Understanding Stock Losses
The loss of physical inventory, stock losses affect the revenue of every business—including those in the retail sector. In fact, retailers realize well that stock loss or inventory shrinkage is a real problem that can hurt the bottom line, causing sizeable loss of profits each year. To put simply, stock loss is the discrepancy between your physical inventory and your accounting records.
Have you ever noticed discrepancy between the actual inventory on hand and the amount exhibited by your records? If you have, then, you have suffered stock loss. As mentioned earlier, several factors can contribute to stock loss or inventory shrinkage including misplaced stock, customer or employee theft, shipping errors, inefficient recordkeeping, and order fill errors.
While losses caused by errors in entry are inaccurate loss, stock losses due to theft are true stock loss that you have suffered. To minimize loss of stock due to theft, you’ll have to control each step involving the stock and increase the stock’s security wherever it may be. If you’re thinking about how you can minimize stock losses in your business, then read on to find out.
Train Your Employees
Do you know what causes most of the stock losses in a business? Theft. According to recent surveys, theft accounts for more than 40% of all stock losses suffered in a business. So, how do you prevent or minimize stock losses caused by theft? You train your employees. One of the best ways to prevent or minimize stock loss in your business is training employees to deal with a shoplifting situation or handle thieves.
Only a few companies today have guidelines to handle thieves and even less talk about preventing shoplifting. By being open and honest with them about shoplifting, you will help open your employees’ eyes to shoplifting issues. Train your employees/staff to recognize shoplifting and close the gaps in your security. Another way you can prevent or minimize stock loss caused by theft is by ensuring better placement of your product within your store such as keeping the stock at the back of the store or locked in a case. This will help prevent a quick grab-and-run. By taking these simple yet effective theft prevention measures, you will avoid the costs of hiring a team of security personnel or installing a large-scale security system.
Invest in Inventory Management
As revealed above, theft is the biggest contributor to stock loss and people stealing your inventory can be your customers as well as your employees. So, you need to be vigil about who’s around your inventory. Customers can walk out of your store and take-home items that they didn’t pay for while your employees can do the same walking out of the backdoor of your store or warehouse. The good news is that you can prevent this by investing in inventory management.
With a good inventory management system, you can reliably track your stock, which will allow you to know the stocks you’re losing, when and how often. Additionally, the system will allow you to see discrepancies and identify employees who are always around your stock when it goes missing. To deter theft, inform employees/workers that you will be regularly checking the system for inventory levels.
Implement a Double-Checks System
Generally, inaccurate stock records are caused by the use of multiple systems to manage inventory or by mistakes during the receiving process. A good way to prevent mistakes is implementing a double-checks system when accepting inventory. Additionally, you can minimize the mistakes that occur during the transfer of data from one system to another by using a single automated system.
Improve You Receiving & Stocking Process
Damaged stock is one of the reasons for stock losses. By improving your receiving and stocking processes, you can prevent damage to the stock coming in, which will help prevent/minimize stock loss. To improve the above processes, you need train your employees regarding the handling and storage of stock in the backroom or warehouse. Another way to prevent damage is smart placement of product/item.
Place the larger items on the bottom of shelves and ensure that it’s safe and easy for customers and employees to reach the items they want to access. In case you have a storage facility or warehouse, schedule inspections of the facility including checking roofs. This is important because faulty warehouse roofs often cause damage to the stock kept there. In addition to performing required warehouse repairs, ensure the presence of presence of fire detection and prevention systems there as warehouse/storage facilities are prone to fire which can cause damage to stock.
Hire a Stocktaking Business
The final piece of advice to minimize stock losses in your business is outsource your stocktaking needs for your inventory. By providing you with accurate information on your stock, stocktaking such as retail stocking and food & beverage stocktaking helps to minimize stock losses in your business. With regular stocktaking, you can prevent stock issues such as loss of stock and maintain control of your business. While an annual stocktake may be sufficient for your business, it is in your best interest to perform stocktake regularly, preferably once every quarter or ideally once every month.
You can minimize stock losses in your business by using the tips given above. For more information on this, get in touch with Food & Beverage Stocktaking today!