How can you use exception reporting to investigate inventory shrinkage?

3 How to interpret exception reports?

Once you have generated the exception reports, you need to review and analyze them carefully. You should look for the root causes and patterns of the exceptions and determine if they are valid or invalid. Valid exceptions are those that have a reasonable explanation or justification, such as a promotional sale, a special order, or a quality issue. Invalid exceptions are those that indicate a problem or an opportunity for improvement, such as a data entry error, a theft, or a stockout.

You should also compare the exception reports with other sources of information, such as sales reports, purchase orders, invoices, receipts, or security footage. This can help you verify the accuracy and completeness of the exception reports and identify any discrepancies or gaps.

4 How to act on exception reports?

After you have identified the valid and invalid exceptions, you need to take appropriate actions to resolve or prevent them. For valid exceptions, you may need to document, communicate, or adjust them accordingly. Whereas for invalid exceptions, you may need to correct, investigate, or escalate them. Possible actions include correcting inventory records or transactions that are incorrect or incomplete, investigating inventory items or locations that are suspicious or inconsistent, escalating inventory issues or incidents that are serious or recurrent, implementing inventory controls or procedures that are missing or inadequate, training or coaching the inventory staff or stakeholders that are involved or responsible, and reporting or monitoring the inventory performance or trends that are relevant or important.

5 How to optimize exception reporting?

Exception reporting is an invaluable tool for inventory management, but it must be used correctly to be effective. To maximize the benefits of exception reporting, you should review and update the criteria or rules regularly, prioritize and categorize the reports based on their urgency and impact, assign and follow up on actions and responsibilities, measure and evaluate outcomes and feedback, and learn and improve from insights and lessons. Exception reporting can help you identify and prevent inventory shrinkage by highlighting any abnormal or unusual transactions or events in your inventory system. By utilizing exception reports in the right way, you can enhance your inventory accuracy, efficiency, and profitability.

6 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?