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The inventory advisor

Nov 11, 2019


Your profits could be walking out the door. What procedures do you have in place to minimize theft in your supply chain?

We all experience a certain amount of inventory shrinkage in our supply chain businesses. Still, if you don’t keep on top of this, it can result in a considerable amount of financial loss.  Inventory loss can be the result of administration errors, spoilt or damaged stock, expired products, or theft. Theft is something that most supply chain companies don’t like to consider, but it’s a hard cold fact that could obliterate your business. Take it seriously.

In this article, we will take a look at how you can minimize your financial loss as a result of theft in your business. These are some handy tips that can be implemented in your business today.

An excellent place to start is by educating your staff. They should learn how to read basic body language signs. When shoppers avoid eye contact, linger in odd areas, appear nervous or leave and return to the store multiple times, these signs could indicate a plan to shoplift. Staff should report a suspicious-looking shopper to store security and not take matters into their own hands. Staff must also be educated on what the consequences would be if they were caught stealing.

Only employees that need access to your inventory should have access to your storeroom. Its a lot easier to see if something is missing in a storeroom that is neat and clean, so make sure that staff keeps it this way.

Your receiving area is another area susceptible to inventory theft. It’s been known that employees mark shipments as ‘spoiled’ and then take this for themselves. Implement a process whereby either a manager or another employee inspect all shipments that are marked as ‘spoiled’. If another employee checks it, they should preferably be from another department. Another tip is to use clear plastic bags for trash in your receiving area, so the contents are visible.

An attendant should monitor dressing rooms in a clothing retail environment, and a system should be in place to track the number of items a shopper takes in and out of the dressing room.

Installing a surveillance camera system is the ultimate for in-store and floor space protection. The aim of installing a surveillance system is to deter people not to try and trap them. Put up signs to state that there are cameras and what the penalties will be if there is an incident of theft.  

Your high-value items should always be kept in a lock-up area that has a higher level of access required.

Split up job functions amongst your employees. This ensures that regular checks and balances occur. Don’t allow one person, for example, to manage, process, and record receipts.

Having efficient POS systems that require individual login details will minimize theft at the till point level. Make sure you look at each tills transactions daily, and if any of the following occur, you need to investigate further:

  • An excessive amount of access to the cash drawer
  • Refunds that are recorded in small amounts
  • Returns that do not match the product
  • A fake discounted price but the client pays the full price – ensure you have a threshold in place, where management needs to override anything over that threshold
  • Employees should have restrictions in terms of what they can do without a supervisor’s override – ensure these are in place.
  • Watch for Universal Product Code errors – to avoid this, ensure that items have the correct barcode and that they are scanned, labeled, and shelved correctly.

Look at the design of your shop floor and place your cash registers close to the entrance/exit. This allows staff to greet your customers as they enter, which provides the cashiers with a complete line of sight of the entire store. Place your more expensive items close to the cashiers as this will deter would-be shoplifters.

If you carry a lot of SKU’s consider doing cycle counting as your stock count method. This entails counting a small amount each day until you have gone through your entire list of SKU’s, then you rinse and repeat the cycle.

Look at your current technology. Do you have an inventory management solution, or are you trying to manage your inventory through limited functionality within your ERP? An Inventory management system will provide you a lot more overall visibility of your inventory. Another technology worth considering is the addition of a full warehouse management system. Fully kitted out with barcode scanners and mobile devices to enable the tracking of inventory from receiving through to the till point.

In conclusion, we are all aware that theft is an uncomfortable subject. Still, if you don’t take the necessary precautions and implement policies and procedures, your profits could be walking out the door.