1You might be running a business thinking that all you need to do in order to make your business successful is to take care of the marketing, HR, and sales but you should know that there are many basic concepts of running a business which many people forget and this is what leads to the decline of many firms all around the world. Well, there are many aspects of running a business that you need to cover and for making your product or service ubiquitous but in this blog post, we are going to keep our topic of discussion specific to inventory management only. 

Well, managing inventory properly is one of the keys to making your business successful. By taking care of the inventory management, you can make sure that the demand meets the supply, you are not wasting your products, you are not overproducing, you are not underproducing, and much more. 

There is a lot that can go wrong with your inventory management approach and in this blog post, we are going to talk about one of the most common mistakes that most people make while managing inventory and that is not taking care of inventory shrinkage.

What is inventory shrinkage?

Inventory shrinkage is one of the most common issues that most business owners have to deal with and it is the excess amount of inventory listed in the accounting records but which no longer exists in the actual inventory. You should know that excessive shrinkage levels can indicate problems with damage, miscounting, inventory theft, evaporation, incorrect unit of measurement, or many other issues as well. You should always even keel your inventory stock in order to avoid problems like inventory shrinkage. 

If you will not address issues like inventory shrinkage then you will never have an exact idea about how much stock you have and under the wrong impression, you might have to deal with overstocking or understocking as well. 

Top 10 tips to deal with inventory shrinkage 

1. Invest in surveillance 

One of the best things that you can do is to invest in cameras and put them around your inventory area as we have already discussed that one of the main reasons behind inventory shrinkage is theft. You can also use multiple warning signs stating the consequences of theft in the firm. This will send a positive message among everyone in the firm and the one stealing products will stop it. 

2. Implement security measures 

Another important thing that you can do in order to prevent any type of inventory shrinkage is to level up the security by installing fences and using other means to keep the stock safe from any type of theft. In addition to this, you can also impose strict security protocols in order to make sure that no one is able to steal even a single grain of rice from your inventory.

3. Prevent fake promotion codes 

Giving promotion surely acts as a magic wand for your business but at the same time, you have to know that scammers can use these promotions in the wrong way. Many scammers can circulate fake coupons of your products and this can also lead to inventory shrinkage. So, have a strategy in place to avoid any type of fake promotion code being used. 

4. Reduce temptation 

If you are really interested in preventing any type of theft in your store then you should always keep the higher valued items in secure areas where only authorized people can enter. This will keep the theft at bay and you will not have to deal with any type of inventory shrinkage. 

5. Get rid of fabricated sales transactions 

One of the best ways you can get rid of inventory shrinkage is to make sure that you are splitting up responsibilities for all the important tasks in your business workflow. This way, you will make sure that all the key processes are being passed through at least a few individuals and thus the chances of any type of fraud will be reduced to a great extent. 

6. Use a double-check system 

If you really want to get rid of inventory shrinkage then you should make sure to have a double-check system in your inventory. This is one of the best ways to get rid of any type of inaccuracy in your inventory and when inaccuracy will reduce in your business, you will start enjoying better accounts management in your inventory and thus there will be no inventory shrinkage. 

7. Give products unique identities 

If you don’t have proper product SKUs and UPCs then there are maximum chances that you are going to deal with inventory shrinkage since both SKUs and UPCs are an important part of proper inventory management. You will also need to make sure that your product labels and codes are as clear as possible. There should also be a part of the system that can easily accommodate new products. 

8. Automate inventory management with a software 

You should know that most of the inaccuracies happening in your inventory are a result of human error and this is why you should never only rely on manual workload for managing your inventory. There are many different ways you can automate your inventory management approach with the help of a software solution. There are many accounting software solutions that can help you to do the same. 

9. Plan for busy periods 

If you are running a small or medium-sized business then keeping track of your inventory might become difficult during periods of high demand as you are already bogged down with so much work that keeping tabs on stock becomes difficult. Well, you can plan ahead for such situations, and instead of messing up everything, you can easily keep tabs on inventory during busy periods. 

10. Shift to cloud 

If you are already using a software solution for managing your inventory then you are doing a good thing but if you are using that software solution by installing it on the desktop then you are giving an invitation to inventory shrinkage. With software solutions on the cloud, many people will have access to the software solution at the same time and this will reduce errors. 

11. Track inventory shrinkage over time 

In order to get rid of inventory shrinkage, you have to come up with an ideal solution and find the cause of inventory shrinkage. This is why it becomes necessary to track inventory shrinkage over time to know the main reason behind it. 

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