What Is Inventory Shrinkage & How Do I Prevent It?
The term shrinkage may also be used by manufacturers to describe the loss of raw materials during their production processes. This shrinkage is also known as spoilage or waste and it can be either normal or abnormal. The best fulfillment services https://quick-bookkeeping.net/ companies will have low or no shrinkage allowances. So, when you outsource your fulfillment operations, you may be able to reduce your shrinkage rate. Placing your order fulfillment in the hands of professionals could actually save you money. Determining inventory shrinkage involves simply deducting the physically counted inventory from the expected amount.According to a study from the National Retail Foundation, retail businesses lost $62 billion from “shrink” in 2019, amounting to an average of 1.6% of sales.Unknown causes represent about six percent of the total inventory shrinkage.Before joining FSB, she managed a storefront for several years, working in everything from merchandising, to buying, to sales analysis.If you've ruled out theft and administrative errors, investigate whether your supplier is abiding by your contract and that your numbers match up. Run credit, background, and criminal checks before hiring, and reach out to applicants’ references to identify any red flags. However, most of them boil…