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INVENTORY SHRINKAGE AND
SECURITY MEASURES
What is Inventory Shrinkage?Reasons for Inventory ShrinkageLoss Prevention Action PlanInternal Theft Prevention
OBJECTIVES
Inventory shrinkage is the term used to describe the loss of inventory.
For Example
If the inventory records of a retailer report that 3,261 units of Product X are on hand, but a physical count indicates that there are only 3,248 units on hand, there is an inventory shrinkage of 13 units.
WHAT IS INVENTORY SHRINKAGE?
Theft by Employees (Shoplifting)Inventory Counting ErrorsAdministrative ErrorsVendor FraudLoss and DamagePerish abilityObsolescence
REASONS FOR INVENTORY SHRINKAGE
LOSS PREVENTION ACTION PLAN
8: Follow Up(Re-visit)
7: EvaluateImplementation
6: ImplementSolutions
1: RecognizeStock Loss ShrinkSales and Profit
(reports & detail)
2: Developa Strategic Plan
(where is itoccurring?)
5: Develop Solutions& Prioritize Actions(work with mgmt)
4: Analyze Risk,Identify Causes
(drill down into areas)
3: Map Key Processes& Measure Problem(flowcharts & POS
data mgmt)
Why would my staff steal from me!The retail Industry attracts unskilled workers, often at
minimum wageThink of it as the Carrot and Stick ApproachThe carrot includes things like fair compensation, a good
working environment, employer sponsored activities that improve morale, good communication and concern for success of a company
The only way is to reach some employees is through a stick of an effective security program and straight forward policy of prosecuting any employee caught stealing
INTERNAL THEFT PREVENTION
Reward good people by paying commissionsPeople like discount, set an Employee Pricing level for some
or all of your Inventory You can even expand on this by allowing staff to sell a
certain amount of inventory at Employee discount to friends and family
Move old stock and improve staff moraleProfit sharing is the quickest way to make all staff to feel
they have a vested interest in making the company profitable
Good communication goes a long way to make staff feel they're part of the company
CARROT
Run frequent Administrator Reports – Daily or once a WeekPrevent unauthorized mark downs by setting security levels
to reflect what the individuals need to doRefunds are often an area of vulnerability that is open to
employee abuseReceiving and shipping are also areas prone to potential
mishandling
STICK
