifth way to avoid inventory shrinkage is to analyze and optimize your inventory levels and turnover rates to avoid overstocking or understocking your goods. You can use inventory analysis tools and methods such as ABC analysis, EOQ model, or safety stock calculation to determine the optimal quantity and frequency of ordering and replenishing your goods. You can also use demand forecasting, inventory optimization, or lean inventory techniques to align your inventory with your customer demand and market trends. By analyzing and optimizing your inventory, you can reduce the risk of obsolescence, expiration, or markdowns due to excess or insufficient inventory.

6 Review and improve your processes

A sixth way to avoid inventory shrinkage is to review and improve your processes and policies to eliminate any inefficiencies, errors, or loopholes that could cause inventory loss. You can use process mapping, value stream mapping, or kaizen to identify and eliminate any waste, variation, or non-value-added activities in your warehouse operations. You can also use benchmarking, KPIs, or continuous improvement methods to measure and improve your warehouse performance and customer satisfaction. By reviewing and improving your processes, you can increase your inventory accuracy, reliability, and profitability.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?